Free Benchmarking–Does Your Marketing Measure Up?

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Here’s something we know after conducting the marketing performance measurement and management study since 2001: Best-in-Class marketers are relentless when it comes to continuous improvement. How do they know how they stack up? They regularly audit and benchmark. We know this can be expensive—even a small benchmarking study for marketing typically takes at least $20,000. With marketing budgets still feeling the crunch, it makes sense to be a bit more creative when it comes to benchmarking. And that’s where our annual marketing performance study comes in!

There are plenty of studies out there, and only you can decide which ones are worth your time. As a marketer you could probably complete a study every day, but if you are feeling the pressure to prove the value of your marketing, then this survey is for you. With 13 years under its belt and participation from marketing professionals and executives from around the world, in every industry and of all size organizations, we are able to provide a solid view into what Best-in-Class marketers do better and differently when it comes to measuring marketing’s contribution and value.

Given how hard you’re working every day, it’s frustrating when budgets are slashed and programs are terminated. You know Marketing is highly valuable to the business, but can you prove it? If you can, you may be among the ranks of the Best-in-Class—those marketers who have made marketing relevant to the C-Suite! If you can’t, it’s probably time to make some changes.

Find out how your organization stacks up against the Best-in-Class. Give 15 minutes of your time to participate in the 13th Annual MPM Survey and save the benchmarking dollars.

What does the survey benchmark? The focus of the survey is Marketing Alignment, Accountability, Analytics, Operations, and Performance Management capabilities. Complete the survey, share the link with your marketing colleagues and leadership team, and use the survey and the upcoming results to spark internal dialogue on the state of your marketing!

You can access the survey by following this link: https://www.surveymonkey.com/s/2014MPM_VEM

 

Customer Conversations: Identifying Revenue Opportunities Using Customer Analytics

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“We’re not going to make our revenue target for the fiscal year,” declared our customer, a Director of Customer Insights at a global vem-customer-conversations2technology company.  She followed with, “I was barely holding on to key resources this year, and now my budget’s taking another hit!”  I could tell she was feeling tired and discouraged.

After listening a bit more I asked, “What customer analytics could your leadership team use right now that would help close some of the revenue gap, and at the same time demonstrate your team’s value?”  She said, “Last quarter the sales team asked us to conduct a lead aging analysis, which identified some opportunities with the greatest likelihood to convert in the next quarter. They found this very helpful and they are running with it.”  I said, “That’s great!”

Keeping her team’s charter in mind, which is to rank and profile customers by critical dimensions, such as revenue, lifetime customer value, and profitability I returned to my initial question, “What are the burning questions about customers that the leadership team is asking?” Her response, “I don’t know.”

This is a common scenario. With scarce resources, it’s often difficult to get ahead of need – to be proactive in creating value from data. So, we began to brainstorm the kinds of things the leadership team might want to know to help improve the revenue situation.  Since time is of the essence, some of the ideas we discussed revolved around purchase intent behaviors, channels, and touch points that would facilitate near-term revenue generating opportunities.

After we explored the possible questions, I mentioned a customer analytics study that had been conducted not long ago by Aberdeen. The study found that Best-in-Class organizations that leverage customer analytics have a:

  • 35% year over year increase in average order value
  • 43% year over year increase in annual revenue
  • 42% year over year increase in customer profitability,
  • 25% year over year increases in market share growth.

With that in mind, I asked her whether her organization uses metrics such as profit margin, customer value, customer lifetime value, and customer acquisition (quantity, cost and time dimension) to measure the value of her group. She said, “No, we just measure our output, time to delivery of requests, and budget.” I suggested she might want to take a look at these other more outcome-based metrics.

As we closed the conversation, she had some new ideas on how to proceed and how to measure the value of her team. Just as importantly, she acknowledged that perhaps she and her team may have become too reactive in their analytics and reporting, and that they needed to take the lead by using segmentation, predictive modeling, and data analysis to provide business leaders with direction. In today’s environment, many marketers feel they aren’t at liberty to take action.

Our motto, “better to ask for forgiveness than permission.”

Weaving Contextual Data into Models

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Many companies are developing opportunity scoring models which essentially assign a predetermined numerical score to specific behaviors or statuses within a database. The purpose of opportunity scoring is help sales people know which opportunities are sales ready and worthy, and therefore take priority. Often variables such as title, company, and industry, serve as the basis for the scoring model. However, behaviors can be used too, such as the completion of a contact form, visiting a particular page on the website, participating or viewing a demo, etc. Contextual data adds another dimension to the model by weaving in predisposition information that reflects content, timing and frequency-for example what products they currently use, the last time they purchased, their complete buying history, the types of keywords they used in their search, etc.

Keep in mind, timing is everything. To be effective, contextual data must be delivered to the right person, at the right time, within an actionable context. For example, the date of a key customer’s contract renewal is posted in your CRM system all year long, but that doesn’t mean you’ll remember or even see it. Think how much more useful that data becomes when your system automatically alerts you to the fact that it’s the customer’s renewal date. Sending email messages about renewals too early just creates noise at best and at worst suggests you don’t know their renewal date. Customers are more likely to respond to call to action when it is in context of their workflow. Communication that is contextual is more personal and as a result feels more authentic, shows value, and leads customers want to act. As a result, you can reduce the cost of customer acquisition and the cost of sales.

The end goal of contextual data is to connect with the buyer when they are most predisposed to buy. As a result, you can use contextual data to help build propensity to purchase models, for prioritizing opportunities to support opportunity scoring, to develop more personalized messages, and select the best mix of channels.

This same concept of contextual data can be used to build propensity to purchase models. By identifying the winning experiences associated with a particular segment, you can use this information to craft more relevant messages to similar targets to increase uptake.

Personalization is a compelling and challenging proposition. It’s a moving target and therefore requires a test and learn approach. By adding contextual data into the process you can make your personalization efforts more effective and more relevant.

What Type of Customer Experience Do You Deliver?

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Customer Experience (CX) is one of the most highly discussed topics in organizations today. By definition, CX encompasses all interactions across the entire life cycle of the customer relationship. According to a recent survey by Oracle, of 1,300 senior executives in 18 countries, 97 percent believe CX is critical to their success. In addition, the study revealed a significant difference in perceptions between what executives think about the experience that they provide customers, versus what customers think about the experience that they receive. Only 49 percent of executives believe customers will switch brands due to a poor customer experience, yet 89 percent of customers say that they have switched because of a poor experience.

In the same study, improving CX was found to be one of the top three priorities for the next two years, according to 93 percent of study participants, and 91 percent want to be a CX leader. However, 37 percent are just now getting started on a formal CX initiative, so when it comes to execution, businesses seem to be stuck in idle. To be effective, a CX strategy must be aligned across the organization and encompass all customer touch points. The survey results found that conflicting key performance indicators and lack of alignment are among the biggest hurdles to achieving CX success. Alignment is especially critical to developing a CX strategy that results in positive, consistent, and brand-relevant experiences for your customers. Your business must align organizational goals between departments and lines of business to facilitate the best customer experience possible.

The first step in moving your CX initiative forward is to fully understand the actual customer experience. The saying, “walk-a-mile in their shoes” could not be more apropos. One of the best ways to begin to capture the customer experience is with a journey mapping exercise. This process helps you understand what it is like for your customer to interact with your business. The good, the bad, and the ugly of your customers’ experience becomes apparent through this exercise. Once you have the map, you can begin to prioritize your next steps.

Experience Impacts Loyalty

How a customer engages with your organization in order to do business with you is known as your service model. It consists of various touch points that set the tone for overall customer satisfaction, trust and loyalty. These touch points include interactions with marketing, sales, service, operations, product, finance, and so on–from transactions via phone, meetings with account teams, receipt and payment of invoices, to using the website and social media channels. Satisfaction at each of these touch points should be measured and managed because each one influences loyalty–positive sentiment, purchases, references, etc. If the service model meets your customers’ needs and expectations, they will be loyal and become brand advocates, possibly bringing in new business for you.

Capture Critical Touch Points

In-depth interviews and focus groups are two of the best ways to begin collecting customer touch point and experience information. These types of conversations make it possible to identify and understand all the stages your customers experience across the life cycle, and from these conversations you can learn about the specific contact points customers have when they do business with you. The objective of this step is to define the broad stages (such as purchase, delivery, deployment, service) and their associated contact points (trouble tickets, invoices, contracts, etc.). It shouldn’t be surprising if you end up with a complex map that includes a large number of stages with a multitude of contacts.

Once you have the touch points mapped, the next step is to understand the following attributes for each touch point: frequency, value in the experience, impact on loyalty, and level of satisfaction. Transactional and intercept surveys can help with capturing this information. This level of information will help you associate touch points with loyalty and business impact, enabling the development of a CX strategy that will create a predictable, consistent and positive experience and prioritize to your action plan.

Loyalty vs. Retention Measurement

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Companies who want to retain or expand their relationships with existing customers are finding that measuring and modeling customer loyalty is very valuable. We were recently asked “Do you need to measure loyalty if you are measuring retention-aren’t they the same thing?” Our answer, no, they are not the same thing, and you may need both.

Retention is a measure of whether an existing customer continues to do business with you. That is not to be confused with loyalty, which measures a customer’s predisposition to select a business entity as a preference, and indicates a certain resistance to competitors. Loyalty is a behavioral disposition that suggests that a customer will consistently respond favorably toward a brand/company, and also suggests the willingness to engage. As you can see, there is a distinction and it’s important to understand that a customer who continues to do business with you may be retained, but not necessarily loyal.

Responding favorably covers a lot of territory-from passively choosing to remain a customer, to actively choosing to advocate for a brand/company. Therefore, while measuring retention, once you define what a customer is in terms of tenure, it is a matter of counting. Loyalty takes a bit more sophisticated measurement and needs to take into account three potential behavioral responses if you are going to use the concept to build a model:

  • Expansion–the likelihood the customer will increase their level of business, such as by purchasing more of the same product or other products in your portfolio
  • Influence–the degree to which they can be influenced by the company in a way that positively impacts the company, such as seeking out advice, paying online, complying with new policies
  • Advocacy–the extent to which a customer is willing to actively promote the company, such as online reviews, supporting the company’s position on an issue, participation in case studies, serving as a reference, or making referrals.

Note: The Net Promoter Score (NPS) methodology attempts to account for these 3 behaviors, but the primary goal of this score is to help you ascertain the number of promoters vs. detractors.

You will want to determine which of these behaviors (it can be all of them) best define loyalty for your company. If you don’t know, the answers to these five questions will help you get started:

  1. What is the ideal customer for your company? What do they do/not do? What does a less-than-ideal customer look like?
  2. What does your company want from its relationship with customers and why?
  3. What can customers do to support the company’s mission?
  4. What can customers do to help the company improve service and reduce the cost to serve?
  5. What can customers do to reduce the cost of doing business with them?

You may want to engage a number of stakeholders in conversations around these questions. Once you determine the behaviors that define loyalty, you can build a model and begin to measure loyalty. It may be necessary to take different customer segments into account, and as a result you may need more than one model. To validate the model, you may need to conduct some research with customers who meet the loyalty criteria as well as customers you believe do not. Then, set about defining how you will use the model to measure and improve loyalty.

Customer loyalty is an intangible but extremely valuable company asset. By distinguishing retention from loyalty you can begin to understand the customer experiences, interactions, perceptions and attitudes that drive and impact loyalty.

Measuring Influencer Marketing

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Many marketing organizations today have an influencer marketing strategy. The purpose of this strategy is to help with customer acquisition (number and/or rate) and rate of product adoption.  The findings in the 2013 Influencer Marketing Survey support this perspective, “influencer marketing is seen as a customer acquisition and lead generation practice not a brand exercise.”

This strategy entails establishing and tapping relationships with people that are perceived by the market and customer to have the ability or power to affect or sway other people’s thinking or actions. Influencers exist within every ecosystem – these can be members of the press/blog community, analysts and industry thought leaders, industry experts, trusted advisors, etc. The breadth, quantity and quality of your influencers will impact the success of this strategy. 

Before we jump into how to measure influence marketing, we’d like to respond to a question we’re frequently asked, “What is the difference between influencer marketing and public relations?” The answer to this could be its own article, so to quickly explain the difference, we turned to our friend Chris Aarons (@Chris_Aarons), an expert in implementing influencer marketing strategies. 

Chris says, “The simplest answer is that public relations is about communicating your messages to and with members of the press (and some PR firms include bloggers as well) to spread information or news. Whereas, influencer marketing focuses on identifying and securing credible third-parties with extensive networks, who may not necessarily be members of the press, to drive engagement and/or marketing objectives.” We’ll leave it to you to tweet with Chris on how you feel about this explanation!

Back to influencer strategy management… Relevant metrics include:

  • Activity-based: number of influencers, types of influencers, and the degree of engagement by each influencer
  • Pipeline: deals and wins, influencer contributed lead and acquisition cost, sales cycle impact, and influencer lift

Ultimately, what you want to know is whether influence or sway is impacting customer acquisition, and if so, how much and how fast.

Should this be a viable strategy for your organization, you may want to think beyond counting, and create a way to measure influence. In the social world, various organizations are creating influence metrics.  But influence occurs both on and off line, which means you need to be able to measure influence/sway beyond the “social digital world.” As with many key performance metrics, an influence metric is comprised of several measures.  

So how might we construct such a metric? Conceptually we can posit that influence is derived from two variables, quality and impact. The equation would look like:

Influence = Quality (%) x Impact (#)

In addition, factors that affect each of these variables include the following:

Quality Factors:

  1. What percentage of the desired influencers participated? 
  2. How prominently did they feature your company/product? Assign percentages to these or others you if you prefer [Top billing or stand-alone article/blog, subject line mention or tweet,  quote in general or related article, participation in LinkedIn Discussion]
  3. What is the overall sentiment/tone of the influencers’ content/conversation/discussion? Assign a percentage to each of these positive, negative, neutral

Impact Factors:

  1. Quantity - the total number of tweets, shares, likes, comments, click throughs, etc. generated by the influencers
  2. Penetration - how many of the targeted markets/communities were reached (for example – LinkedIn Groups, click throughs to links)

Add up your quality factors, add up your impact factors, and then multiply the two sums. Start by collecting the data and establishing your base line. Monitor the change in your influence metric and analyze the impact of each factor on the score. Once you complete these steps, it will be necessary to evaluate the relationship between the influence score and your number and rate of customer acquisition.

Efficiency vs. Effectiveness Metrics

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In his book, The Effective Executive, Peter Drucker explained the difference between efficiency and effectiveness: “Efficiency is doing things right. Effectiveness is doing the right things.” He strongly advised focusing first on effectiveness before efficiency. Along with outcome-based and leading-indicators metrics, Marketers also need both efficiency and effectiveness metrics. Here’s an easy way to distinguish whether your metric is one or the other:

  • If the metric is measuring how well you squeeze out waste or cost or measure maximum output for input, it’s most likely an efficiency metric. Marketing spend, ROI, and cost/per lead, lead/rep are examples of efficiency metrics.
  • If the metric is measuring how well you are contributing to or producing a desired result, it is most likely an effectiveness metric. Share of preference, share of wallet, products/customers are examples of effectiveness metrics.

efficiencyVSeffectiveness

As we have learned from over a decade of research on marketing metrics, many marketers are doing a good job of establishing, monitoring, and managing efficiency metrics and not as good of a job with developing, measuring, and managing effectiveness metrics.

This propensity to focus on efficiency metrics ultimately creates a problem for marketing. You can be improving efficiency, which has nothing to do with whether or not what you are currently doing is the right thing to do, while not actually becoming less effective. Effectiveness is about achieving the right result, or being on the right path. When we are positively impacting and contributing to the right result, then we earn our right to participate in strategic conversations.

It may be easier to identify, track and manage efficiency metrics but that may not be the only reason we see more efficiency related metrics. Many people assume that they are on the right track so if and when there is a problem, they address it by trying to make the process more efficient without questioning whether they are going in the right direction. But if you are going in the wrong direction, becoming more efficient will actually make the problem worse. For example, let’s say your company wants to grow its revenue by some amount. As a marketer, you believe you can affect this by producing some additional business from existing customers. So, you are monitoring and improving the inquiries, deals, cost per new deal, etc.  The company is growing but its market share is declining. Why, because the growth opportunity is really outside the existing customer segment. So while marketing is becoming more and more efficient at generating business from existing customers, the company’s market share is actually declining and the competitors are achieving greater market dominance.

What’s really important is effectiveness. In the end, it doesn’t matter if your business is spending the least amount possible or your demand-generation initiatives are streamlined. What matters is whether marketing is solving the right problems and moving the right business needles.

Before you start thinking about how to improve your efficiency, step back and think about how marketing is expected to move the needle and measure its effectiveness. Don’t misunderstand, efficiency is extremely important and you will need efficiency metrics. Improving efficiency can make a difference, but only if you’re on the right path.  And the only way to know that is to have effectiveness metrics in place as well. Efficiency is important, but powerless without effectiveness. Effectiveness opens the door for efficiency.