Marketing Metrics marketings va… · Improve Your Probability for Success ™ | | ©1999-2010...

Page 1

The Power of Marketing Metrics: Proving Marketing’s Value to the

Organization

Laura Patterson

President & [email protected]

Improve Your Probability for Success ™ | www.visionedgemarketing.com | ©1999-2010 VisionEdge Marketing. VEM Proprietary. Not for reproduction or redistribution without written permission. 2

Founded in 1999 and headquartered in Austin, TX, VisionEdge Marketing, Inc. serves more than 100 customers, and counting.

VisionEdge Marketing, Inc. is a data-drivenand metrics-focused marketing firm that specializes in improving marketing performance and creating competitive advantage designed to attract, secure and retain profitable customers.

Services Include:

Marketing performance management

Marketing and sales alignment

Product and strategic marketing

Pipeline re-engineering

Professional development

About VisionEdge Marketing – Experienced Practitioners

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CMO Challenges - Measurement


Break the Never Ending Cycle

Perhaps the greatest risk is that without a perception of accountability and value, CEOs

and CFOs will make sweeping, arbitrary decisions about cutting expenditures which ignores the relationship between marketing spending to effectiveness and produces a short-term focus leading to limited success.

Need focus to go from outputs-focused to outcome-focused

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Why Companies Invest in Marketing

Understand the market and customers

Develop and execute a strategy to create

preference and consideration that enables the

organization to

Acquire more of something

Acquire it faster

Acquire it cheaper

Otherwise, might as well just put more feet on the

street

Need to demonstrate we are “getting the job

done”


Customers Connect Marketing to the Business of Business

“The purpose of a business is to

create a customer.”- Peter Drucker

Page 4


Marketing’s Three Primary Roles

1. Find Profitable Customers/Consumers

The process of acquisition

New customer acquisition – net new business

2. Keep Profitable Customers/Consumers

The process of retention/renewals

3. Grow Profitable Customers/Consumer

The process of increasing the value of your customer franchise and brand -Cross-selling


Our 3 Roles Enable Us to Move 3 Business Needles

Find/SecureProfitableCustomers

Acquisition

KeepCustomers

Penetration

GrowCustomer

Value

Monetization

Market Share Lifetime ValueBrand/

Customer Equity

Page 5


Accountability requires Metrics-Which Example Best Represents What You Track?

Tracked Trial Rates

Measured Adoptions Rates

Focused on Category Growth rate

Tracked Pipeline Contribution

Tracked everything Web

Press Hits

Measured Awareness

Focused on Lead ROI


Illustrating the Importance of Selecting the Right Metrics – Measuring Activity vs. Outcomes

My friend Joe

runs 5X/week

Page 6


Need Performance Management

…the process

of measuring progress

toward

achieving key outcomes and

objectives in order to

optimize

individual, group or

organizational performance.

CMO Council's 2008 Marketing Outlook

“The top challenge for marketers remains to better quantify and measurethe value of marketing programs," in spite of improvements in accountability over previous years.


Best Practices Marketing Organizations

Have a set of measurable

performance standards, a

pointed focus on outcomes,

and clear lines of

accountability.

They are performance-driven

outcome-based .

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Transforming into a Performance-Driven Marketing Organization

1. Align and link marketing to

business outcomes

2. Embrace a culture of

accountability

3. Adopt a measurement framework

that establishes clear standards of

performance and metrics

4. Create a performance

measurement system based on

data and analytics

5. Use data and performance targets

to drive continuous improvement

and to hold the entire system

accountable for performance.

6. Apply analytics to facilitate fact-

based decision making

7. Align resources, policies, and

practices

8. Add the right skills, systems and

tools

9. Track and report results against performance standards


Six Action Steps The Best-in-Class Employ

Align and Link to the Business

Set Measurable Marketing Objectives

Adopt a Metrics Framework

Select Outcome—based Performance Targets

Measure

Report

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Action Step 1: Align to Business Outcomes

1. The Starting Point - serve as the foundation for everything that follows

A consequence, result, effect

How the organization will measure

success

2. Start with the business decisions that need to be made

3. Identify all key business outcomes

Indicate what constitutes success for the organization in the CEO‟s words

4. Select those that marketing can

impact

Understand to what degree Marketing is expected to move the needle


Tip:Using Mapping to Create Alignment

Outcome-based Mapping™ is a

process that ensures marketing is aligned to business outcomes

technique for creating a common

vision and shared language for improving business results

Mapping allows marketing the opportunity to define their own objectives

A Map is a step-by-step description of the

actions taken by marketing personnel –

Direct line of site between a specific

set of activities to produce a defined set of outcomes presented in a visual

format.

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Improve customer advocacy score by 10% by YE2011

Action Step 2: Performance Based Marketing Objectives

Realistic

Measurable

Time specific

Aligned and consistent with the organization’s priorities

4 Criteria:

Increase referral rate of existing customers by 40% by YE2011

25% of existing customers will adopt new XYZ product within 6 months of launch

Contribute 25% of the qualified new opportunities quarterly with a 70% or greater conversion rate

confidence


Action Step 3: Metrics

Metric:

A metric is a standard unit of measure

Business -Standards of measurement by which efficiency, performance, progress, or qualityof a plan, process, or product can be assessed

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Page 10


Adopt a Metrics FrameworkOutputs Outcomes

Activity-

Based

Operational

Outcome-

Based

Leading-

Indicators

Predictive

CountingMedia Mentions

Ctm visitsClick Through Rates

Site Visitors

Demo Downloads

EfficiencyApps/branch

Campaign ROIProgram: People Ratio

Cost/Billing Dollar

Program spend/headcountProgram/Total Spend

Awareness: Demand RatioMarketing Spend:Revenue

Business OutcomesMarket Share

Category OwnershipLifetime Value

Adoption Rates

Likelihood

of OutcomeShare of Wallet

Rate of Growth:

MarketShare of Preference


Strategic Metrics Tie Marketing to the Business

Our Job Points the Way to the Metrics

5 Customer/Brand

Equity Indicators

• Price Premium

• Net Advocate Score

• Customer Franchise

Value

• New Product

Acceptance/

Adoption Rates

• Product Margins

4 Lifetime Value

Indicators

• Purchase Frequency

• Share of Wallet

• Advocacy/Loyalty

• Tenure

5 Market Share

Indicators

• Share of Preference

• Share of Voice

• Share of Distribution

• Rate of Customer

Acquisition

• Rate of Growth:Market

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Action Step 4: Setting Performance Targets

Difficulty in setting targets are one of the most common problems for marketers

Need to make sure the measures and the targets selected are relevant to the objectives and outcomes

Targets are a tool to help improvement, not an inflexible mechanism that guarantees change or results

Performance TargetsTurn the Wheel


Action Step 5: Marketing Measurement

Marketing Measurement:

The act of measuring or the process of being measured.

Measure:Dimensions, quantity, or capacity as ascertained by comparison with a standard.

Measurement, to be

accepted and

actively supported,

should be viewed as

an integral part of

everyone's job.

It must become an

accepted part of the

organizational culture.

It should be clearly

understood and

accepted that

everyone is expected

to take an active role.

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Action Step 6: Report

Accountability by its very

nature means Reporting

Monitoring and reporting

results enables fact-based

decisions

Metrics and KPIs (key

performance indictors) are

the building blocks for

creating a dashboard


What is a Dashboard? A „multidimensional‟ view of

data and their interrelationships

Executive dashboards provide summary views of data and alert users to values that are significantly above or below expectations

Only work if they are tied to a structured action process

It must do more than just measure, needs to be used to foster decision making

“A dashboard is a visual display of the most important information needed to achieve one or more objectives; consolidated and arranged on a single screen so the information can be monitored at a glance.”

Stephen Few, Information

Dashboard Design (2006)

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Crossing the Finish Line


Success Factors: Skills, Processes & Tools, Culture

Processes,

Systems, Tools

Skills & Training

Solutions to the problems of marketing accountability and creating a ROMI culture begin with training

(ISBM)

Culture

Create, reward and livea measurement culture

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The Rewards of a Performance-Driven Marketing Organization

Better insight into customers – what they want and what messages will resonate

Greater message continuity

More effective allocation of resources

Fewer underperformers on the sales team

Higher win rates

Improved customer acquisition and retention

Stronger customer loyalty and equity

Greater customer share of wallet


Take the Next Step on Your Journey

1. Conduct an audit to identify alignment, data and process gaps

2. Assess the crucial skills marketers need and provide training

3. Identify and add the right talent, systems, and tools to help automate marketing processes and improve marketing performance

4. Leverage best practices and company insights for continuous improvement opportunities

5. Create and adopt a performance measurement and management strategy, system and framework that aligns marketing with the business outcomes

6. Engage the leadership team and form strategic partnerships with an extended team of finance, IT, sales, service, etc.

7. Create and align processes, policies and practices that insure the linkage between marketing programs and business results

8. Design and select metrics and clear standards of performance that enables marketing to measure its impact, effectiveness, efficiency and value

9. Create a multi-level dashboard to report performance and results in real-time to facilitate course adjustments and foster decision making - make it an iterative and collaborative effort

Page 15


Thank You and Questions

Metrics in Action: Creating a

Performance Driven Marketing

Organization

Workbook: It's More than Money on the

Line: Creating Metrics to Measure

Marketing‟s Effectiveness, Impact and

Value

Both are available at

www.visionedgemarketing.com

http://www.visionedgemarketing.com/

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