sales and marketing
Four Models Every Marketer Should Master
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!
Transitioning from Service Provider to Value Generator
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.
Value Generator
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.
Marketing Defined
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?
* * *
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.
Analytics: The Essential Ace in Every Hand
None of us would agree to play a card game with cards missing from the deck; we would know that the odds of winning would be significantly diminished. Yet surprisingly, many marketers are willing to implement marketing programs sans analytics.
In the past few weeks I have attended several marketing conferences. At each event, marketers are talking enthusiastically about how to make Web sites, SEO, social media, email campaigns, and mobile better. However, there is very little conversation about how to be smarter. Analytics is an essential card — actually an ace — in every marketer’s deck for enabling fact-based decisions and improving performance, and most importantly, for being smarter.
While the ace alone has value, when played with other cards its power is truly revealed. And when it comes to analytics, the other card is data. Yes — we have all heard the common complaint about the elusiveness of quality data. Unfortunately, data quality has been an issue in organizations for so long that it has now become the ready excuse for why marketers cannot perform analytics. To harness the power of your analytics card, identify your data issues and create a plan to address them.
Another reason that you may overlook this missing card in your deck is that guessing or gut instinct has been working well enough. Unfortunately, this approach may not suffice in the long-term and your “luck” may run out as organizations push to make “smart” decisions. As marketers, analytics is our opportunity to actively contribute to fact-based decisions. Through analytics, marketers achieve new insights about customers, markets, products, channels, and marketing strategy, programs and mix. It also enables marketing to help improve performance, competitiveness, and market and revenue growth.
As the importance of analytics gains momentum, marketers with analytical acumen will be in great demand. According to some resources, the complexities of data analysis and management are becoming so enormous that there is a shortage of people who are able to conduct analysis and present the results as actionable information. Taking the initiative and honing your analytical capabilities will enable you to make sure you have this ace in the deck — and preferably, in your hand.
Most of us are already working with a time and resource deficit. Try to find a way each quarter to bolster you analytical skills. Attend a conference, read a book, take a class, and bring in experts you can learn from. Here are some key analytical concepts and skills to add:
· Quantitative Decision Analysis
· Data Management
· Data Modeling
· Industry and Competitive Analysis
· Statistical Analysis
· Predictive Analytics and Models
· Marketing Measurement and Dashboard
If you can build your analytics strength, you’ll always have an ace in your pocket.
Power Up Your Marketing to Prove Business Value
Numerous studies throughout 2012 reiterated just how challenged marketers are in proving
Marketing’s business value.
The Capsicum Report found that “Marketers lack commercial acumen and don’t speak the language of the business, reporting their contributions in terms of ‘activities’ or ‘outputs’ rather than the business key performance indicators.”
The Economist Intelligence Unit reported that “the CMO’s traditional dilemma of demonstrating effectiveness, return on marketing investment, and relevance to the business still persists.”
The Forrester Evolved CMO study stated that “to prove their value and justify investment, they (CMOs) must tie marketing closer to business results.”
The 11th annual marketing performance management study conducted by VisionEdge Marketing and ITSMA reported a continuing trend of the C-Suite’s perception that only about 25% of marketers are able to demonstrate their impact and contribution to the business.
Some marketers, though, are cracking the code, and we can learn lessons from them as we work to power up our marketing.
One of the key differences about the stellar performers is that these marketers view and present themselves as businesspeople first. This elite group is customer-centric above all else, and it’s driven to transforming or establishing Marketing as a center of excellence within the organization.
These marketers work at ensuring that Marketing focuses on producing results that matter to the business, particularly in customer acquisition, retention, and value, and they are able to communicate those contributions in ways that are relevant to the C-Suite.
These marketers consistently apply five best-practices:
1. Aligning marketing activities and investments with business outcomes
2. Developing outcome-based metrics and reporting capabilities to demonstrate their
accountability
3. Employing and developing analytical skills
4. Investing in the infrastructure, processes, and systems to support their work
5. Building collaborative alliances with Finance, IT, and Sales colleagues.
They also recognize that deploying those best-practices is only part of the equation for boosting their performance and measurement competencies. They realize that playing a more strategic role takes added muscle, which they build by…
- Embracing strong talent, balancing creativity with science derived from valuable customer and market insights
- Emphasizing innovation for all aspects of marketing—related to strategy, implementation, processes, and so on.
Every organization can benefit from adding such power and muscle to their marketing team:
Take a look at the most recent 2013 Marketing Performance Management Report: Executive Summary (FREE DOWNLOAD) or Purchase the Full Report at the VisionEdge Marketing Online Store!
Measuring Relevancy: A Three Step Approach for Linking Content and Behavior
Various studies over the years have examined the relationship between content relevancy and behavior. Almost everyone would agree that content must be relevant. But what is relevance? According to Wikipedia: “Relevance describes how pertinent, connected, or applicable something is to a given matter.” A thing is relevant if it serves as a means to a given purpose.
In the context of this discussion, the purpose of content is to positively influence customer or employee behavior, such as increasing purchase frequency, purchase velocity (time to purchase), likelihood to recommend, productivity, etc.
When we ask marketers and others how they measure content relevancy, we often hear, “We base it on response rate.” If the response rate meets the target, then we assume the content is relevant; if response doesn’t meet the target, we assume it’s not relevant.
Clearly there is a relationship between relevance and response. Intuitively we believe that the more relevant the content, the higher the response will be. But measuring response rate is not the best measure of relevancy. Many factors can affect response rate, such as time of year, personalization, and incentives. Also, in today’s multi-channel environment, we want to account for responses or interactions beyond what we might typically measure, such as click-throughs or downloads.
So, what is the best way to measure relevancy?
The best-practice approaches for measuring relevancy are many, and many of them are complex and require modeling. For example, information diagrams are an excellent tool. But marketers, who are usually spread thin, need a simpler approach.
The following three steps provide a way to tie interaction (behavior) with content. It’s critical
that you have a good inventory of all your content and a way to define and count interactions, because once you do, you’ll be able to create a measure of relevancy.
The process and equation include the following:
1. Count every single piece of content you created this week (new Web content, emails,
articles, tweets, etc.). We’ll call this C.
2. Count the collective number of interactions (opens, click-throughs, downloads, likes,
mentions, etc.) for all of your content this week from the intended target (you’ll need to
have clear definitions for interactions and a way to only include intended targets in your
count). We’ll call this I.
3. Divide total interactions by total content created to determine Relevancy: R = I/C
To illustrate the concept, let’s say you are interested in increasing conversations with a particular set of buyers. As a result, this week you undertook the following content activities:
• Posted a new whitepaper on a key issue in your industry to your website and your
Facebook page
• Tweeted three times about the new whitepapers
• Distributed an email with a link to the new whitepaper to the appropriate audience
• Published a summary of the whitepaper to three LinkedIn Groups
• Held a webinar on the same key issue in your industry
• Posted a recording of the webinar on your website, SlideShare, and Facebook page
• Held a tweet chat during the webinar
• Tweeted the webinar recording three times
• Posted a blog on the topic to your blog
We’ll count those as 17 content activities.
For that very same content, during the same week, you had the following interactions:
• 15 downloads of the whitepaper from your site
• 15 retweets of the whitepaper
• 15 Likes from your LinkedIn Groups and blog page
• 25 people who attended the webinar and participated in the tweet chat
• 15 retweets of the webinar
• 15 views of the recording on SlideShare
That’s a total of 100 interactions. It’s likely that some of these interactions are from the same people engaging multiple times, and you may eventually want to account for that likelihood in your equation. But, for starters, we can now create a content relevancy measure:
R= 100/17 = 5.88.
Using the same information, had we measured only the response rate, we might have counted only the downloads and attendees—40 responses—so we might have had the following calculation:
R = 40/17 = 2.353
As you can see, the difference is significant.
By collecting the interaction data over time, we will be able to understand the relationship between the relevancy and the intended behavior, which in this example is increased “conversations.”
I strongly encourage you to consider relevancy as a key measure for your content marketing. By tracking relevancy, you will be able to not only set benchmarks and performance targets for your content but also model content relevancy for intended behavior.
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