Analytics
Performance Management For Marketers
As early as the 1940s, business leaders began developing processes to enable and evaluate how employees contribute to the success of the organization. These processes became the foundation for what we refer to as performance management. With the increased pressure on business leaders to be more personally accountable for the performance and conduct of their organizations, the emphasis on performance management has trickled down and across the organization, which includes marketing.
Performance management focuses on optimizing individual or group performance in order to achieve the organization’s key initiatives and objectives – and it includes the metrics and the data, measurement, alignment and analytical processes, methodologies, capabilities and systems needed to manage the performance of an organization. A sound marketing performance management process is essential for enabling marketing professionals to demonstrate and communicate the impact of marketing on — and contribution to — the organization.
Lately, we’ve been hearing many colleagues use three performance management terms interchangeably: marketing effectiveness, marketing accountability and marketing measurement.
While these three terms are complementary, they are also distinct from one another. Each serves an important role in the performance management process.
Here is one way to understand the nuances surrounding these terms and help you use them in your performance management journey.
Marketing accountability is a broad concept that reflects the ability of marketing to explain the basis for its actions. Accountability implies reporting, while marketing dashboards serve as its vehicle. Accountability has a computational aspect and covers a range of marketing capabilities, processes, and metrics. There are a number of possible marketing metric categories.
One such metrics category is marketing effectiveness, which measures the ability of marketing to produce a specific result. Another common and separate metric category is marketing efficiency. Being able to actually measure marketing effectiveness takes marketing measurement.
Marketing measurement is the act or process of measuring. Marketing measurement is essential to being able to perform marketing accountability.
These three terms are related, but not interchangeable. Each is an important aspect of marketing performance management. The whole point of performance management, marketing accountability and marketing measurement is to help marketing optimize its performance and achieve meaningful business results. The best way to approach marketing performance management, accountability and measurement is to see it as a continuous, process -one that can be repeated – which is designed to help you measure, analyze and learn so that you can make more informed decisions and successfully produce more and better predictable business outcomes.
7 Key Steps for Creating a Performance-Driven Marketing Organization
Members of the leadership team expect marketing to generate value for their organization. Why? For many organizations, over 80% of their value is derived from intangibles. These intangibles, such as marketplace position and customer relationships, are often produced by marketing initiatives and result from marketing investments. Therefore, it’s no surprise that the leadership team’s expectations and pressure on Marketing will continue to rise. Generating value requires marketing to help the organization capture market share, increase customer lifetime value and grow customer equity. It is essential that Marketing maps out a clear direction and, as we say in Texas, ‘Get ’er done’.
‘Getting it done’ takes performance management. While Marketing Performance Management and measurement is not new, the current business climate has increased the emphasis on marketing accountability and analytics. Joan Ritter wrote in The Technology Executive, huge leaps in technology, together with the instant gratification of real-time campaign measurement in Internet marketing, have converged to bring the issue of marketing accountability to the front page of the business section.
Even improvements in the economy will not diminish the C-Suites’ focus on marketing accountability, effectiveness and measurement.
Many marketing organizations, however, are not getting ’er done. For over ten years we’ve conducted a marketing performance management and measurement (MPM) study. The most recent results reveal that over the past decade, Marketing hasn’t made much progress in regards to performance measurement and management. In fact, 10% of the 446 respondents assessed their marketing organizations as completely ineffective (10.3 percent) in measuring marketing performance, compared to 12.5 percent choosing completely effective. Three in four respondents rated their organization’s effectiveness in measuring marketing performance as only somewhat or marginally effective. These results are very similar in terms of responses to this same question in previous years. We have found that Best-in-Class marketers stand out. They are better with statistical significance in their ability to align marketing with business outcomes and clearly convey their impact and contribution to the organization.
7 Easy Steps That Start Your Journey
Wondering which way to go next? Here are 7 easy steps to get you heading in the right direction on your journey;
- Alignment: Establish direct-line-of sight between Marketing initiatives and investments and business outcomes.
- Metrics: Create outcome-based metrics and maintain a metrics catalogue.
- Data: Leverage accurate, timely data. Develop a Data Dictionary and Data Source Inventory,
store this information in an accessible format, and update it regularly.
- Analytics: Hone your analytics skills so you can gain insights from your data and build
models.
- Performance Setting & Tracking: Commit to set outcome-based performance targets for
every program and track results.
- Dashboard: Produce an actionable marketing dashboard that quickly and visually conveys
your contribution to the organization and facilitates course adjustments.
- Refine It & Start Over: Keep in mind that continuous improvement takes a ’reiterative
process’; a test and learn culture. What you do today will feed back into the process in the
future. In this way we learn from each activity and adjust our future actions accordingly. Where to start on your journey? The very first step is to address the challenges of alignment and accountability. Addressing these two gaps requires Marketing to clarify the strategic intent of all the investments it makes on behalf of the companies it serves. Marketing accountability requires marketing professionals to have data, analysis, and measurement skills. They must be fact- driven. Both of these may require a significant cultural shift and changes in the personnel roster.
Improving and refining what you do today will change your results tomorrow. If you are not satisfied with the way things are, then change them. Consistent gathering and evaluation of information will lead you to better decisions and better results. Isn’t that really what it is all about?
Analytics and Marketing Ops: A One-Two Punch for Growth
Today’s customers are more value-oriented and less loyal creating even greater challenges in today’s business climate. With customer expectations increasing, the competitive landscape growing, the proliferation of new technologies and channels, and the avalanche of data, marketers needs more than intuition and experience to succeed. The world is just too dynamic and the pace of change is just too fast. In fact, the deluge of data is actually fueling the growth of analytics. As Dave Frankland of Forrest once said, “the goal is not to collect data, but to develop insights.” Insights are the purview of analytics. Analytics are algorithms advanced and/or mathematical techniques on large volumes of data that help marketers translate data into actionable insights to help drive marketing and customer strategies and optimize marketing efforts.
Analytics is hard and time consuming so why make the effort and investment? A High Performance research study by Accenture found that companies that invest heavily in their analytic capabilities outperform the S&P 500 on average by 64% and recover more quickly during economic downturns.
How are the high performers different? First, they have above average analytical capabilities. Second they have better decision support analytical capabilities. Third, they more highly value analytical insights, which seems obvious or they wouldn’t have invested in the first two. And finally, they use analytics across their entire organization, including sales and marketing. Julio Hernandez, a partner at Accenture, says, “Companies need to be analytically inclined and data- driven in order to turn insights into action for driving growth.”
How can you use analytics to drive growth? Marketing analytics help you answer questions such as: “Which customers are worth paying a lot of attention to? Which ones are worth less?” Analytics helps you evaluate and address five growth opportunities:
- Acquire more valuable customers
- Acquire customers who will buy more from you
- Acquire customers who will buy your more high value products/services
- Retain high value customers longer
- Determine which marketing activities have the greatest impact on accelerating customer acquisition and improving retention
Companies use analytics to make decisions related to business operations, competitive moves, staffing and skill requirements, customer strategy, positioning and messaging, marketing optimization. Even so few companies really invest in analytics. A 2011 Ventana Research study included input from more than 2,850 organizations found that more than half of organizations still spend the majority of their time in unproductive data preparation and quality assurance processes, rather than in applying analytics.
There are so many possible analytic projects to evaluate it may be hard to know where to start. To prioritize projects we recommend you evaluate projects against two criteria: ease of execution from easy to hard and value derived from low to high. Score each project and classify them into one of four categories.
- High-Value/Easy-to-Execute- Must Do’s
- Low-Value/Easy-to-Execute – Quick Hits (things you can do in 30 days or less)
- High-Value/Hard-to-Execute- Transformative
- Low-Value/Hard-to-Execute- Nice to Have
We recommend you focus on the high-value/easy-to-do first. This is the way to demonstrate fast high value wins. Then tackle the easy-to-execute/low-value for the next set of fast wins while you put a plan in place to address the hard-to-execute/high-value projects.
The math associated with analytics is only one step. Here are a few items that should be on your checklist before “doing the math”:
- Establish a clear methodology you will use to guide your work.
- Define the business objective and desired outcomes.
- Analyze and select the most appropriate data sources to support the outcomes and scope of work.
- Select, extract, and transform data upon which will be used to create models.
- Create, test, and validate models
- Apply model results
- Manage and modify models to improve performance
It’s probably become evident that an analytics approach to marketing takes skills and resources. In their book The Four Pillars of Profit-Driven Marketing, authors Leslie Moeller and Edward Landry claim that being good at analytics is not enough. Analytics along with the tools to disseminate the insights from analytics, the processes that makes sure analytics is not an afterthought and the organizational infrastructure are the keys to success.
How do you scale it? Most companies have some analytical capability, usually residing in a market research or intelligence function. We believe the optimal way to scale is with marketing operations. Marketing operations is oxygen for growth. A properly chartered and resourced marketing operations function facilitates an agile marketing organization. These marketing organizations define efficient and scalable processes, including data capture and management; use analytics to identify and recommend ROI-led marketing investment, including developing models to optimize channels; and facilitate strategic planning and growth by using analytics to develop market and customer segmentation models.
Our research shows that many organizations have someone performing some part of the marketing operations function, primarily budgeting, research and planning. As we approach 2012 and continue to try and manage a business environment that most of us would describe as uncertain, perhaps it is time to invest in the infrastructure and skills to achieve the next level of capabilities on your marketing metrics and analytics journey.
To Survive and Thrive Takes Analytical Muscle
Today’s CMOs (chief marketing officers) face a set of completely different challenges than their predecessors. The CMO role has continued to evolve over the past fifteen years as a result of the emergence of new media, the growing number of sales and service touch points, more complex distribution models, and the fragmentation of customer segments. As a result, the CMO has moved from focusing primarily on brands and clever advertising to a larger, more strategic role designed to enable a company to meet the ever-changing needs of a diverse and global customer base. The Business Week article “The Short Life of the Chief Marketing Officer,” reported that the average tenure today for a CMO is 26 months. Recently, the CMOs at Chico’s, Home Depot, MySpace, and Rite Aid left after short tenures while Orbitz recently announced that it has “decided to eliminate the global Chief Marketing Officer position and continue managing the Company’s marketing efforts on a regional basis…”
If a short tenure is the norm, what can a CMO do today to survive and thrive? To survive and thrive, CMOs need to see themselves as champions of growth who can anticipate customers, develop their organizations’ marketing capabilities, and measure marketing’s impact on the business in terms that matter to their CEOs, CFOs, and leadership teams. This will require CMOs with a bent towards the analytical end of the marketing spectrum instead of the creative end. Successful CMOs will need to exercise analytical muscle and have a deep understanding of the business landscape in order to predict and recommend which markets, products, and/or services will deliver the most profitable revenue growth.
Six Survival Tips
According to board members surveyed for the MarketBridge study, CMOs with greater quantitative focus and measurement emphasis have a 20 percent longer tenure. Specifically, surviving CMOs will need to exhibit these six skills:
- Move business-focused responsibilities to the front and center.
- Talk in the language of business. This includes reading balance sheets, understanding business models as well as key drivers of business value, and identifying key growth opportunities.
- Leverage emerging marketing channels to build strong brand loyalty, reach targeted audiences, and gain insight into customer needs.
- Understand which metrics are valuable for demonstrating the impact of marketing on the business.
- Build collaborative teams committed to adding and demonstrating value to the business.
- Prove that the investments they are making on behalf of the company are working.
Five Ingredients for Thriving
While surviving CMOs will focus on lead generation, pipeline management, branding and customer acquisition, the most important ingredient for thriving CMOs is their ability to increase their stake in growing customer lifetime value and focus on developing long-term customer profitability.
Four remaining essentials for the thriving CMO include:
- Embracing analytics and metrics and leading the way for marketing performance management initiatives.
- Closing the gap between marketing and the customer, leading the charge for a customer-centric business strategy, and serving as the “voice of the customer”.
- Leveraging data to analyze market and customer trends and strengthening their knowledge of ethnography, lead-user analysis, and online customer communities to create customer-driven products.
- Taking the helm in helping the company anticipate and respond to rapidly changing market and customer needs, creating new business models, and leading the charge in establishing new marketing capabilities.
CMOs who want to survive and thrive must actively align every brand under the corporate umbrella with the core values of the corporate entity and reconcile the brands with one another. They must initiate intra-business collaborations that develop, deliver and communicate a value proposition that resonates with customers. Only by building tight relationships between marketing and the rest of the organization and developing relationships outside the business will CMOs be able to tap into customer information that enables the business to extend into emerging markets and bring innovative products to market. CMOs will need to use their creativity to develop new ways to gain a deeper insight into the needs of customers and understand the trade-offs that will be required to design innovative products that meet customers’ buying criteria. The global market is growing in complexity. Only those CMOs who can leverage data-management tools and processes to help companies maintain a consistent brand while optimizing pricing, placement and promotion within specific markets and connecting marketing to the business, will be left standing.
To Survive and Thrive Takes Analytical Muscle
Today’s CMOs (chief marketing officers) face a set of completely different challenges than their predecessors. The CMO role has continued to evolve over the past fifteen years as a result of the emergence of new media, the growing number of sales and service touch points, more complex distribution models, and the fragmentation of customer segments. As a result, the CMO has moved from focusing primarily on brands and clever advertising to a larger, more strategic role designed to enable a company to meet the ever-changing needs of a diverse and global customer base. The Business Week article “The Short Life of the Chief Marketing Officer” reported that the average tenure today for a CMO is 26 months. Recently, the CMOs at Chico’s, Home Depot, MySpace, and Rite Aid left after short tenures while Orbitz recently announced that it has “decided to eliminate the global Chief Marketing Officer position and continue managing the Company’s marketing efforts on a regional basis…”
If a short tenure is the norm, what can a CMO do today to survive and thrive? To survive and thrive, CMOs need to see themselves as champions of growth who can anticipate customers, develop their organizations’ marketing capabilities, and measure marketing’s impact on the business in terms that matter to their CEOs, CFOs, and leadership teams. This will require CMOs with a bent towards the analytical end of the marketing spectrum instead of the creative end. Successful CMOs will need to exercise analytical muscle and have a deep understanding of the business landscape in order to predict and recommend which markets, products, and/or services will deliver the most profitable revenue growth.
Six Survival Tips
According to board members surveyed for the MarketBridge study, CMOs with greater quantitative focus and measurement emphasis have a 20 percent longer tenure. Specifically, surviving CMOs will need to exhibit these six skills:
- Move business-focused responsibilities to the front and center.
- Talk in the language of business. This includes reading balance sheets, understanding business models as well as key drivers of business value, and identifying key growth opportunities.
- Leverage emerging marketing channels to build strong brand loyalty, reach targeted audiences, and gain insight into customer needs.
- Understand which metrics are valuable for demonstrating the impact of marketing on the business.
- Build collaborative teams committed to adding and demonstrating value to the business.
- Prove that the investments they are making on behalf of the company are working.
Five Ingredients for Thriving
While surviving CMOs will focus on lead generation, pipeline management, branding and customer acquisition, the most important ingredient for thriving CMOs is their ability to increase their stake in growing customer lifetime value and focus on developing long-term customer profitability.
Four remaining essentials for the thriving CMO include:
- Embracing analytics and metrics and leading the way for marketing performance management initiatives.
- Closing the gap between marketing and the customer, leading the charge for a customer-centric business strategy, and serving as the “voice of the customer”.
- Leveraging data to analyze market and customer trends and strengthening their knowledge of ethnography, lead-user analysis, and online customer communities to create customer-driven products.
- Taking the helm in helping the company anticipate and respond to rapidly changing market and customer needs, creating new business models, and leading the charge in establishing new marketing capabilities.
CMOs who want to survive and thrive must actively align every brand under the corporate umbrella with the core values of the corporate entity and reconcile the brands with one another. They must initiate intra-business collaborations that develop, deliver and communicate a value proposition that resonates with customers. Only by building tight relationships between marketing and the rest of the organization and developing relationships outside the business will CMOs be able to tap into customer information that enables the business to extend into emerging markets and bring innovative products to market. CMOs will need to use their creativity to develop new ways to gain a deeper insight into the needs of customers and understand the trade-offs that will be required to design innovative products that meet customers’ buying criteria. The global market is growing in complexity. Only those CMOs who can leverage data-management tools and processes to help companies maintain a consistent brand while optimizing pricing, placement and promotion within specific markets and connecting marketing to the business, will be left standing.
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