Some years ago a retail credit card group I was working with decided

to change its store card to a full-service MasterCard. It was a very positive deci-sion, and one that was well ahead of its time. However, in the heady early days a decision was made to send out these new MasterCards to every customer, including all of the dormant accounts, without screening for credit.

Initially this decision increased the group’s revenues significantly, and things went very well for about six months. At around the six-month mark, though, credit failures started – and kept on coming. It got so bad that the card group was sold to reduce the losses for the retailer.

While the problem with this endeavor is clear to the most casual observer, this same problem exists in more discreet ways throughout financial services marketing. In financial services, marketing struggles with the usual challenges of branding, customer acquisition and customer reten-tion, but it also struggles with the risk associated with monetary transactions. So performance management for finan-cial services marketing groups is critical, and getting it right can raise not only the top line but the bottom line as well.

Marketing executives and their teams have been hampered by issues associated with managing the performance of their marketing organizations for a long time.

Performance management for financial services marketing groups is critical, and getting it right can raise not only the top line but the bottom line as well.

Managing marketing performanceSECRET FORMULA OR DISCIPLINED APPROACH? MarkMoorman

IDENTIFYING EFFECTIVE MARKETING PROGRAMSYou need to be able to track

the overall effectiveness of

marketing programs. I’m not

talking about specific cam-

paigns – like how the broad-

band cross-sell marketing

campaign did via the Web

with the three free months

offer to existing digital cable

customers. That’s a campaign

performance report. And,

while those detailed reports

are important, I’m talking

about an aggregated view of

the effectiveness across all

of those marketing programs

– both direct (e.g., personal-

ized e-mail offers and catalog

campaigns) and broader

media vehicles (e.g., search

engine marketing, trade pro-

motion and print ads).

By having both a top-down

aggregated view and the

ability to drill down into the

details, you will have a better

understanding of the impact

each program is having on

the business to determine

what the right media mix

should be.

Excerpt from “The ‘Holy Grail’ of Marketing Metrics” by Michele Eggers, Customer Intelligence Product Manager at SAS. Read the full article: www.sas.com/pmsupp-holygrail

R e p r i n t e d f r o m

Performance Management SupplementFinancial Services 2007

sascom®

magazine

These challenges include:• Aligning marketing activities and

resources to strategies and goals.• Linking marketing performance to the

company’s financial performance.• Maintaining accountability on the

marketing team.• Integrating and optimizing spending

across marketing.• Understanding and improving the

efficiency and effectiveness of marketing activities.

Financial services marketing depart-ments struggle with how to address these critical issues while also keeping in mind the ultimate goal: creating a customer-centered, strategic process within the marketing organization. To be successful, the process must be enabled by the right technology, easy to use, provide timely access to the right informa-tion and assure that the entire marketing organization immediately understands the impact of its decisions and actions – on both finances and customers.

The right metrics mean marketing magicUnderstanding the right metrics for your organization is vital. Organizations need to create standard marketing key performance indicators (KPIs) that are a compilation of marketing best practices. The areas that need to be covered are:• Marketing program metrics provide

insights into the efficiency and effec-tiveness of your marketing efforts.

• Customer metrics help you examine multiple customer dimensions to provide insights into their satisfaction, value, segment migration, etc.

• Business/financial metrics give macro-level sales, profitability and cost information to the CMO and other executives for a quick reading on the marketing department’s financial impact.

• Marketing process metrics focus on the efficiency of the entire marketing process to identify best practices and areas that need improvement.

Creating these KPIs is the most difficult process. Which events best describe the desired outcome, and how do you balance events so you don’t end up with unex-pected results? The story about the credit card organization driving up revenue but not watching risk is played out over and over in banks today. Whether it is account-opening drives that create more unprofit-able accounts, or cross-sell initiatives that move money from a more profitable product to one of lesser value, under-standing the right customer buttons to push and the right focus for your organization can be a real struggle.

Understanding the deep-rooted, causal relationships between metrics and the marketing activities that drive them is crucial. You need both a historical view and a forward look at trends, not just a snapshot in time. Analytics can help. Properly using analytics to look back so that you can more accurately look forward is a great place to start building KPIs that matter. Adding analytics to your marketing performance management initiative can help you:• Forecast the results of a campaign

targeted at high-value customers.• Validate the forecast and connect the

campaign to the results.• Identify trends that help you under-

stand aberrations and isolate factors such as seasonality, weather, etc.

• Direct resources to areas more likely to produce higher returns or proactively address issues before they happen.

All aboard!Once you have defined effective KPIs, you must map and disseminate this information throughout the organization. While we will not discuss the policy and procedure changes here, be aware that the bulk of the work of disseminating this information is human- and policy-related.

Your employees act according to their incentives, but that doesn’t automatically mean they’ll act according to the organi-zation’s overall performance metrics.

Therefore, proper incentive policies are critical to overall success. Once you have set incentive policies, the next critical step is delivering information. Control, security and timeliness are a few of the key issues with information delivery. It is important that you be able to manage the information from a central point of control but also offer many secured views of that data. This often requires powerful data access because the data is often stored in several different sources and requires a great deal of transforming and cleansing to make sense as a KPI. Look for technologies that provide:• Strong data access.• Robust data cleansing.• Multiple aggregation roles.• Role-based security.• Central management and metadata.• Web deployment.

In this day of performance-based management, marketing organizations are being asked to manage to create specific outcomes. But marketing is still more art than science. It is important to take the time to understand the effects of metrics on the business.

Be encouraged, though. There are valuable ways to approach this. Use the data you have. Use analytical analysis to define KPIs based on history and trends. Use technologies that access the data and present it in the most manageable way to the organization. And remember, it is a learning process. Like any other good learning, it may take time and patience and the right tools to perfect it. ■

BIOMark Moorman, Advisor in the Office of the Chief Technology Officer at SAS, works with customers, partners and SAS divisions to address changing business and technology dynamics. Prior to this role, Moorman led SAS’ Financial Services Practice.

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