marketing metrics

Best-in-Class Marketers Prove They Create Value

Posted on Updated on

In 2000, the Advertising Research Foundation probably didn’t realize that their report about marketing’s ability, or lack thereof, to measure its value and contribution would initiate numerous studies, conferences, and products on the topic.  This year’s joint VEM/ITSMA Marketing Performance Management Survey* , which looks at how marketers and C level executives would rate marketing’s value, revealed that 85 percent of the nearly 400 study participants are seeing increased pressure for marketers to measure marketing’s value and contribution.

Image

A key component of the annual study looks at the comparison of the number of marketers earning an ‘A’ grade from the C-Suite for their ability to impact the business and measure their value with their counterparts who are falling short. The grades remained relatively consistent with prior years, with only a quarter of the marketers earning an ‘A’ for their ability to measure and report the contribution of marketing’s programs to the business.

Image

By now one would think this journey would be nearing completion, but there appears to still be plenty to learn.  Over the years, the study has revealed that ‘A’ marketers exhibit a number of differences from their colleagues–they are better at alignment, accountability, analytics, automation, assessment, and alliances.  The investments in these capabilities and how they approach the work of marketing has enabled them to serve as value creators for their organizations.  On the other hand, the marketers in the “middle of the pack” focus more on enabling sales, and the laggards operate primarily as campaign or program producers. In this day and age, with all the technology that marketers have at their fingertips, it begs the question “Why can’t ‘B’ and ‘C’ marketers get close to C-level executives and show their value?”

Become a Value Generator

Marketing organizations that create value are proactive.  The ‘A’ marketers hold themselves accountable for contributing to business outcomes even if senior leadership doesn’t. They believe it is their responsibility to identify, investigate, evaluate, recommend, and prioritize market and customer opportunities. These marketers implement continuous change to maximize the organization’s success, and enable it to stay abreast or ahead of market, customer, and competitor moves.  ‘B’ and ‘C’ marketers don’t seem to do that, don’t ask the right questions, or don’t know how to show their value.

Make Marketing Performance Management a Priority

According to the data, organizations that are performing well when it comes to customer value and business growth, are those where the marketers excel at performance management.  ‘A’ marketers prioritize performance management, establish a clear roadmap for performance improvement, and focus on aligning marketing to the business not just sales. They have regular two-way dialogue with senior leadership and are motivated to select and report on the metrics that matter most.

Here are three qualities of this elite group that any marketing organization can emulate:

  1. Be a business person first, a marketer second
  2. Provide customer and market insight to inform business strategy, in addition to enabling sales
  3. Tap experts to hone skills and improve capabilities

Join the conversation with VisionEdge Marketing and ITSMA in our webinar, The Link Between Performance Management and Value Creation, Tuesday, June 17th, from 10:00-11:00am CST.

*VEM has been conducting the survey for 13 years. ITSMA has co-sponsored the survey for the past three years.

 

Loyalty vs. Retention Measurement

Posted on

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

Posted on Updated on

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

Posted on Updated on

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.

Just Add Data: Some Assembly Required

Posted on

Many companies tell us that they are creating a marketing dashboard to improve visibility and alignment.  As a key element of performance management, a marketing dashboard also serves as an important vehicle for assessing marketing’s contribution.  Almost every week, we’re working with a company who is trying to select the right performance metrics and develop an actionable marketing dashboard. In addition to internal factors,  good data is a vital ingredient to successful dashboard.  Data is needed to employ metrics and establish key performance indicators.  Without the data, it would be difficult to measure marketing’s value, determine how well marketing is moving the needle, and/or how well marketing is aligned with the rest of the organization and the overall strategy.  

However, even with the data, it’s possible for the metrics to distort reality.  For those of you investing in business intelligence tools and various marketing and sales software systems, remember to put the necessary checks and balances in place to evaluate the usage and quality of the data.  You will need  a way to quickly address data inaccuracies so that the metrics don’t steer execution in the wrong direction.  It will also be important to have a process for evaluating aspects of the organization that are hard to measure.

One thing to keep in mind throughout your journey is that metrics can help create alignment as well as improve and prove the value of marketing.  One of the most overlooked aspects of the performance management process is the dialogue it creates and the opportunity for organizations to discuss the meaning and implications of the metrics. The journey to create a Marketing Dashboard can be a difficult one, but once you have an excellent dashboard at your fingertips, you’ll see its value and will agree that it is well worth the investment. 

Creating a Change Agent Culture in Marketing

Posted on

This year, numerous studies of the marketing discipline and numerous articles highlighted the challenge and need for marketing to capture, manage, synthesize and leverage data and analytics. Marketing organizations around the world want to become more data-driven, but the explosion and rapidly growing volume of data as well as the lack of effective tools make this difficult. In the meantime, they are revamping their organizational lineup, adding more analytical talent and capabilities that enable them to boil oceans of data and produce mountains of reports.  

Access to this information and refined analytical and process skills create an opportunity for marketers to generate business-relevant insights. Having the necessary skills and technological infrastructure are becoming table stakes to successfully compete and serve customers. These capabilities are evolving into the building blocks of every marketing organization’s foundation.  Today, marketing leaders use data, analytics, metrics, and modeling to tackle point problem and to enable organizational change. To be effective change agents, marketing leaders need to move from being a blocking and tackling organization to taking a more holistic approach — one that integrates analytical, process, strategy, planning, and performance management expertise. 

Being a change agent is a noble aspiration, but what does that entail? Change agents are catalysts. A successful change agent improves the organization’s ability to achieve a higher degree of output. When acting as a change agent, marketing leads the creation of a vision of what could or should be. Marketers then identify what it takes to realize this vision and go about amending or replacing strategies, procedures, and processes that are obstacles to achieving the vision. We operate on two planes — one where the organization currently is, and the other being the ideal state. 

Since marketing should be the antenna for the organization — gathering and interpreting the signals — we are in a better position to act as change agents. The business environment is always changing, and therefore, the company that can create, manage and master change has the greatest potential to thrive. Being a change agent means more than just coming up with a brilliant idea — it is about bringing the idea to life and engaging the rest of the organization. Creating, managing and mastering change is a skill. The skills we have in marketing to connect and engage with external customers and prospects are the same skills we need to connect with and engage people within the organization. That’s what gives marketers an advantage as change agents. The steps we use to impact and drive change externally also enable marketing to impact and drive change internally. 

These vital steps are: 

1. Link change explicitly and tightly to real performance outcomes. Change is not for the sake of change; change should improve business performance. The result of change should be concrete, specific, quantifiable, business outcomes. 

2. Develop concrete initiatives that support the outcomes and focus on what it will take for these initiatives to affect the organization’s operation in a positive way. 

3. Include the human dimension in your calculations. People do what people do. They embrace, they resist, they obstruct, and  they rise to the occasion. Listen closely. People dodge drafts. Find ways to enroll people into the process.  

4. Develop and market the message. When we sell to different market groups, we develop appropriate campaigns. Employ this approach inside. Segment your internal markets and tailor the message accordingly. Leverage both the informal and formal networks. 

5. Disruption is an important part of the process. Being a change agent means you’re going to discomfit people around you. You’re going to interrupt the “way we do things.” As change agents you must be able to step outside of your own comfort zone if you want to take people outside of theirs. Key to being a change agent is producing and keeping a healthy tension alive in the organization. 

Here’s an important point to remember about being a change agent — the first person who must change is you. A change agent models the way. We must live the vision we see and the behavior it requires if we want others to do so. The rest of the team will be watching us. We must develop the skills and techniques to change how we work if we’re going to help others acquire the skills and techniques to change how they work. Being on the front line enables us to capture, manage, and synthesize market and customer data sooner and faster. As a result we are ideally situated to use analytics, metrics, and process to act as organizational change agents. 

More Data Does NOT Equal Better Insights

Posted on

We’re drowning in data. We generate it from our own activity or research; we collect and capture tons more from external sources. And, by now, all of us have been exposed to the conversation about Big Data—the voluminous unstructured data that is collected from nontraditional sources such as blogs, social media, email, sensors, photographs, video footage, and so on. 

As the number of channels and customer touches expand, so does the amount of data coming from them. Every day, there are more than a billion posts and 3.2 billion likes and comments on Facebook, and 175 million tweets on Twitter. According to Stephanie Miller, VP of member relations at the Direct Marketing Association, “data is big, getting bigger, and more complex (and expensive) to manage.” 

In today’s data-rich and data-driven environment, we are predisposed to gain our insights from data. But action doesn’t always follow collection. A survey of 600 executives by the Economist Intelligence Unit found that 85% of the participants thought the biggest hurdle to unlocking value from data was not grappling with the sheer volume, but analyzing and acting on it. And gleaning the insights from the data is what makes the data valuable. 

 Merriam-Webster defines insight as the power or act of seeing. Keyword: Seeing. We must use the data to identify and see—to see patterns, trends, and anomalies. And once we gain this insight, its value is proven by the actions we take as result. Data that doesn’t help you see isn’t useful. So, in this instance, more does not always translate into better insights. In fact, according to the recently released 5th annual Digital IQ Survey, consulting firm Pricewaterhouse Coopers (PwC) found that 58% of respondents agree that moving from data to insight is a major challenge. 

 In 1990, Stephen Tuthill at 3M helped make the connection between data and wisdom. His The Data Hierarchy outlines four important concepts: data, information, knowledge, and wisdom, with data being the raw items or events. Once we have the data, we can sort and organize it into information. Knowledge is then derived from the patterns that result from understanding the relationships between the data and other factors. Wisdom comes when we understand what to pay attention to—what has meaning for us. 

 So, rather than focusing on more data, we need to focus on capturing the right data and then analyzing it in a way that gives us the power to see (knowledge) and act (wisdom). Bernard Marr from UK-based Advanced Performance Institute reminds us that to get the most out our data “you need to know what you want to know.” Once you know what you want to know, collect and organize the data. 

So, now what? 

Getting From Data to Insight: 

1. Having the data is one thing, analyzing and synthesizing it is another. Synthesis is 

where we begin to see the patterns. Once the synthesis is completed, you will need a way 

to bring the data to life. Data visualization greatly aids in this part of the process. Data 

visualization presents analytical results visually so we can more easily see what’s relevant 

among all the variables, capture and communicate important patterns, and even support 

predictive models. Visualization is an important step for exposing trends and patterns that you might not have otherwise noticed. 

2. Not all patterns are germane. Take the time to review and discuss each pattern and its 

potential implications. Talk about why you think each pattern is important and what it 

means. This is an essential step for going from information to knowledge. 

3. In one simple statement, articulate the insight that emerged out of each pattern or 

point of synthesis. We find it is helpful to capture insight on a Post-it Note and place it on 

a wall or flip chart to easily track each insight and see the “big picture” that may be 

emerging as we go. 

4. Incubate the insights. Give yourself and your team at least a day away from the “board.” When you and the team return you can take a fresh look and decide whether to make any changes. 

5. Do the insights resonate? Once you are comfortable with the conclusions/insights 

you’ve captured, involve other people who were part of the initial steps to gain their 

reactions. Be sure to give them the context. The point of this step is to decide if the 

insights resonate and are compelling enough to make or affect key decisions. That is, to 

determine whether you have acquired the wisdom you need to act. 

The success of this approach is contingent on the quality (not necessarily the quantity) of the data set, then following a process proven to identify core insights to support strategic decisions.