We know–models can be intimidating. But as the need to add analytics and science to our work continues to increase, models have become one of the primary vehicles every marketer needs to know how to develop and leverage. If you’ve already dived into the deep end on models, congratulations. On the other hand, if you’re just dipping your toe into the water, have no fear, because while there may be a bit of a current, it is time to venture forth.
Mathematical models help us describe and explain a “system,” such as a market segment or ecosystem. These models enable us to study the effects of different actions, so we can begin to make predictions about behavior, such as purchasing behavior. There are all kinds of mathematical models-statistical models, differential equations, and game theory.
Regardless of the type, all use data to transform an abstract structure into something we can more concretely manage, test, and manipulate. As the mounds of data pile up, it’s easy to lose sight of data application. Because data has become so prolific, you must first be clear about the scope of the model and the associated data sources before constructing any model.
So you’re ready to take the plunge–good for you! So, what models should be part of every marketer’s plan? Whether a novice or a master, we believe that every marketer must be able to build and employ at least four models:
- Customer Buying Model: Illustrates the purchasing decision journey for various customers (segments or persona based) to support pipeline engineering, content, touch point and channel decisions.
- Market Segmentation or Market Model: Provides the vehicle to evaluate the attractiveness of segments, market, or targets. More about this in today’s KeyPoint MPM section.
- Opportunity Scoring Model: Enables marketing and sales to agree on when opportunities are sales worthy and sales ready.
- Campaign Lift Model: Estimates the impact of a particular campaign on the buying behavior.
These four models are an excellent starting point for those of you who are just beginning to incorporate models into your marketing initiatives. For those who have already developed models within your marketing organization, we would love to know whether you have conquered these four, or even whether you agree these four should be at the top of the list. As always, we want to know what you think, so comment or tweet us with your response!
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.
Are you one of those superhero marketing organizations? You know, the “1-800 I need a presentation, brochure, case study, or email campaign NOW” marketing organizations that takes urgent requests and turns on a dime?
Feeling pretty good about your responsiveness? If you said “yes,” we’d tell you congrats for being such a terrifically honed tactical machine, but—and, yes, there’s a “but”—we’d also tell you it’s your own fault if you feel as if you’re a hamster on a wheel.
There’s a difference between being a service organization to Sales and being a value generator for the company. As marketing professionals, our future depends on being the latter.
Let’s clarify the difference.
And, if you decide you are primarily a service organization to Sales and desire to be a value generator, see the five key steps at the end of the article for ideas on how to make the transition.
Service Organization to Sales
You know you’re a marketing organization that operates as a service organization if your day-to-day work primarily involves converting inputs (requests) into desired outputs (presentation, campaigns, collateral, etc.) through the appropriate application of resources (talent, information, etc.).
When Marketing acts as a service organization, its objectives and priorities are typically focused on service delivery (time, quality, and budget) and on Sales satisfaction (measured in “qualified leads generated by marketing”). Those types of measures often dominate the conversation between the two organizations, and this type of marketing organization aims to serve and solve tactical problems as efficiently and effectively as possible.
Some marketing organizations that operate in this fashion can be proactive, but ALL marketing functions that operation in this fashion must excel at being reactive. The challenge for these organizations is that it is very difficult to actually measure the contribution and value of Marketing, and the impact of investments in Marketing.
You know you’re a value generator if the work you are producing increases the worth of the organization’s goods/services, or it is focused on initiatives that create better value for customers, leading to appreciating share of wallet or loyalty, or better value for shareholders who want to see their stake appreciate.
Marketing organizations that act as value generators may be reactive at times, but true value generators are proactive. They believe it is their responsibility to identify, investigate, evaluate, recommend, and prioritize market and customer opportunities. These marketers focus on improving and implementing changes that will maximize the organization’s success and enable it to stay abreast or even ahead of market, customer, and competitor moves.
Product adoption/acceptance, customer acquisition, customer retention, customer growth, market share, etc. tend to dominate the conversations among this group.
In 2007, the American Marketing Association (AMA) redefined Marketing as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”
Most of us have come to accept that we have the main responsibility of achieving profitable revenue growth derived from acquiring and retaining profitable customers.
This definition and focus suggests that Marketing as a business function is intended to be a value generator, a task we jointly and equally share with our very important partners in the sales organization.
Five Initial Steps for Making the Transition from Service to Value Orientation
1. Own your company’s positioning
Creating customer value is increasingly seen as a key source of competitive advantage. The aim of all businesses is to create a value proposition that is superior to and more profitable than those of competitors. That value proposition becomes the basic ingredient for the company’s positioning. Trout and Ries introduced us to the idea that the company positioned as the leader gets about 50% of the market, No. 2 gets 25%, No. 3 gets 12.5%, and the rest of the competitors split the remaining 12.5%. Marketers who are value generators are responsible for positioning, and a key first step to transition to a value creator is to create and maintain the company’s positioning and all that entails.
2. Focus marketing on real value creation activities
Take the lead on keeping conversations and investments focused on developing a continuous stream of products and services that offer unique and compelling benefits to your customers. Some of your first efforts might include, but shouldn’t be limited to, product and process efforts, gaining insight into the needs of well-defined segments, harnessing data and analytics to accelerate efforts within existing markets or to create new markets, and reconfiguring company and/or industry value chains. Establish and own a sustainable process of value creation. If the work at hand doesn’t meet the criteria, discuss where it fits among the priorities for Marketing.
3. Develop a deep understanding of strategy
Marketing strategy is the critical link between marketing goals and marketing programs and tactics. Strategy selection provides focus and enables an organization to concentrate limited resources on building core competencies that create a sustainable competitive advantage to support pursuing and securing the best value creation opportunities. It provides the guidance and direction for channeling the organization’s marketing resources to generate market traction, penetration, and dominance.
4. Speed up
Opportunities don’t linger in today’s fast-paced dynamic customer-driven market. Remember, the time value of money concept says money received today is better than money received in the future. Speed of opportunity execution is just as important as speed of opportunity identification.
5. Define measures of success tied to value and impact
What more is there to say?
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Although the two types of marketing organizations are not mutually exclusive, marketing organizations on the hamster wheel rarely have the time, talent, or budgets to be value generators.
The rub is that today’s executives often expect more from marketing than servicing Sales. The C-Suite expects a measurable return on its marketing investment. To meet that expectation Marketing must be able communicate how it is relevant and to more resemble a value generator than a service provider. Generating value for the business requires working the numbers, then tracking and reporting on the performance to the numbers.
Taking a customer-centric view rather than an internally oriented Sales-support revenue-centric view and “doing the math” facilitate the creation of a marketing organization that is relevant, that can measure its value—and, more important, affect revenue and profit.
As 2013 winds down and we prepare to enter 2014, there are bound to be a few changes in the CMO line up. You say, that’s not news, CMO tenure is always a bit tenuous. But actually, that is less true today than ever. In SpencerStuart’s 8th Annual CMO Tenure Study, it was reported that CMO tenure is now nearly 4 years, compared to just 2 years back in 2006. While CMO tenure varies across industries, there are several attributes long- tenured CMOs share. First and foremost, these CMOs can demonstrate positive impact on the company and have impact beyond the “marketing agenda.” They also tend think more like business-people who are able to provide strategic direction and use data and analytics to make fact-based decisions.
In addition to being an exceptional, technically proficient marketer, there are three attributes we see among successful long-term CMOs.
1. Customer-centric. These tenured CMOs connect regularly with customers. They do more than conduct voice of customer research, review customer data, or meet with a customer advisory board. They are actively and regularly engaged in customer conversations. Do you describe your customers for example as engineers with X years of experience in Y industries, Y accreditations, who attends B events, reads Y publications, and uses Z social media? If this example seems familiar you may be missing the mark. These long-tenured CMOs have a deeper understanding of their customers’ needs, wants, emotional state and motivations, what it takes to engage them, and the kind of experience that needs to be delivered. These CMOs serve as the window into the customer for their companies. They are relentless in their pursuit to know and understand the customer.
2. Outcome-oriented. It is clear to the leadership team that these CMOs have marketing well aligned to the business with metrics and performance targets focused on producing business outcomes rather than marketing outputs. These CMOs understand that outputs such as visitors, fans, followers, etc. create more contacts, connections and engagements that are important. They also understand that their job is to translate these outputs into something relevant and meaningful to the leadership team, such as how marketing’s contribution is reducing the sales cycle/accelerating customer acquisition, reducing the cost of acquisition or retention, and improving product adoption and win rates. These CMOs have an excellent handle on what touch points and channels are most effective and efficient depending on the needle that needs to be moved.
3. Alliance-savvy. There’s been a great deal of coverage on how important it is for the CMO to have solid relationships with their Sales, IT, and Finance colleagues, and our research shows that Best-in-Class CMOs do more than that. These CMOs have forged formal explicit partnerships with these counterparts. They invest in these alliances because they believe that the partnership will enable the organization to be more customer-centric and more competitive. As a result, these companies are able to enter new markets and bring new products and services to market faster. What is different about the alliances formed by these CMOs? They work with their colleagues to plan, form, design, and manage a formal working agreement that focuses on developing the right working relationship, taking into the account that each function most likely operates differently. They create and execute an agreement that emphasizes how the organization’s committed resources will achieve a common set of objectives, how to leverage the differences to the company’s advantage, and how these differences are designed to facilitate collaborative rather than competitive behaviors among all the members of each team. Performance metrics are established to support the alliance with a focus on both the outcome of the alliance as well as the process.
Whether it be the stream of green lights you hit on the way to work or the person that holds the door for you as you juggle groceries, at the end of the day, we are most appreciative of the people and things that make our lives easier. Although technological innovation and automation have given us the ability to soothe many of our woes, we cannot forget that the human element is at the center of all things marketing. In light of this, we must ask ourselves, “Would I be satisfied as a customer or colleague in this process, and if not, how could I change it?” By exemplifying these traits of a successful CMO, the outlook of your operations will shift from being self-serving to philanthropic in nature.
Jamie, the VP of Marketing at one of our manufacturing companies, in a recent conversation expressed excitement about securing someone from the finance group to support marketing data and analytics. “It took 2 years of lobbying but now we’ll be able to make better and more informed decisions,” said Jamie. To which I replied, “Awesome!”
Then, in my usual fashion, I asked a series of rapid-fire questions:
- What decisions are you hoping to make and in what priority order?
- What and where is the data that they will be accessing?
- What is the data capture and management plan?
- Is he just going to start delving into the data( A.K.A. boiling the ocean to see what treasures await) or are there specific insights about customers or the market that you want to gain?
- How will his contribution be measured?
- Is his role specifically digging into and analyzing data- and if so for what?
- Will he serve your team in a broader capacity a.e marketing ops, performance management and reporting?
Well, you can see the line of questioning.
Jamie said, “Whoa, I didn’t really think about what he was going to do or how, I just knew we needed someone who was comfortable with data and analytics because this isn’t my strong suit.” I said, “Adding this capability to your team is a great win, and demonstrating how it will prove and improve the value of marketing will create an even more important win. Now that you have this person, it might be a good idea to take some time to think about and decide function’s scope, role, purpose, etc.”
Jamie said, “Yeah, these are good questions and getting off on the right foot and in the right direction is really important for the team and for him. It almost took a miracle to get this person; we won’t get a second chance at it.”
Jamie asked if we could schedule a meeting next week to discuss things further. I said, “Of course, it would be our pleasure. In the meantime, your person may find our Marketing Operations: Enabling Marketing Centers of Excellence and from Intuition to Wisdom: Mastering Data, Analytics and Models white papers helpful .” As we set a date for our next call, Jamie said in closing, “ Downloading these as we speak.”
As marketers we need to take the macro-environment into consideration when we’re creating any plan. With the election looming, there is a constant barrage of headlines suggesting that the U.S. economy is faltering and that the future could be bleak. Many of the themes emerging from opposing sides are designed to emphasize differences and polarize.
During periods of change and uncertainty, it makes sense that companies work hard to understand the implications of the results for several scenarios. Scenario analysis is a good exercise for strategic planning at any time. Most polls are showing a close election and suggest that we will continue to live under a divided government, accompanied by discord, debates and delay.
It might be heartening to know that since 1947 the president’s political party has switched back and forth eight times and the control of Congress has reversed even more frequently. Even with these changes in political power, the economy grew 85 percent of the time. Since 1982 the U.S. economy grew 90 percent of the time. In fact, the economy has expanded at an annual average rate of 6.6 percent, despite periodic recessions.
So while historically we know that political choices establish the framework for the economy, and while there is a lot of uncertainty about potential changes to that framework — especially in terms of government spending and tax and industry legislation — our government’s system of checks and balances tends to produce incremental shifts rather than dramatic swings. Financial markets and the economy tend to adapt quickly to any changes, resuming a business-as-usual
cadence despite policy changes.
The election will be in the history books in a few months, but the marketing investments needed to make to generate value for your organization will last far longer. That’s why you need to avoid getting caught up in the election hype. Don’t play politics with your planning. Using the election, waiting on the results to create your marketing plan and taking a “wait-and-see” approach to your investments are not the best course of action. The future of your business is more likely to be determined by your plan of action — or lack of a plan — than any election outcome. As we enter the election and planning season, here are five reminders to help achieve the best results:
1. Be Strategic: Choose the best strategy that will generate value for your company and industry.
2. Pick your Bets: Bet on a strategy tailored to your current situation designed to achieve your organization’s customer and market outcomes.
3. Follow the Boy Scout Motto – Be prepared: Don’t wait until the end of the year to prepare for calendar year 2014. This will only put your organization behind today’s global competition.
4. Semper Paratus– (Always Ready): You are more likely to achieve next year’s performance targets if you have a plan ready to implement when the new fiscal year begins.
5. Develop your plan and make quality strategic marketing investments aimed at moving the needles for the business.
While change and uncertainty may make planning more difficult, they also make it more essential. A good plan takes into the account the extra risk the business may face. In times of uncertainty it is important to step back and identify risks, consider scenarios, and continue to innovate. Rather than using the impending political climate as an excuse for “battening down the hatches” or to taking a “wait and see” position, the best course of action is to maintain a long term perspective designed to manage potential risks and move your organization forward.