the science behind the art of marketing
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The Science behind the Art of Marketing
Sanoma Media Parade- June 2012Caroline Vervaeke
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The questions we ‘re facing:1. To what result can a + - change in the marketing
budget lead?2. To what result can a change in the marketing
mix lead?
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Marketing Performance Calculation is complex
This might be an understatement……
Doing more with less budget
Proving the added value of the marketing efforts
Increasingly price-sensitive customers
Not satisfied with the results of social media
YMS results 2012
DM becomes a mass medium with decreasing success rates
Boost of channels and media
Fragmented audiences & fragmented attention
Multitasking & switching off
Exaggerated focus on short term brand activation
Marketing trends
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Why NOW is the time for the right Marketing Metrics
“70% of the buying process is now complete by the time a prospect is ready to engage”
(SiriusDecision Inc.)
“65% of CEO’s give their marketing departments an insufficient for measuring the marketing impact”
(VisionEdge Marketing & Marketo 2010)
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But where do we start?
Customer Acquisition Cost
Customer DefectionBrand recognition
Top of Mind
Brand awareness
Click Through Rate
Number of leads
conversionNet promotor score
Brand preferences
Facings
Conversation
Profitability metrics
Innovation metrics
Growth metrics
Number of customers
Web analytics
Sales metrics per channel
Sales metrics per segment
Redemption rate GRP
OTS
OTH
Advertising effectiveness
Customer advocacy
Customer Lifetime value
Share of walletShare of market
Retention rate
Churn rate
Customer satisfactionShare of voice
reputation
Time to market
Opening rates
Number of visitors
Customer Retention
Number of complaints
Revenue metrics
Net profitmargin
There is no 1 truth for all companies
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But where do we start?
Customer Acquisition Cost
Customer DefectionBrand recognition
Top of Mind
Brand awareness
Click Through Rate
Number of leads
conversionNet promotor score
Brand preferences
Facings
Conversation
Profitability metrics
Innovation metrics
Growth metrics
Number of customers
Web analytics
Sales metrics per channel
Sales metrics per segment
Redemption rate GRP
OTS
OTH
Advertising effectiveness
Customer advocacy
Customer Lifetime value
Share of walletShare of market
Retention rate
Churn rate
Customer satisfactionShare of voice
reputation
Time to market
Opening rates
Number of visitors
Customer Retention
Number of complaints
Revenue metrics
Net profitmargin
There is no 1 truth for all companies
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Think in a structured way, start by asking some relevant questions
1. What exactly influences our customers today?
Check the Decision Making Progress
And match the importance of the marketing mix elements with the importance of the touch points
ànd the importance of the metrics
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Think in a structured way, start by asking some relevant questions
2. How well informed (really) is your marketing judgment?
Start by formulating hypotheses about the impact of changes in the marketing mix/budget, and thèn seek analytical evidence
Data remain only as useful as the expertise you bring to bear, and good judgment will remain a hallmark of the best marketers
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Think in a structured way, start by asking some relevant questions
3. How are we managing financial risk in our marketing plans?
ROI risk
Risk ParametersMax % of spending on unproven vehicles f.i. 20%
Max % of decrease on proven vehicles f.i. 15%
Create a breathing room for piloting, testing & learning
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Think in a structured way, start by asking some relevant questions
4. How are we cooping with added complexity in the marketing organization?
Specialists are NEEDED
External?
Good integratorFocused
On the bottom line
Clarity in processes, Responsibilities
Internal/external
Impact on Marketing expenditure
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5. Do we have a measurement plan & what metrics should we track?
Think in a structured way, start by asking some relevant questions
“44% of qualified marketers have no idea what a 10% budget increase could do for their company”
(Lenskold Group’s 2010 BtoB Lead Generation Marketing ROI study)
Invest up to 10% of your marketing budget in measurement, including testing.
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The key question: what metrics do we choose?
1. Typical marketing metrics rarely have impact in the board, so keep them internal to marketing
Brand awareness, GRP, OTS, OTH, CRT’s, OR, TOM…..
2. CEO’s only take business objectives into account. Marketing metrics have to prove impact on those objectives
GROWTHMAINTENANCEREVENUEPROFIT
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Marketing Drivers
Products / Technology
Services
Communication
Purchase Process &Experience
RelationshipBuilding
ChannelManagement
Price Positioning
Segmentation & Targeting
Positioning
Scope
Marketing Strategy
Business Paradigms
Business objectives
THOM’s Value Capturing model
Marketing Strategy
Marketing Drivers
Customer Equity
Marketing Value
Measurement plan, including the right metrics ànd assumptions
Commercial Efficiency Plan
Price Premium
Market Share
Marketing ValueCustomer Equity
Intention
Awareness
Perception &Reputation
Preference
AcquisitionEngine
RetentionCommitment
Recommen-dation
Behaviour
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You need a plan upfront
It is not about proving ROI, but improving ROI
1. Establish targets & ROI estimates upfront, based on business objectives
2. Design marketing programs to be measurable: what, when, how
3. Focus on decisions that will improve marketing programs = commercial efficiency
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Key message 1: Prioritize your metrics, based on marketing priorities
Marketing ValueLow High
Low
Hig
hConsolidate/
improve
Drive customer equity
Boost Brand Building
Drive sales conversion
Marketing Drivers
Products / Technology
Services
Communication
Purchase Process &Experience
RelationshipBuilding
ChannelManagement
Price Positioning
Cu
sto
mer
eq
uit
y
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Key message 2: Metrics should not only make us able to take decisions today, but also for the future
DECISIONS
Strategical: Target group, Channel, Offer ….
Operational: In store, image campaigns….
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Key message 3: avoid wrong metrics
Vanity metrics: likes, press views, business cards ….
Quantity metrics: GRP, leads, nr of spots/displays/leaflets…
Activity metrics: nr campaigns, promotions, ….
Efficiency (doing things well) <-> effectiveness (the right things)
Cost metrics: cost/lead, cost/contact, OOP media budget….
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What about soft metrics?
Soft measures
Hard measures
THINKING
BEHAVIOUR
Awareness
Knowledge
Liking
Preference
Conviction
Trial
Purchase
Re-purchase
• Too often marketing department excels in measuring soft measures
• Exceptionally the link is made with hard measures
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Key message 4: Importance to incorporate the hard metrics
Revenue metricsAggregate impact on
company revenue
Marketing Program PM
Incremental contribution of individual mkt
programs
Profit per customerLTV of an incremental
customer
PAST PRESENT FUTURE
Lead generationCycle time
Investment Pipeline
contributionProgram ROI
Average selling price
Conversion rate versus trend or
benchmark
Response rateLift over control
group
Investment to acquire cust.
Marginal cost to serve
Size prospect DBMkt contrib.
forecast
Expected contribution
forecast
Retention ratesProd /customer
NPS
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Key message 5: Choose no more than 5 key metrics and put them in perspective
- Choose wisely because it’s hard to put organizational focus on more than 5
-Measure success versus goals for those metrics for every campaign, every channel, every product…..
How did we do?
What is working ?
How will we be doing?
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Key message 6: Assure implementation and recognition
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So, suppose your CEO's kindly asks you to decrease your budget with 10%?
1. Make your homework and check the 5 questions2. What are the most important metrics compared to the
different assumptions given?3. Decrease budget with no more than 15/20% of the less
performing vehicles4. Be sure to incorporate the impact of related marketing
programs in your decision5. Make new assumptions and calculate the impact on the
revenue metrics
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At a glance
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Establish metrics, goals and ROI estimates upfront
Limits the number of metrics and keep focus on decisions to make
Use data to prove assumptions
Invest up to 10% of your marketing budget in measurement
Don’t put more than 20% of your marketing plan at risk
Link your marketing metrics to the company objectives to gain credibility