performance management

5 Steps to Improve Your Marketing Accountability

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What is marketing accountability?

Accountability has become another business buzz-word. We all think we know what the word means and we all think we do it. When you review the definition of accountability, it doesn’t really shed much light on its importance, “ac•count•a•bil•i•ty [uh-koun-tuh-bil-i-tee]: the state of being accountable, liable, or answerable.” (Dictionary.com).

We can turn to the AMA for a more specific definition. The AMA defines marketing accountability as:

“The responsibility for the systematic management of marketing resources and processes to achieve measurable gains in return on marketing investment and increased marketing efficiency, while maintaining quality and increasing the value of the corporation.”

Perhaps VEM’s perspective will help drive home the concept. Accountability is the measuring and monitoring of the commitment a person, group, or organization makes to deliver specific, defined results. We have found that accountable marketing organizations are both accountable to the financial and strategic initiatives of the organization. When marketing examines the ROI of a program it is addressing the financial side of the equation.

Measuring marketing’s commitment to moving the needle regarding market share growth or an increase in customer value are examples of being accountable for the strategic initiatives side of the equation. Both necessitate aligning marketing objectives with business outcomes and linking marketing to a company’s financial performance.

Performance Management Takes Measurement

“You can’t manage what you can’t measure.” This time-tested adage from management guru Peter Drucker applies now more than ever given the continuous scrutiny on marketing. Best-in-class marketers understand this idea all too well and are investing in the infrastructure (tools, systems, skills, processes) needed to develop a fully accountable performance-driven outcome-based marketing organization. These organizations aren’t only focused on being more efficient (reducing costs and waste), but improving their effectiveness and strategic value with laser-beam focus being on improving business results.

Notice two operative words: performance-driven and outcome-based. Accountability starts with an outcome, a result that needs to be accomplished. Marketers have tended to concentrate on outputs, the “stuff” we produce, and the ROI on these outputs. Best-in-class marketers are shifting from being output-oriented to outcome-based.

For example, rather than reporting on the number of people who attended a webinar and the associated ROI, these marketers are reporting on the number of qualified opportunities against the expected performance target for a webinar and how many of the opportunities ultimately converted into sales worthy prospects.

Performance-driven marketing organization leverage performance management techniques. Performance management is the process of measuring progress toward achieving key outcomes and objectives in order to optimize individual, group or organizational performance. VisionEdge Marketing research over the past nine years found that marketing performance management is a top priority for the C-Suite (CEOs, CFOs, COOs, etc.).

The bottom line, as marketers we must still prove the business value of marketing, that is we must be ever more diligent and vigilant when it comes to marketing accountability.

The need for marketing to embrace performance management is not new. The Advertising Research Foundation study highlighted this finding back in 2000. Despite the number of tools added to the marketing arsenal, performance management remains elusive for many marketers. Why? In our work we have discovered that many marketing organizations lack the data and tools they need to measure and manage performance and those that have the tools and data often lack the analytics, metrics, performance targeting, and measurement sills. These problems will continue to plague marketing organizations until they focus on and acquire the analytical approaches and skills, the right data and data collection processes, and the right measurement skills and tools.

Most importantly accountable marketing requires develop meaningful action based measures and metrics. This year’s study by Unica (now part of IBM) found that turning data into action, measuring results and effectiveness remain among the top priorities for marketers.

Steps to Improve Your Marketing Accountability

There are two things every marketer can do to improve their accountability. First, ensure the link between marketing objectives and the associated programs, tactics and activities are directly linked to specific quantifiable business outcomes. Second, demonstrate the value of marketing by setting, monitoring and reporting on relevant measurable marketing objectives, metrics and performance targets to the leadership team.

Easier said than done you think? True. But these five initial steps will go a long way toward enabling you to start and accelerate this important journey.

  1. Conduct an audit to identify alignment, data and process gaps.
    It’s hard to know where to go and where to aim if you don’t know your current state. Use the audit to identify and add the right talent, systems, and tools to help automate marketing processes and improve marketing performance. Assess the crucial data, analytical and measurement skills your team needs and provide training.
  2. Create and adopt a performance measurement and management strategy, system and metrics and measurement framework that aligns marketing with the business outcomes.
    Design and select metrics and clear standards of performance that enables marketing to measure its impact, effectiveness, efficiency and value. It’s important to understand the select the right metrics. Marketing metrics should tie to our three primary responsibilities: acquiring, keeping and growing the value of profitable customers. Therefore the metrics we select should in some way indicate the impact marketing is having on market share, customer value, and customer equity.
  3. Engage the leadership team and form strategic partnerships with an extended team of finance, IT, sales, service, etc.
    In 2005 the Tuck School of Business facilitated an executive roundtable with nearly 20 CFOs and CIOs from some of the largest companies in the world, including Cisco, IBM, Eaton, Whirlpool and Citigroup. Why? Because CFOs and CIOs along with other members of the C-Suite “have increasingly become key partners in a variety of initiatives critical to business success.” Performance management is one of these critical business initiatives. CFOs often lead the internal discussion about metrics and performance management. CFOs are also taking the initiative to develop standard, consistent measurements that focus on leading indicators of value creation. CIOs and IT play a major role in creating and maintaining the infrastructure and data needed to support performance management. Marketing accountability is key to performance management. The elevation of their roles plus the leadership team’s renewed focus on productivity, business value and performance management require marketing to build bridges and allies finance and IT and engage them and other key members in the marketing performance management journey.
  4. Create and align processes, policies and practices that ensure the linkage between marketing objectives and programs with business results.
    As a result the marketing organization will be properly and strategically positioned and pulling in the same direction as the rest of the organization. Organizational development research has shown that proper alignment of people and organization’s result in higher productivity for less effort. When you have achieved alignment the link between marketing project, programs and initiatives and the broader company outcomes is explicit. And each member of the marketing team understands the impact of their daily activities on the outcomes. Once you take this step you will be able to prioritize projects based on their value and impact rather than what’s most familiar or easiest.
  5. Develop a multi-level dashboard to report performance and results in real-time to facilitate course adjustments and foster decision making. Make your marketing dashboard an iterative and collaborative effort. A good marketing dashboard facilitates decisions. If your marketing dashboard doesn’t enable you to make course adjustments, know what is and isn’t working, and communicate the value of marketing in financial and strategic impact terms then it’s time for a dashboard makeover.

For many marketing organizations these steps may require process and cultural changes. So marketing accountability is not a journey for the weak or timid. However, there have been enough studies over the years to suggest that by implementing marketing accountability you will be able to hold or add to your marketing budget AND you will become more effective at using marketing to drive business results.

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Ways to Manage Performance Pressure

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In today’s environment, marketing teams are under increased pressure to manage smarter, act more like a business, and improve and report performance. And they’re expected to do this while every aspect of marketing is under scrutiny and budgets are at risk. This intense pressure to perform is forcing many marketing organizations to explore how to do a better job of optimizing their resources and maximizing their results.

A Matter of Metrics

Even though most marketers know we’re under the gun to measure and manage performance, the ANA’s  marketing accountability study revealed that despite enormous efforts, 42% of marketers remain dissatisfied with ROI measurements and metrics. What’s the hold-up? It may have something to do with our creative roots and the types of metrics marketing tends to lean toward.

For example, often when marketers speak about metrics, they’re really talking about measuring activities and efficiency rather than effectiveness and impact. For example, a common marketing metric, cost-per- lead, frames the results not in terms of revenue or growth, but as a cost. This approach to metrics and analytics is actually a recipe for a lower marketing budget. It doesn’t tell management anything about the contribution marketing is making to revenue, which is marketing’s primary responsibility—generating profitable revenue.

Michael Caccavale wrote in Sales & Marketing Management this past June that, “In general, marketers are good at managing their marketing systems in-house on a day-to-day basis. But the skill sets used to create these reports and analyses are different than those needed to assess the information in a database to make decisions about how to track customer behavior and attack the marketplace. While company marketing departments have plenty of talented ‘creative’ types, they may lack the ‘left-brain’ analytics.”

The drive for more performance measurement and management in marketing is no surprise. Our cousins in sales have always been performance-driven and held accountable to a revenue number. The sales organization is seen as a revenue driver because it operates in terms of producing positive numbers. Yet, in order for marketing to align with sales and impact business as a revenue driver in its own right, marketing also needs to measure itself based on positive numbers and revenue. The more we can tie marketing to revenue, the more we can demonstrate effectiveness and value—and the more the budgeting discussion is about how much money we need to allocate in order for marketing to hit its numbers so that the sales, product and other teams can hit theirs.

Implementing the Right Tools and Culture

To manage and measure performance, marketing organizations and personnel need metrics, systems, tools, processes, new skills and a culture of accountability. These are a completely different set of skills from what marketing has relied on years past when our primary focus was to develop creative to drive interest and awareness. But our budgets and future survival depend on our ability to add these metrics, data, analytics, processes and systems capabilities to our skills mix. While many of us know this, the challenge is the implementation.

As a result, many organizations are creating a “marketing operations” function to bring these capabilities to life and transform marketing into a performance-driven organization. According to IDC, many companies are adding marketing operations managers to their organizations. And even more companies are starting to make the investment in marketing operations. Over one-third of the respondents in the MarketingProfs/Forrester Research “2008 B2B Marketing Trends in Strategies and Spending” indicated that they plan to increase their investment and over half plan to keep it the same.

Essentially, marketing operations is defined as an operational discipline that leverages processes, technology, guidance and metrics to help run the marketing function as a fully-accountable business. As a result, by definition, marketing operations people tend to be more data, analytically and process inclined. By adding a dedicated marketing operations focus, organizations can leverage process, technology, guidance and metrics to run the marketing function as a profit center and a fully accountable business.

The Marketing Operations Roadmap

You’re convinced and you’ve already established a marketing operations function, or you are going to? Terrific! Then it probably makes sense for you to be sure your marketing organization is applying best practices. Our research at VisionEdge Marketing suggests there are five best practices a marketing operations function can utilize to help marketing become a performance-driven organization. These are:

1. Data
2. Metrics and Measurement 3. Processes
4. Systems and Tools
5. Reporting Results

To facilitate the adoption of these best practices and to fulfill its role the marketing organization should create a strategy roadmap. To create the roadmap you will need to complete a strategic assessment that most likely includes conducting an executive stakeholder analysis, creating a business case, and identify the business outcomes marketing is expected to impact. Once this step is complete you will be able to assess your skills, systems, process and tools gaps, and develop your plan to close these gaps. The road map will need to identify what infrastructure, data, analytics capabilities, performance setting and measurement, data collection and analysis, and reporting processes will be needed. The roadmap can serve as an important vehicle for highlighting skills and training requirements and culture and change management.

As part of the roadmap, you should establish and secure agreement on the marketing operations charter, scope, role and responsibilities. Remember, while marketing operations will set up metrics to measure marketing’s performance, there will also need to be metrics to measure the marketing operations’ impact and contribution too.

As long as we live in a dynamic competitive environment, marketing will always be under pressure. However, by establishing marketing operations whether as a function and/or a discipline, developing a strategy roadmap to run marketing as an accountable business, and incorporating the best practices, marketing leadership and personnel can relieve some of pressure.

Four Errors Marketers Make When Measuring Performance

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All too many marketers are doing that these days. If you doubt it, check out a survey by the Association of National Advertisers and Marketing Management Analytics.

The poll found that almost all companies have created some type of accountability process, but
that more than half of all marketing execs are dissatisfied with it. CEOs and CFOs are frustrated with the measurement — and definition — of return on investment, and poor response to ROI data.

Worse, only 55% of the marketers surveyed indicated their ROI goals were closely aligned with their company’s overall strategy. And 51% said they had no goals at all.

My firm’s own research has produced similar results. Our conclusion? Marketing must demonstrate the value it contributes and calculate payback for the money it invests on behalf of the company. Yet there is a gap between expectations and action.

Here are four destructive pathologies:

1. Marketing plans are not aligned with business goals
CMOs know what’s expected of them, but they’re not quite putting these expectations into practice. With the exception of market share, the performance indicators featured in most marketing plans are not tied to larger business goals — they’re focused more on short-term or incremental measures.

2. Metrics don’t match expectations
Here again, there’s a disconnect between goals and action. Marketers know they must measure indicators tied to increased profitability, yet the metrics they use do not reflect this need.This discrepancy is particularly noticeable when looking at the top two business and marketing priorities: Increasing share in existing markets and increasing share among existing customers. It turns out that marketers are not proactively tracking market share, and also not tracking and reporting the metrics most closely associated with the two priorities.
These measurements are falling by the wayside:
* Customer acquisition rate.
* Share of distribution.
* Share of voice.
* Share of preference.

And while customer loyalty is being tracked, other customer metrics are being neglected,
including:
* Purchase frequency and recency.
* Customer lifetime value.* Length of customer tenure.
* Share of wallet.
3. Intentions and investments are out of sync
What’s keeping marketers from improving performance? They lack the internal processes and
tools needed to acquire pertinent data. What’s more, they’re not making the necessary investments. Only a third have a budget for training workers to keep tabs on and boost marketing performance.
4. Best practices are still elusive
An overwhelming majority assert that it’s important to stay abreast of marketing performance
management and measurement best practices, yet most don’t do any benchmarking. Too many
fail to audit and benchmark their metrics regularly, and fewer than half plan to do it in the near future. The result: Marketers lose their ability to assess and improve customer acquisition and retention.

Unfortunately, none of this is new. Our survey’s findings are a culmination of trends we’ve seen during the seven years it’s been conducted. Marketers know that they have to be able to
measure and report on the impact and value of their work. Yet they find it difficult to do this.

Improvement doesn’t come by wishing it were so. The answer is to invest in skills, analytics and processes. That’s essential.

Marketing: More Than Just A Pretty Face

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The marketing professionals within the customer organizations we work with often tell us they have been relegated merely to tactical implementers who make things pretty. We often hear them say they are perceived as the team that makes the Web site pretty, the presentations prettier, the trade show booth attractive, the online demo cooler, the new product brochure snappier, and so on. Perhaps you’re sensing a theme here? Marketing is more than the “make it pretty” department. Our goal as marketers should be to leverage the creative aspects of marketing to enable our organizations to fulfill the role of any business to attract, keep and grow the value of customers.

We can use the American Marketing Association’s (AMA) definition of marketing as a guide for how we can be more than just a pretty face. The AMA defines marketing as “an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” This definition dictates that marketing must be more than a creative function.

If you want to make over your marketing to play a more strategic role, then focus on leveraging four customer-centric processes:

1. Create Value Marketing sits in the space between the company’s capabilities and what the customer wants. By understanding the core capabilities of the company, and then matching it with customer wants and needs, marketing drives value creation. This means marketing must fully understand the customer. In this capacity, the marketing organization serves as a driver of an organization’s value chain by ensuring that products and services are shaped by customer expectations and demands.

2. Communicate Value In order to be the chosen supplier for your customer, you first have to be on your customer’s “short list.” In order to be on the customer’s “short list,” you need to know what the customer values so you can communicate how your company and its products/services deliver on this value in such a way as to create preference for your company and its products/services over alternative options. Every customer touchpoint affects the customer’s decision and action; therefore, every touchpoint needs to be tied to and communicate the value proposition.

3. Deliver Value By establishing a strong link between customer value requirements and the major value-producing activities in the company, marketing has the unique role of enabling the company to deliver on customers’ value expectations. Marketing can then use these value expectations to drive customer preference and stimulate purchase decisions. One way to think of this is that at every customer touchpoint — whenever a customer will be affected by a decision or action — the people involved in that touchpoint need to understand and deliver on the value. In some organizations this is known at “moments of truth.” Marketing is in the unique position of being able to look across all the touchpoints and monitor whether the value is actually delivered. Through constant monitoring, marketing can help determine whether it is delivering on its value promise and whether the value proposition needs modification.

4. Manage customer relationships We need to think beyond technology when we think of customer relationship management (CRM), and instead realize that CRM is a business philosophy in which the customer plays a central and critical role in all business activities. While we can debate who “owns” the customer, marketing is in an ideal position to be the centralized point for aggregating, segmenting and analyzing customer data. This ability to create a single view of the customer comes with responsibility: the responsibility to take a leadership role in creating and managing the processes associated with the company’s customer relationships.

For organizations to grow, the leadership team relies on marketing for more “than just the pretty stuff.” It should depend on marketing to develop marketing strategies that create and deliver superior perceived customer value. With this emphasis on increasing value, marketing can help the firm achieve growth by penetrating existing segments, developing new markets, and creating new products and services. As a result, marketers should be willing to own and be accountable for these four processes if they want to serve as growth champions within their organization and leave the “make it pretty” syndrome behind.

Embracing Cross-Channel Analytics to Create a Competitive Advantage

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There has been more discussion about cross-channel analytics as more organizations leverage both digital and traditional vehicles in their communication mix.

The emergence of Yahoo Web Analytics, Adobe’s acquisition of Omniture (recall that Omniture acquired Visual Sciences, WebSideStory, Offermatica, Instadia, and TouchClarity), and Google’s continued push into the enterprise all signal an increased emphasis on multichannel data analysis.

Before exploring what cross-channel analytics is and how marketers can use it to analyze customer behavior, it makes sense to define analytics and how analytics is being used by marketers.

Basically, analytics is about deriving insights from data. Analysis involves breaking data into smaller parts to increase insight.

For example, chemical analysis entails breaking down chemical processes to understand the chemical reactions between elements of matter. In their books Competing on Analytics and Super Crunchers, Thomas Davenport and Ian Ayres, respectively, make compelling cases for the value of a structured analytics practice in business as a way to create a competitive advantage.

Davenport says that the creation of strategic data assets and business processes is one of the “last remaining points of differentiation” in an increasingly competitive world. More specifically, marketing analytics is a methodical examination of customer and market data to increase understanding of the customer and the market to make and take action to improve your competitive advantage.

What Is Cross-Channel Analytics?

Organizations that pull together data from various marketing programs across different channels use cross-channel analytics to understand the impact of each channel on customer behavior.

For example, in today’s environment, we may need to gather data from an email campaign, a physical event, and an online advertising campaign to better understand purchasing behavior and correlate marketing programs with purchases.

Cross-channel analytics enables you to measure the interaction of various channels, such as websites, customer service, phone support, and print media, to understand how those channels relate to one another and affect customer behavior.

If you believe that customers and prospects are the same regardless of the channel they choose to use, then you must believe that it is time to leverage the data flowing in from every channel to better understand the customer.

For example, if a retail marketer implements a multichannel campaign, the marketer will want to analyze the relationship of the different marketing channels on shopping behavior.

The complexity occurs when a retail marketer implements a multichannel campaign designed to affect both online and offline shopping, and then wants to analyze the relationship between online and shopping behavior across all the channels.

That example can apply to numerous industries, such as financial services, hospitality, communications, etc. The message for every marketer is that such an analysis requires more skills and better tools than the traditional marketing analytics that we’ve previously used to delve into the impact of an integrated campaign on a specific behavior.

What It Takes to Do Cross-Channel Analytics

If you are using multiple channels and you want to both understand what’s really working and enrich your customers’ experiences with your organization, then you’ll have to step into the world of cross-channel analytics.

However, with data spread out across so many applications and locations, doing cross-channel analytics can be tricky. You’ll need skills, tools, and models that go beyond Web analytics. Web analytics focuses on visitors’ behavior, whereas cross-channel analytics tracks individual behavior across channels to understand your customers and their experiences and actions.

Cross-channel analytics requires path-to-conversion analysis and cross-channel synergy analysis. Path-to-conversion analysis requires that you assess all the “events” in the customer pathway that the customer has been exposed to that contributed in some way to the customer’s conversion.

Identifying cross-channel synergies requires looking at how different elements of the communication mix work together to move a customer through the buying process. Assuming that each element contributes something to the conversion path, the questions you want your cross-channel analytics to answer—at a minimum—are these:

  • What percent did each element contribute to the path to conversion?
  • What is the ratio between those elements?
The Value of Cross-Channel Analytics to Current Tools

Cross-channel analytics brings value to many of the business intelligence (BI) tools you’ve already invested in. Here are a few ways that cross-channel analytics adds value to your forecasting, predictive analytics, and modeling capabilities:

  • By creating and using forecasting algorithms from both digital and traditional channels, you will be able to estimate sales based on changing customer behavior. The statistical models you will build will allow you to determine a level of confidence regarding various buying segments’ behaviors.
  • And as your analytical and cross-channel analytics capabilities improve, you will be able to develop models that can predict traffic and revenue impact associated with changes in the communication mix, which can be used, for example, to make real-time adjustments to keywords used in pay-per-click marketing efforts.
  • Cross-channel analytics can make your modeling capabilities and marketing-mix models more effective because you will have a better understanding of the relationship between the different marketing channels and improve your use of decision optimization tools to determine the combination or sequence of messages to maximize engagement and sales.
 The Implications of Cross-Channel Analytics

Gartner reports that the global market for analytics applications, performance management, and BI solutions was $8.7 billion in 2008—roughly 20 times the global investment in Web analytics.

Cross-channel analytics is going to require every company to invest more in acquiring and analyzing data to produce true insights and recommendations that are valuable to the business. As the need for whole-business analysis increases, marketers will need tools and models that bridge online and offline data.

Because customers today can move across several channels in the process of making a single buying decision, marketers are deploying cross-channel marketing and leveraging every communication channel.

Successful cross-channel marketing requires a sophisticated marketing solution that can help marketers analyze customer behavior, make customer-centric decisions, and respond quickly to marketing opportunities.

The ability to overlay many complex layers of data to generate a holistic view of customer behavior and campaign effectiveness has numerous implications for marketing professionals, from improving analytical skills to improving data quality to investing in better tools.

Marketers are going to need to embrace statistics, modeling, and predictive analytics.

 

Five Best Practices for Sales Enablement

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IDC recently reported that salespeople spend about a third of their time on direct customer interactions, 16 percent on prospect interactions, 18 percent on preparing for sales calls, and 9 percent on territory and lead development, but more than 25 percent of their time on administrative tasks. Both inside and field salespeople spend about three hours per week acting as “pioneers” by mining for customer and industry data when preparing for sales calls. Once they get the information they need, they spend more than six hours per week creating presentations. They also spend more than two hours per week looking for marketing collateral. Unfortunately, about 50 to 90 percent of what marketing creates is never even seen by salespeople. IDC calculated that if a company can save one sales rep about 10 minutes per week on administrative or sales prep work and reapply that time to selling activities, it could potentially gain about $57,000 per rep per year as a result. This is the idea behind sales enablement, that is what can companies do to minimize the time salespeople spend on administrative tasks, optimize preparation time, and prioritize selling time? Below are five best practices every company can adopt.

1. Aligned Marketing and Sales Performance Targets: Study after study reveals the downside of poor marketing and sales alignment: longer sales cycles, eroding margins, failed launches of new product, fewer qualified opportunities, missed quotas, redundant  and ineffective marketing and sales materials, inconsistent messaging to the market, and ultimately diminished shareholder value. While it takes some efforts and lots of communication, the performance targets for these two organizations needs to be in sync, this start with common planning against common business outcomes.

2. Map sales and marketing assets to their use cases. This is the domain of Marketing Asset Management and Digital Asset Management solutions. Organizations typically invest a lot of money in creating the right tools needed by the sales force to move prospects forward in a sales cycle and close them. Even so, research suggests that salespeople still spend an average of 40% of their time preparing client-facing deliverables, while leveraging less than 50% of the materials (assets) created by marketing. As a result, many companies have created home grown approaches (intranets, file servers, etc) where the marketing organization can upload an asset for the sales person to access. Often a sales person spends too much time trying to find the right materials for their particular instance. And over time, the intranet or shared file directory begins to contain hundreds of marketing documents such as brochures, data sheets, sales tools, email templates, customer success stories etc. The names of the files may not be descriptive enough – as a result one cannot clearly discern the content from its file name. As a result of these issues and more, the ROI on sales and marketing tools tends to be lower than expected and the two organizations are disappointed in each other. By mapping assets to use case many of the issues of which assets to use can be overcome. By using an MAM platform both teams will be able to improve and control access to assets.

3. Define and document the marketing and sales process before adding any supporting technologies – such as CRM or Marketing or Sales Automation solutions. If the process isn’t defined prior to the implementation, configurations may end having to be reworked causing deployment delays, lack of usage, and cost overruns. Before implementing any technology conducting a marketing and sales process working session and then take 60- 90 days to validate the process to make sure what the team believes is the process is truly the way the process works. Make changes as necessary and update the process map. The process map can then be used to create the business rules for the technology.

4. Identify key improvement drivers. This seems rather obvious but if you don’t know what it will take to improve performance then people will do whatever they think will work. By identifying the improvement drivers, an organization can take a systematic approach to improving sales performance and create repeatable processes that can be applied to new sales people in order to accelerate ramp up time and productivity.

5. Establish shared performance metrics in advance. When Marketing and Sales are working from different performance metrics they can potentially be working at cross purposes. Or even more importantly one team may be achieving their metric at the expense of the other. It’s easy to see how sales and marketing can get sideways when you examine the lack of alignment between commonly used metrics. For example sales metrics often include, revenue per salesperson, Average sale cycle, Average deal size, Sales representative turnover rate, New rep ramp-up time, Average administrative time per rep, Percent of representatives that achieve quota , Average time to close, Average price discount, Percent of accurate forecasted opportunities, Average number of calls to close the deal, Average number of presentations necessary to close the deal, Average number of proposals needed to close the deal, and Average win rate. We’ve seen marketing performance metrics such as these Marketing dollars as a percent of revenue, Average return on marketing, Total leads generated, Average response rate, Lead qualification rate, Lead close rate, Percent of marketing collateral used by sales representatives , Change in market penetration, Improvement in time-to-market , Number of feedback points, Marketing execution time, Message close rate execution time, and Message close rate. All of the metrics are very internally focused. One of the best ways to create shared metrics for sales and marketing is to take a customer-centric approach and create customer related metrics. We’d recommend agreeing on the joint metrics at the start of each year and reviewing performance against these metrics together.

4 Steps to Improve the Value of Marketing

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Ted Levitt, author of The Marketing Imagination, writes, “The role of marketing is to create and keep customers.” A marketing plan is a valuable instrument in helping Marketing plot a course of action for how it will go about creating and keeping customers.

Now that 2012 is less than 50 days away, you are likely tackling your marketing plan and budget. The pressure for marketing organizations to justify their spending, prove their programs’ contribution to the organization, and demonstrate value is only increasing.

A study this summer by Forbes Insights found that being able to measure marketing is “not taking a backseat” and that proving “how budgets are used remains a strong priority.”

Given the current economic climate, it is important to make every investment count. The issues of alignment and accountability are inextricably linked. Without alignment between Marketing and the business, it’s impossible to quantify the value Marketing is providing to the business, let alone focus on the right metrics to establish progress toward helping the organization achieve its goals.

And without the ability to demonstrate value, the budgeting process becomes a game of guesswork because there is no link between expenditures and desired results.

This past summer, a study with more than 4,000 top marketers by The CMO Survey found that marketing spending is expected to increase—with the caveat that Marketing be able to measure its impact.

An initial step every marketing organization can make, regardless of whether it has sophisticated data systems or measurement tools, is to develop a customer-centric, metrics-based marketing plan.

Such a plan serves as the foundation for improving marketing accountability. If developed properly, it will provide you with guidance on how to measure Marketing’s effectiveness and value.

These three steps can help ensure you are properly aligned with your organization and help you secure your marketing budget:

  1. Secure clearly defined business outcomes.
  2. Establish outcome-based marketing objectives.
  3. Develop performance-based programs.

1. Secure Defined Business outcomes

One of the most important steps you can take to help Marketing be more successful is to ensure you are aligned with the organization’s business outcomes.

An organization needs clearly defined business outcomes to be successful. Business outcomes need to be quantified so it’s clear what change is required. Since Marketing doesn’t market to buckets of revenue, marketing organizations that work from a revenue target are operating blind when it comes to business outcomes.

When you are working with your leadership team to clarify the business outcomes, be sure you secure the following information:

  • How many “customer deals” does the organization need?
  • How many of those deals will come from current customers buying current products?
  • How many of those deals will come from current customers buying new products?
  • How many of those deals will come from new customers, and where are those new customers located? In the same verticals and geographies we’ve always done business with? In new verticals and geographies.

Once the business outcomes are defined, you want to clarify what the organization expects Marketing to do with regard to those business outcomes and how Marketing’s effectiveness and contribution will be measured.

Keep in mind that the business outcomes are how the organization will measure success at the end of the time horizon. They are specific and quantifiable, for example:

  • X% of Tier 1 current customers will adopt WIDGET X, resulting in $ of revenue.
  • Acquire X number of net new customers in ABC segment to increase market share by Y%.
  • Marketing is expected to contribute 100% to X% of Tier 1 current customers’ product adoption of WIDGET X.
  • Marketing is expected to contribute 100% of the net new customer qualified opportunities in ABC segment.2. Establish outcome-based marketing objectivesThe business outcomes serve as the foundation for your marketing objectives, and each marketing objective should align directly to at least one of the business outcomes.

    Measurable marketing objectives articulate how Marketing will move the business closer to reaching the business outcomes. The objectives should be measurable and time-bound.

    For example:

  • Increase preference for ABC product among top share determiners in XYZ markets from A to B by end of 2Q.
  • Generate X number of qualified leads within six months of product launch at $Y/lead. Outcome-based measurable marketing objectives facilitate metrics development. The example showsshare of preference, qualified leads, and cost/lead-related metrics.Frame your objectives to reflect Marketing’s three core responsibilities: finding, retaining, and growing the value of customers. Those responsibilities directly relate to what most organizations are trying to improve as a result of revenue and sales: increased market share, customer lifetime value, and customer/brand equity.

Once you craft the objectives, secure agreement from the leadership team that accomplishing those objectives will constitute success. It is essential to secure this agreement before tackling the strategic and program-development elements of your plan. Without the agreement, you may be in for a significant rework.

3. Develop performance-based programs

A study by Forbes Insights suggests that marketers need to determine the overall success of a marketing program prior to implementation and then measure performance against those targets.

That exercise refers to program performance target-setting. Difficulty in setting performance targets is one of the most common challenges marketers face.

Long gone are the days when we can list something as generic as public relations or advertising. And the days where we could use output-based targets, such as a monthly email campaign to prospects or one webinar per month, have also gone by the wayside.

Today, marketers need to set outcome-based targets for their programs. So instead of a performance target of one webinar per month, an outcome-based target might be generating some number of Stage 1 phone appointments.

What are performance targets, and what does setting one entail?

A performance target is basically a stake in the ground that indicates what the program needs to achieve to be deemed successful. The selected measures and targets must be relevant to the objectives and outcomes.

The value of performance targets is that they help drive performance improvement, bring focus, enable course adjustments, and assess effectiveness.

Having baseline data is very helpful when setting program performance targets. A program’s past performance doesn’t necessarily indicate its future performance, but understanding what has been achieved, at what cost, and in what time frame can be useful information.

To establish the performance target, you need to clarify what result or action constitutes success. The closer success can be behaviorally defined, the better.

Once you know what behavior you want to motivate, then set a numerical range of performance (i.e., rather than setting a hard target of X, consider using a range, such as from X to Y). It will be important to attribute the action/behavior to the program and to verify the results.

Be accountable for the money

Organizations give Marketing money to invest on their behalf. The leadership team expects Marketing to use those funds to develop and execute strategies that will result in consideration and preference for the organization’s products and services.

Over time, they want us to achieve results better, faster, and less expensively. If Marketing is unable to meet that expectation, the leadership team will reallocate its investment.

When you tie investments back to outcomes and performance, you stand a better chance of securing your budget. The three steps suggested in this article enable Marketing to communicate how it is investing its resources to provide business value.

To be effective, Marketing needs to ensure alignment to business outcomes and to develop outcome- based marketing objectives and performance-based targets for its programs, tactics, and activities.