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Executive Perspectives on Marketing ROI Adoption

By Jim Lenskold

The 2006 Mplanet conference featured insights from senior marketing executives and marketing thought leaders, along with stellar opening remarks from Dennis Dunlap, president of the AMA (read recaps of his opening at Hyku.com and MarketingProfs DailyFix). I had the privilege of leading a panel of senior marketing executives, featuring Eric Kintz of HP, Jim Pedrick from ING, and Chip Reeves of Dow Corning, to discuss their views on “Driving B2B Success with Marketing ROI.” This conference and the perspectives of my panel helped shaped my views on what to expect for marketing ROI progress moving forward.

The most important insight on marketing ROI did not come from any one individual but from the fact that accountability and financial measurements were prevalent throughout the entire conference. And it was not a casual reference or long-term expectation, but an expectation that this is a core responsibility and a key to improving the respect and credibility of marketing.

Based on the key takeaways from my panel discussion and the message embedded in the AMA’s vision for marketing, here is what I believe will be the trends in the marketing ROI space as well as priorities you should keep in mind. As you will see, progress will not come from new technologies or techniques but from increased adoption as we get smarter about addressing measurement challenges and recognize the opportunity to align marketing strategies and tactics with business objectives.

Increased Acceptance

Marketing ROI is being talked about in a much different way today than it has been over the past five years. There are clear signs of mainstream acceptance as marketing executives throughout the conference, covering a broad range of topics, consistently spoke of aligning their objectives with bottom-line impact and putting quality measurements in place.

Marketing ROI success stories from Dow Corning, ING, and HP on my B2B panel, as well as marketing metrics success stories from Yahoo! and Kraft on a separate B2C panel, are helping the marketing community recognize that better measurements and analyses can start at relatively simple levels and become more sophisticated over time. So expect further acceptance of financial measurements and accountability as a core part of marketing which, of course, will lead to increased adoption of marketing ROI practices.

Emerging Sense of Opportunity

Companies on the forefront of ROI measurement talk about their success with enthusiasm, not because they were able to answer the basic question, “What did I get from my marketing investment,” but because they were using the analysis to drive better strategic and tactical decisions. Jim Pedrick, CMO of Worksite and Institutional Marketing at ING, has leveraged his ROI analysis to drive his segmentation, improve customer retention, and generate profitable growth.

One point I stressed in my opening statements for the conference session is that we want to change the executive view of marketing beyond the point of a “justified expense” (which is better than a “discretionary expense”) and make it a “managed investment” where we run measurements and analysis for the purpose of making our next marketing initiative more profitable than the last. Expect to see the start of a shift in mindset in the upcoming year as marketers recognize that adopting ROI measurements is not just a “must-do,” but an opportunity to improve effectiveness and expand the role of marketing.

Attention to Culture & Capabilities

In his opening statement for the conference, Dennis Dunlap indicated that we face both increasing challenges and increasing opportunities. In terms of marketing ROI adoption, organizational culture and capabilities are both. All of the tools and techniques to improve measurements and analysis will mean nothing if you have not addressed the culture and capabilities.

In the early stages of adoption, you must remove all critical barriers and ensure that your group or a pilot team have the skills and capabilities to succeed. Beyond the minimum requirements, building a culture of learning and fact-based decision making becomes a huge opportunity. Chip Reeves, Director of Marketing and Sales Process at Dow Corning, shared his high-energy “Marketing ROX” flash video being used worldwide to motivate employees to seek a “Return on Everything.” Chip also issues annual marketing awards that recognize employees who have applied ROI analytics to drive performance improvements.

Better Data Access & Tighter Integration

The number one takeaways I highlighted from my panel session was that you can start with some basic ROI analysis, using “10 numbers and a spreadsheet,” and build from there. While that is true, it is best to concurrently take action on some of the harder initiatives that may take time. Getting better access to customer and financial data, which requires support from IT and other groups is one critical action item that should be on your priority list. The other is tightening integration across the broader marketing and sales cycle, which requires better alignment with the sales organization, external channel partners, across business units, and even within the marketing organization.

Cross-functional efforts are among the most challenging but also the most rewarding once completed. One of my favorite statistics comes from a research study by MathMarketing and MarketingProfs. Companies that have achieved marketing and sales alignment are growing 5.4% faster, closing 38% more proposals and churning 36% fewer customers. Each of those contributes significantly to ROI, in addition to the fact that greater marketing and sales alignment improves the ROI measurement and management process.

Executives on Board

Another key theme of the Mplanet conference was that the role of marketing had diminished over the years but that we’re heading into a new era of marketing. That can only happen if we are meeting the needs of the business and the priorities of our executives. As Eric Kintz, VP of Global Marketing Strategy and Excellence at HP, describes it “marketing strategy is business strategy.” Eric explained that “ROI is for us less about a specific measurement or model and much more an operational discipline that ties our key marketing activities to business results.”

Along with aligning marketing objectives to business objectives which will improve the dialogue with executives, we must also manage expectations. Marketing ROI is a journey that tends to start with smaller scale stages of success and builds momentum. It is not a one-time measurement or analysis that delivers all of the answers. Building the operational discipline takes time but there are plenty of profit improvements to achieve along the way.

If you look at my list of trends, accompanied by key priorities critical for success, you can see it covers acceptance and opportunity identification of marketing leadership and then expands to include the culture and capabilities across the marketing organization, involvement and alignment of cross-functional teams, and alignment with executives. This inward-looking focus is necessary to start and accelerate your marketing ROI adoption but we can’t lose sight of the fact that the ROI process actually centers on the customer. In fact the ROI process at Dow Corning actually emerged from their Voice of the Customer (Six Sigma) efforts.