Tag: B2B Insights

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Archived Research

2008 Lead Generation ROI Study

Lenskold Article Series

by Jim Lenskold

2008 Lead Generation ROI Study

This was the first research that branched off to dig into B2B Lead Generation marketing (the general marketing research continued in during this year as well). 


  • Benchmark study for B2B Lead Generation Marketing

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  • What are the most important lead generation objectives to drive high performance?

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  • How is marketing balancing lead quantity vs. lead quality metrics?

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  • How does alignment with the sales organization drive highly effective lead generation marketing performance?

Here is a featured highlight from this study:

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Archived Research

2010 B2B Lead Generation Marketing ROI Study

Lenskold Article Series

by Jim Lenskold

2010 B2B Lead Generation Marketing ROI Study

This research archive offers good insights into using marketing ROI and measurements to guide lead quality and lead nurturing marketing.

 

  • Which types of lead generation marketing programs are most effective at driving high quality leads?
 
  • What are the strengths and shortfalls for current measurement practices for lead generation marketing?
 
  • Where are the best opportunities to improve lead generation ROI and support incremental budget? (Hint: good info for your lead nurturing programs)
Key issues of measuring and improving lead generation marketing effectiveness were explored in the 2010 Lead Generation Marketing ROI Study. The results were drawn from 231 respondents who indicated that they were marketing practitioners in B2B companies (half or more of their revenues generated from business customers), whose marketing group generates leads for a sales organization or channel partners. The full 31 page report includes detailed findings, recommendations and incorporates comparative adoption from 2008 to 2009. This 2010 research study with B2B lead generation marketers explored practices and priorities for using measurements and return on investment (ROI) to improve marketing effectiveness. Several key findings emerged from this research:  
  • Marketers with sufficient insight to estimate the profit potential from an increase in lead generation marketing indicate that there is untapped profit potential. Of those B2B lead generation marketers providing an estimate of the incremental profits from a 10% increase in their budget, 6 in 10 expect a profit increase of greater than 10%. The challenge is that almost half (44%) of the B2B lead generation marketers surveyed lack the insight to estimate the profit potential, responding “don’t know” when asked how much could profits be increased with the additional 10% increase in marketing budget.
  • Highest profit potential lies with nurturing stalled leads, reported by 58% of lead generation marketers. Close to half indicated that all other areas examined also have untapped profit potential. This is very consistent with the results of 2009 where nurturing also topped the list.
  • B2B lead generation marketers using ROI metrics were more likely to anticipate much greater growth than their competitors (22% vs. 10% of all others).
  • Organizations that use marketing ROI metrics reported higher use of lead quality measures based on customer revenue generated from the initial sale (51% vs. 21% of organizations that use only non-financial metrics) and lead quality based on sales conversion rates (63% vs. 34%).
View this webinar for detailed findings, conclusions and recommendations from the 2010 B2B Lead Generation Marketing ROI Study. Here is one of the many findings from this research:

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How Marketers Win Friends and Keep Profitable Customers Through ROI Analysis

Lenskold Article Series

by Jim Lenskold

How Marketers Win Friends and Keep Profitable Customers Through ROI Analysis

Customer-centric metrics and measurements are essential for guiding profitable marketing strategies and tactics for both B2B and B2C companies. Learn how better analysis and planning help marketers more effectively retain profitable segments of customers. We’ll cover specific steps with marketing ROI techniques and analytics you can take to manage key profit drivers — such as targeting, customer longevity and vulnerability, the customer experience, referral value, and planning integrated marketing over the customer lifecycle — to deliver more profitable retention marketing.

 

To view webinar, you will be redirected to marketingprofs.com and will be prompted to sign in to view session. *Please note that fees may apply for non-premium members.

 

Click here to view webinar.

 

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Marketing to Customers, Channel Partners, & Influencers: How to Manage Multi-Funnel Complexity

Lenskold Article Series

by Jim Lenskold

Marketing to Customers, Channel Partners, & Influencers – How to Manage Multi-Funnel Complexity

Many companies need to win more than just the support of the customers to generate sales. Some companies sell or distribute their products/services through independent channel partners, such as brokers, resellers, distributors, or retailers. In addition, some companies are dependent on strong influencers, such as professionals compensated for their recommendations, expert reviewers, or independent funding sources who are paying for all or part of the purchase. Weakness in any one area can be detrimental to overall sales despite showing strengths with one particular target group. So where and how do you most effectively invest your marketing budget across these separate targets to successfully generate sales?

 

This is where the funnel approach becomes even more important and works best when established to manage multiple funnels as a single, integrated approach to driving new sales. These decision funnels will include the stages each target must pass through to purchase, sell/distribute, or recommend. Stages that include awareness, needs definition, consideration, engagement, preference, and action (much more detailed for actual use) represent what marketing must influence and where customers may “leak” if they fail to reach the desired outcome.

Managing multiple funnels can simplify these complex business models and help you 1) understand how decision funnels for target groups relate to one another, 2) identify where and how your marketing impacts funnel progression and leakage for each target, and 3) quantify both plans and performance evaluation to improve ROI.

Creating a Multiple Funnel Framework

While marketers using the funnel typically define the funnel stages from the company perspective, the funnel becomes much more strategic and actionable when defined from the customer perspective. Figure 1 shows high level funnel stages for each target group and an example of how they might relate to one another.

Influencer Impact

Influencers can play a significant role as customers reach the stage of researching and evaluating their options to address a need or problem. When influencers are recommending alternatives to your products/services, they create leakage points where customers decrease their consideration and purchase intention. When your marketing effectively wins greater support from more influencers, the impact will show an increase in these early evaluation stages of the customer purchase funnel.

Channel Partner Impact

Similarly, marketing to expand your channel partner penetration or increase the performance of existing channel partners selling or distributing your products/services ultimate impacts many areas of your customer funnel. The impact can shift perceptions and actions with the most important being a lift in sales conversions. Marketing organizations sometimes miss the opportunity to get better returns from investments to improve the effectiveness of their channel partners over investments into additional branding or demand generation.

Customer Impact

Customers typically drive the ultimate purchase decision, although channel partners and influencers can initiate the purchase direction or create significant purchase barriers. Marketing direct to the customer when strong channel partner or influencer relationships are present is likely to have an impact on the decision funnels of these other target groups as well. Marketing efforts may be directed at creating strong brands and high demand among customers that will increase performance from channel partners and win support from influencers. Or marketing strength with consumers can create enough demand to generate sales with limited channel and influencer support. This pull-through strategy can impact the customers’ choice of channel partners (such as the iPhone’s influence on AT&T sales) or impact the influencers’ decisions (such as a physician’s willingness to prescribe a specific brand based on a patient’s preference).

Developing a more detailed version of this multi-funnel for your own business model provides clarity for assessing different strategic approaches to grow sales. Your assessment of the primary areas of funnel leakage, with either detailed quantitative analysis or general qualitative input from sales and marketing teams, will lead you to opportunities to improve effectiveness and ROI. While companies often debate whether they need a push or pull strategy, the best opportunity for improving performance will come from identifying the weak areas within the combined funnel.

 

Following are examples of leakage points that marketing can influence…

For Channel Partners:

  • More likely to recommend competitive products/services
  • Not promoting your products/services
  • Promoting your products/services but ineffective at converting buyers

For Customers:

  • No brand awareness, consideration, or preference for your products/services
  • Not responding to channel partner promotions
  • Prefer other channel partners that do not sell your products/services
  • Responding to influencer input with decreased preference and purchases

For Influencers:

  • No brand awareness, consideration, or preference for your products/services
  • More likely to recommend competitive products/services
  • Lack of access for influencers supporting your products/services to reach customers and channel partners at the right time in their decision process

Guiding Strategies and Tactical Planning

Once you have created your integrated, multiple funnel framework, you can then put it to use to guide strategies within or across the multiple target groups with a better sense of the impact on all target groups as well as the connection to incremental sales.

 

  • Formulate your marketing strategy within or across target groups.
  • Identify the tactics and the initial outcomes in terms of influencing funnel progression for the specific target group contacted.
  • Identify secondary outcomes in terms of funnel progression on the other non-contacted target groups.
  • Map out how the expected initial and secondary impact is intended to lead to an increase in sales to customers.
  • Use the expected impact on specific areas of the multiple funnels to guide key metrics, implement tracking, and define measurements of marketing effectiveness.
  • Measure new marketing initiatives and/or test alternatives to determine the actual impact relative to expectations. Measurements should concentrate on targeting and funnel leakage where improvements are likely to have the most significant value.

Pharmaceutical Marketing Example

Pharmaceutical companies have a very unique requirement for their multi-funnel environment with two very strong influencer groups in addition to the consumer; healthcare practitioners who write prescriptions (such as physicians) and insurance companies (a.k.a. “payers”) who fund all or part of the expense for consumers. There are marketing and sales efforts to all of the target groups. Practitioners have the potential to drive sales volume even without consumer marketing, and, along with insurance companies, can create significant funnel leakage even when consumer demand is high. Leakage results when practitioners have strong objections to the product or when the lack of funding from payers leads to competitive replacement.

 

Here is a brief example of how the initial and secondary outcomes guide the primary metrics to track and measure.

Initial Outcome
Secondary Outcome
Primary Metrics
Practitioner marketing (influencers as professionals)
Decision based on assessment of quality of healthcare and impact on patient satisfaction		 Increase recommendations   Increase prescriptions with consumer acceptance and payer approval Increase payer conversion with increased demand (payer risks losing enrollment from consumers and employers) Increase in recommendations Increase in prescriptions
Insurance Company marketing (influencers as payers/funding source)
Decisions with long-term impact based on cost control and offering attractive coverage		 Increase prescriptions with consumer acceptance and physician support Increase in physician recommendations Increase in prescriptions Increase in quantity of insurance companies offering coverage  
Consumers (customer decision-makers)
Decision based on health benefits and personal cost		 Increased brand preference Increased requests to physicians Increase prescriptions with physician support and payer approval   Increase in recommendations Increase in prescriptions

Allocating Budget to Multiple Target Groups

One of the greatest barriers to choosing the best marketing investments is an organizational structure that separates marketing teams into silos which each concentrate on the different target groups. Not only does this make it difficult to integrate marketing initiatives, but it also tends to limit measurement of the marketing impact to just the group targeted so the opportunity to create higher impact campaigns influencing multiple target groups gets missed. In addition, the organizational structure can lead to competition for budgets that may compromise the decisions to manage toward a greater collective impact.


There are many levers that marketing can use to improve bottom line results, such as:


  • Invest in brand to influence customers, channel partners, and influencers
  • Motivate channel partners through their decision funnel to either expand the number of partners or grow your share of existing partners
  • Improve the marketing and sales effectiveness of channel partners to increase sales with customers and increase channel partner preference/loyalty
  • Motivate influencers through their decision funnel to either increase the number of influencers, increase the strength of recommendations, or increase the frequency of positive mentions
  • Connect customers in early stages of the purchase funnel to positive influencers to increase the portion of customers progressing to a purchase decision
  • Improve the customer experience with your products/services to increase repeat purchasing from customers, increase channel partner benefits, and win more support from influencers

Here are several options for evaluating where to invest marketing based on effectiveness and profit contribution, ranging from basic to more sophisticated:


  • Measure the effectiveness of existing marketing on the initial outcome (i.e., the primary objective) and incremental sales
  • Test new strategies to determine how to best improve marketing effectiveness
  • Assess funnel leakage independent of marketing campaigns to prioritize the need for new or improved marketing based on profit potential
  • Run analytics to understand the affect of improvements within one target group on other target groups (such as the marketing impact on influencer outcomes having a subsequent impact on channel partner decisions)
  • Model the impact of specific tactics on multiple target group funnels (such as the consumer advertising impact on influencer and channel partner perceptions and actions)

Companies in the high-tech, financial services, insurance, pharmaceutical, automotive, and dozens of other industries are dependent on winning the support and influencing the decisions of multiple target groups in order to successfully generate sales. Each target group has their own decision funnel that can benefit from marketing support. With limited marketing budgets, marketing executives can use integrated multiple funnels as a smarter approach to guide strategies, measurements, and improvements to performance and profitability.

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rio resources White Papers

CMO Guide to Marketing ROI

Lenskold Article Series

by Jim Lenskold

CMO Guide to Marketing ROI

Marketing ROI and measurement analysis may be daunting subjects for many. Why, where, when and how marketing is driving financial contribution are valid questions. But, managing marketing profitability is top of mind for every Chief Marketing Officer. Most CMOs understand that a reliable and practical ROI process provides unique opportunity to catapult profit potential, improve efficiencies and effectiveness, and build credibility for the entire marketing team. And clearly the greatest path to increased effectiveness and delivering the greatest return is evident with marketing ROI measurements, financial analysis, and decision support.


The CMO Guide to Marketing ROI is a compelling 16-page editorial that breaks down the critical steps needed to establish a marketing ROI framework. It simplifies complex business issues and offers a practical, pro-active approach to create the culture and capabilities for managing and improving marketing ROI.


The white paper features compelling content, a case study with Kodak, and a practical quick-tip checklist. It also summarizes the marketing ROI framework with an easy to follow flow chart. The paper identifies the big wins with ROI analysis, measurements and applying insights to strategic decisions.

Fill Out the form to complete the download

By submitting this form, you are consenting to receive marketing emails from: Lenskold Group, 601 Bangs Avenue, Suite 504, Asbury Park, NJ, 07712, https://www.lenskold.com. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

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rio resources White Papers

Maximizing Lead Generation Marketing ROI

Lenskold Article Series

by Jim Lenskold

Maximizing Lead Generation Marketing ROI

This white paper combines a four-part article series on Maximizing Lead Generation Marketing ROI. It builds from the basics of strategy and organizational alignment to measurements and metrics.

Part 1: Lead Quality Counts

Part 2: Insight, Alignment & Action

Part 3: Measuring Effectiveness

Part 4: Dashboard Metrics

Loaded with actionable information, this is one of our most popular papers.

Fill Out the form to complete the download

By submitting this form, you are consenting to receive marketing emails from: Lenskold Group, 601 Bangs Avenue, Suite 504, Asbury Park, NJ, 07712, https://www.lenskold.com. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

By submitting this form with the Subscribe button checked, you are granting: Lenskold Group, 601 Bangs Avenue, Suite 402, Asbury Park, New Jersey, 07712, United States, https://www.lenskold.com permission to email you. You may unsubscribe via the link found at the bottom of every email. (See our Email Privacy Policy for details.) Your e-mail will be kept private and only used for educational content from Lenskold Group as outlined in our Privacy Policy. By clicking on the link delivered via e-mail to download content, you consent to use of a cookie that will provide you access to all other content without completing the form again.

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Why CMOs Need to Instill Better Measurement Discipline – Now!

Lenskold Article Series

by Jim Lenskold

Why CMOs Need to Instill Better Measurement Discipline…Now

There is no shortage of marketing measurements in most large corporations, yet there exists a significant gap in terms of measurement discipline. Measurement problems exist on a number of levels ranging from basic accuracy and prioritizing what should be measured, to how those measurements align with objectives and how the results are applied. Measurements and analytics are powerful tools that provide insight to improve marketing performance. These serve as the sources for knowledge and facts that shape strategies and guide tactical decisions. Without reliable insights into what’s working and where improvements are possible, marketers must piece together their gut feelings on what makes sense with their informal read on marketing’s influence on customers and sales.

 

Putting a measurement discipline in place involves going beyond the occasional campaign measurement or results tracking to establish standard processes across the organization. Within many large marketing organizations there are always a few measurement “champions” who recognize the benefits and push to improve their own results with better measurements. However, leadership from the CMO or VPs of marketing is necessary to move this to a discipline that is engrained into the culture of the organization. When measurement discipline is achieved, the organization works more effectively and efficiently toward clear business objectives.

To put you on the path to measurement discipline, I’ll share what it takes to understand current shortfalls, establish a measurement management process, build capabilities, and create the right culture.

Measurement Practice Shortfalls – What’s Missing Today

For most marketing organizations, measurements are an afterthought relative to strategy and campaign development. There are companies that have extremely well-designed measurement methodologies using different forms of modeling, tracking analyses, or market testing. But even these companies typically fall short of their full potential. Based on conversations with well over one thousand marketers over the years, here is how I would summarize the state of marketing measurements in terms of shortfalls and opportunities.

Measurement Shortfalls

  • Campaign results are tracked and reported without drawing any clear conclusion on what is driving results and what should be done to improve results
  • Measurements are inaccurate but assumed to be accurate if positive (marketers using pre-post tracking attribute negative results to the influence of external factors while attributing positive results to marketing)
  • Measurements do not have clear objectives tied to how the information will be used
  • Measurements are primarily designed around tactics and neglect the big picture, strategic performance drivers
  • There is no budget or no practice to measure marketing impact
  • Metrics not tied to financial performance are measured without any knowledge of how (or if) these metrics influence sales and financial contribution

Opportunities from Better Measurement Discipline

  • Plan measurements 6+ months in advance and integrate with campaign plans to prioritize strategic and tactic insights based on potential performance improvements
  • Establish a process to accumulate and retain knowledge on how marketing influences customer purchase decisions
  • Develop standard methodologies and measurement techniques with acceptable accuracy
  • Ensure results are consistently applied to guide strategies and campaign plans
  • Communicate measurement success stories to reinforce the culture and build momentum
  • Design measurements with the goal of assessing outcomes, diagnosing shortfalls, and improving results

Developing the Vision & Process

If you look at the opportunities listed above, you can see why this is a CMO imperative. The measurement discipline elevates the ability to guide the most critical decisions with better precision for greater impact. Marketing organizations manage large budgets that are facing greater scrutiny without the credibility that comes from measurements. CMOs should not be satisfied with measuring marketing contribution but should also demand that the organization demonstrate the ability to act on measurements and improve performance. This is where credibility is earned.

The vision for better measurement discipline starts with the CMO’s expectation that well-constructed measurements concentrated on key profit drivers will provide a competitive advantage when developing strategies and tactical plans. The process requires integrating measurements into key stages of the marketing planning and delivery cycle. The planning cycle should follow this general direction:

  • Set marketing and campaign objectives aligned to business objectives
  • Develop your strategy with ROI scenario planning to improve profit potential
  • Complete a rolling 6-month measurement plan to prioritize measurements and integrate into campaign planning
  • Develop tactical plans with measurements defined prior to execution
  • Execute & measure marketing initiatives
  • Track and analyze results
  • Refine upcoming objectives, strategy, and tactical plans, leveraging insights to improve performance
  • Manage the learning cycle by maximizing the use of measurements and identifying the  next measurement priorities

CMO commitment is critical to success. To achieve new levels of success, the CMO must motivate the team to invest additional effort into measurements and also back that effort with resources. CMOs should empower those measurement champions within the organization to lead the effort and innovate. The payback comes to all in the organization as they understand the value measurements provide in informing their decisions.

As reported in the 2009 Lenskold Group / MarketSphere Marketing ROI & Measurements Study, companies that are outgrowing their competitors are much more likely than companies growing slower than competitors to indicate that they are “using good measurements of marketing effectiveness to prioritize top marketing campaigns” (41% vs. 24%) and “have data, facts, and insights to better guide marketing spend decisions” (44% vs. 27%). The benefits are clear so now the team must map out a path to establish this measurement discipline.

Building Capabilities & Culture

In organizations where measurements are used inconsistently or are not yet running to their full potential, improving measurement discipline must be done in stages. You want to build both capabilities and culture as each supports the other.

 

Capabilities include providing data access, systems support, and internal or external measurement resources. You have to accept that the process will start with the best available information and, even as it improves, it will never be perfect. Enhancing your capabilities may involve introducing new methodologies such as structured market testing or modeling. You may decide to shift what you measure, putting additional emphasis on more strategic or high priority insights. Or you can add depth to your results analysis, understanding more about segment level performance or diagnosing the weak areas in your customers’ purchase funnel.

 

Here are actual examples of how companies we work with have improved their measurement discipline:

 

  • Designed a measurement pilot to assess customer retention strategy
  • Developed the first comprehensive measurement plan for a 6-month mass media and sales channel media blitz and concurrently defined the measurement planning process for future campaigns
  • Established a structured market testing program to assess both strategic and tactical performance drivers
  • Introduced marketing performance modeling to calculate baseline sales and marketing lift from retailers with the ability to forecast sales levels based on marketing plans, expected competitive advertising, and market conditions
  • Mapped out a detailed 4-quarter measurement plan outlining specific measurements and the process for applying results

Regardless of your current measurement practices, a good process for advancing to the next level is through pilot initiatives with select team members. Pilots help senior management recognize the benefits of applying new insights and help the marketing team build confidence and accelerate adoption.

 

Once new measurements are trialed and accepted, the process can be systematized and infrastructure further improved to take the next step up in capabilities. Measurement success stories must be communicated to demonstrate how measurements offer strategic value and can truly deliver performance improvements.

 

Following measurement pilots and adoption, the marketing organization must establish a clear process for what gets measured, how, and how often. Remember that is it not important to measure everything. Your measurement objective is to identify actionable insight that can improve future marketing effectiveness and profitability.

 

To complete the process, the CMO must set the expectation that measurements are valuable and must be acted upon. Good measurement discipline also requires that the CMO encourage sharing of all measured results, both positive and negative, since it is all necessary to guide improvements.

Why Now?

The need for marketing to adopt better measurement discipline has always been important but it has certainly become more urgent in the past year. As reported in our 2009 Lenskold Group / MarketSphere Marketing ROI & Measurements Study, 8 in ten marketers (79%) indicated that the need to measure and report marketing effectiveness has increased in the past year. With current economic conditions, every budget dollar counts and really needs to deliver results. These conditions put pressure on senior executives who then put pressure on the marketing team to show they can impact the bottom line. And realistically, you cannot fully manage and improve marketing effectiveness without knowing what is working and what needs to change.

 

The other timing consideration to motivate action now is the annual planning process that is just beginning for many companies. Making progress on your measurement discipline requires 1) bringing more measurement and analysis insight into the current planning cycle and 2) planning and budgeting for better measurements in the upcoming year. There may still be an opportunity to inform 2010 planning with either some quick measurements incorporated into current marketing, or running an historical analyses on past marketing.

 

With tight budgets next year, it could be hard to find budget for measurements and analysis, especially if it has been under-budgeted to date. However, allocating a portion of budget for measurements and analysis can make the rest of the budget more productive and create a competitive advantage for both the current and future years.

 

Measurement discipline requires time and effort. But once marketing executives make the commitment, the process will gain momentum and continue to evolve as it delivers new insights to guide performance improvements.

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Make a Plan to Get More Out of Your Annual Planning and Budgeting

Lenskold Article Series

by Jim Lenskold

Make a Plan to Get More Out of Your Annual Planning and Budgeting

In our days of youth, we dreaded the end of summer and the return to school. Now, as marketing and business managers, we have the equally dreadful annual planning and budgeting process that for many starts toward the latter part of summer. CFO Magazine reports that almost half (45%) of financial executives say “budgeting and reporting are contentious, political, and time-consuming.” If the number-loving finance group has this view, you’re not likely to find marketers’ opinions to be any better.


Since planning and budgeting are not going away, you may as well make the effort to get more value out of the process. It’s actually an ideal time for putting basic ROI analysis to use. Here are four ways to use financial insight to create more profitable strategies and tactical plans while building greater credibility with your executive team.

1. Alignment with objectives sets the right stage

Alignment with business objectives and at least a reasonable financial estimate of your impact will enhance your credibility with Finance and the executive team who are determining where in the company to put their limited financial resources. The credibility from showing ROI and contribution to business growth puts marketing on equal footing with other departments, making it more of an investment than a discretionary expense.


Start by using the best information available to map the impact of your marketing on customer perceptions and behaviors completely through to financial outcomes. Not every marketing initiative directly drives incremental sales, so look beyond this independent initiative and consider how this integrates with other initiatives. It’s helpful to consider the customers’ buying funnel that represents the progression from unaware prospect to profitable customer.


Your plan should state both what your marketing accomplishes on its own and specifically how that contributes to business performance. If you are not sure how your marketing contributes, you quite likely have gaps in your strategies and plans.


Getting an estimated ROI projection from this point can be done two ways:


  1. The first approach is to compare the cost of your marketing initiative (your investment) to the incremental financial contribution (the profit directly from your initiative or in excess of the profit that would have been contributed without your marketing initiative).
  2. The second approach is to sum your initiative and the ones that follow (where sales are actually generated) to compare that total investment to the total profits returned.

Yes, there are lots of details to getting these figures precisely right, but running an estimated projection is the start to understanding your profit potential.

2. ROI scenarios lead to better profitability

Even if you are working without perfect information, you should be able to at least assess the relative value of your marketing initiatives to improve each, and then prioritize for budget allocation. Run ROI scenarios to understand how changes to your target, marketing mix, offers, integration, and general investment levels change the profit potential.


Be sure to put most of your effort into prioritizing your target market segments, since targeting almost always has the greatest influence on ROI. You need to concentrate your efforts on not only high-value customers but also high-potential customers—the ones you can cost effectively motivate to choose your products and services.


The final budget allocation needs to reflect the business objectives for balancing short-term and long-term results. It should also have an appropriate mix of proven marketing initiatives (low risk) and new initiatives that are innovative and high potential (high risk).


Some 72% percent of the financial executives surveyed by CFO Research Services say that “planning and budgeting information is unrealistic or irrelevant,” either frequently (27%) or occasionally (45%). Of course, marketing always has unknowns, such as customer response, marketing effectiveness, and competitive activity, but smart marketers will make their estimates as realistic as possible. You’ll use the best assumptions you can, maybe tapping further into historical data or custom research.


The more your ROI analysis can represent your expectations of marketing performance, the easier it will be to refine those assumptions and adjust your marketing decisions. Plus, the exercise to estimate the financial outcomes of your marketing investments will help identify information gaps, leading to the next action item presented in this article.

3. Better insight today makes for better decisions tomorrow

One of the reasons the planning process is so painful is that there is rarely enough quality research and analysis to make informed decisions. Instead of finding yourself in that same position again next year, incorporate greater learning into the plan you are developing.


Granted, it’s not easy to pull budget from revenue-producing marketing activities to fund measurements and analysis. What you have to consider is that (1) the value of some marketing initiatives is already questionable; (2) in most cases the insight gained will pay back with more effective marketing in the current or following year; and (3) plenty of new insights can be gained with little or no incremental budget if you take the time to plan right.

4. Use the right metrics in the right way

Finally, you want your success metrics to be aligned with business objectives as well. There are a lot of dynamics involved in properly setting goals and objectives, and we’re only going to touch on one key point here. The marketing organization as a whole must reach the point where the primary goals contribute to the business objectives of profits and growth (both short term and long term).


Performance metrics, such as awareness, audience reach, advertising recall, and even leads generated, are critical for knowing whether you are on track to deliver on those goals. But be careful not to let performance metrics become your goals. Keep in mind that executives feel less pain when they cut budgets that have no clear connection to business objectives.


Conclusion


The planning and budgeting process apparently brings out the worst in us. Over half (53%) of the financial executives surveyed by CFO Research Services say the budgeting process “encourages undesirable behaviors among managers.”


Besides the gaps in data, performance measurements, and analyses that limit the accuracy of annual marketing plans and forecasts, there are also corporate culture issues that come into play. Executives engage in wishful thinking and push managers to deliver more results with less budget, while managers seek to under-commit and over-perform, especially where bonuses are dependent on the final plan.

For now, let’s focus on using quality ROI analytics to improve both our accuracy and our credibility. Let’s also try to act on our best behavior.

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Five Steps to Show Exceptional Leadership by Better Aligning Marketing Performance to Business Goals

Lenskold Article Series

by Jim Lenskold

Five Steps to Show Exceptional Leadership by Better Aligning Marketing Performance to Business Goals

Since marketing ROI surfaced to the top of marketing executives’ priorities six or so years ago, the debate over marketing being more art or science has been endlessly debated without resolution. Marketing’s creative side is essential to engaging customers and the science of measurement and analysis is essential to managing performance. Strong cases have been made for both sides of the debate and, in my opinion, neither side wins out. Marketing should not be viewed as art or science, but as business, plain and simple. You spend corporate dollars and are expected to deliver revenues and profits back to the business, whether you do this artistically or scientifically.

Chief Marketing Officers (CMOs) and senior marketing executives must manage marketing performance with clear alignment to business goals to deliver short-term and long-term cash flow, growth, and profits. While most marketing strategies are designed with business goals in mind, the disciplined planning still falls short. As marketing executives head into 2008 planning, there are five key steps to follow to elevate your leadership role and better manage performance. And if any of these steps are made difficult by shortfalls in your systems, knowledge, or culture, then your goal is to make 2008 the time to improve your capabilities so you do not fall further behind.

1. Set quantified objectives and use KPIs aligned to business goals.

Not all marketing is intended to deliver revenue on its own but all marketing is ultimately intended to drive incremental revenue at some point time. Generating awareness, preference, engagement, or leads all contribute to the overall sales process, each playing a critical role in acquiring, retaining, and growing profitable customers. But these and the other stages in the customer funnel are not the end objective and are potentially not even good metrics unless put into the right context.

Setting revenue or profit objectives is much easier if you have historical analysis or measurements that create a link between your marketing efforts, changes in customer attitude or behaviors, incremental purchase activity, and financial value. But many marketers have not run measurements to have this information readily available. As a marketing leader, you want your organization to go through the discipline of at least quantifying their assumptions using the best information available. 

 

The idea is to follow the impact and find the contribution.

 

You start by developing the strategy and tactical plan to implement with a specific budget. Before you finalize this plan, you need to ask your team questions to follow the course of impact and quantify your assumptions. For example, consider the following series of questions.

  • What do you expect to occur as a result of your marketing initiative?
  • And then what happens between your impact and the point where they are purchasing or repeat purchasing your products and services?
  • How many customers will be impacted?
  • Are they current customers, competitor customers, or new to your category?
  • What is the expected time period for purchasing behavior to begin and what is the expected duration of your impact?

All of these questions connect the marketing plan to the business impact. But questions like these are not always addressed when the approach is to implement good quality marketing and assume a portion of those exposed to our message will change their mindset and possibly their purchasing decisions.

Not all of the marketing and sales activity that follows is within your control but surely your efforts are intended to work effectively with these other touchpoints. The discipline of quantifying your assumptions will make your planning more strategic, lead to greater dialogue with your peers responsible for other parts of the sales cycle, and lead to better integration. And you can more easily identify the right key performance metrics based on knowing your impact flow, the quantities at each stage of engagement, and the timing.

The same discipline works for long-term brand positioning and customer experience initiatives, even though the time horizon is extended. These types of metrics are best managed as part of a balanced scorecard so that marketing investments are properly allocated to both short-term and long-term financial health.

2. Plan your marketing with good insight on profit drivers.

 

Driving profitable growth ultimately requires a good ROI process and the financial framework to support it. As you gain additional insight into the drivers of profitability at both the product/service and customer level, the marketing organization can significantly improve its ability to manage and deliver bottom line impact.

Tracking revenues is important but limits marketing’s ability to optimize budget allocation. Strong marketing leaders need to educate the organization on the profit impact of different products and services, customer purchase patterns, the impact of the customer experience on customer tenure (retention) and cross-purchasing. Financial insight needs to be accessible to the marketing team in an easily manageable format so it can be incorporated into the planning process. This information can effectively guide customer targeting, the product/service mix, management of the customer relationship, and budget allocation (applying a technique we call value-tiered marketing).

3. Apply comprehensive measurements and analysis to gain competitive advantage.

 

Good marketing leaders recognize the value of outsmarting the competition, understanding customers, and experimenting with new marketing approaches. A culture that recognizes the value of a continuous cycle of learning will put good measurements and analyses in place to provide marketers with performance feedback. Improving effectiveness is dependent on knowing what works, what doesn’t, and why.

Do you struggle with the fact that your business model makes it difficult to get good measurements? Congratulations, an extra effort on your part to get innovative and capture insight through measurements is very likely to put you ahead of the competition so you can win a greater share of the most profitable customers. Keep in mind that if it was easy, everyone would be doing it.

Highly reliable measurement methodologies are still under-utilized by many marketers (see the 2007 ROI Measurements and Processes Trend Study). Marketing executives must step up and fund more measurements and analysis and also set the expectations that the organization must not just report on measurement but apply this knowledge.

4. Identify and prioritize performance improvements with the greatest profit potential.

 

With objectives aligned to business goals, insight into key profit drivers, and measurements and analyses on marketing performance in place, marketing executives can better identify and prioritize where to focus their improvements. In some cases, the most profitable portion of the customer base can serve as a model to which the priority is to manage additional customers toward the same type of relationship. More likely, the greatest profit opportunities will come from better targeting, a better customer experience, better integration, or better experimentation.

Targeting has the greatest impact on marketing ROI. Marketing and sales efforts must be targeted toward the segment of customers that are both high in total value (short term and long term) and high in conversion potential (purchasing in response to your efforts. The customer experience is also critical since it determines the long-term value of acquired customers based on their likelihood to continue purchasing.

Better integration is a common gap that comes from not managing the customer’s buying journey or “funnel” as one continuous progression with marketing activities aligned to deliver incremental sales. Profit improvements also come from better experimentation as marketers develop and test diverse strategies and tactical plans with good measurements in place to breakthrough marketing initiatives.

Improvement opportunities are likely to exist across these key areas so if you are looking for just the top priority, the first step is to run financial analyses using historical trends to determine the sensitivities and upside potential of different improvements on profits.

5. Take action, deliver results, and push for more.

 

Too often, marketing measurements and analyses are used for nothing more than reporting. ROI analyses are used to justify past marketing expenditures and fill in static dashboards. Marketing leaders must shift this mindset so marketing is viewed as a “managed investment.” Marketing executives build credibility and respect among C-level executives as they demonstrate strength in continuously improving effectiveness as well as responding to both positive and negative changes in market conditions. The initial point of applying new insight on profitability and performance establishes a commitment and proves the value to the marketing organization (where skeptics are likely to exist). ROI analysis may start as a process to “speak the language of the CEO and CFO,” but it clearly becomes more significant when the process allows marketing to “deliver on the key metrics of the CEO and CFO.”

With greater credibility and confidence, marketing is better positioned to secure necessary budgets and earn that seat at the boardroom table. And the role of marketing expands as they manage the impact on customer value that each part of the business influences.

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Change the Culture to Change Marketing ROI Success

Lenskold Article Series

by Jim Lenskold

Change the Culture to Change Marketing ROI Success

Most marketing executives know that with better insight into how current marketing is performing and what is driving (or not driving) marketing effectiveness, they can deliver greater impact with better use of marketing resources. With information available on best practices, numerous success stories, and increased pressure from the CEO and CFO, why are many marketing organizations so slow to adopt marketing ROI and measurement practices? Blame a combination of cultural inertia that inhibits change and artful dodgers who manage to avoid accountability.

 

Overcoming this significant barrier of organizational culture requires CMOs and marketing executives to understand what drives different types of players in the marketing organization to adopt marketing ROI practices. For example, you need to know what to do with your Champions and how to keep Artful Dodgers and Cynics from derailing your progress. Stakeholders outside of marketing also need to be on board to contribute their expertise to enabling marketing ROI measurements and management.

Prepare for Each Role within the Marketing Organization

If you want to truly improve the financial contribution of strategies and tactical campaigns, the marketing organization must adopt practices for better measurements and ROI analyses. Marketing ROI capabilities can range from basic steps that individuals can take to organization-wide transformations that involve several stakeholders.

 

Success is dependent on understanding how to manage:

 

Players within Marketing

  • Champion
  • Sponsor
  • Followers
  • Artful Dodgers
  • Cynics
 

Supporting Organizations

  • Sales
  • Analytics
  • IT/Operations
  • Agencies
  • C-Suite Executives
 

Not much happens without a marketing ROI Champion.


As with any significant change initiative, there must be a champion who is willing to motivate action. The champion is someone who is passionate about the potential benefits and wants to push new boundaries to improve marketing performance.

 

There are three ways that the first steps toward marketing ROI can get underway:

 

  1. The champion is empowered by executives to rally a team and lead the adoption for the organization.
  2. The champion will work independently to achieve their own small-scale success and eventually either gain visibility to win executive support or build grass-roots support to spread success across the organization.
  3. Executives will mandate that the marketing organization improve their accountability and, without a champion, the organization will move slowly and less effectively toward a basic level of capability.

Clearly, the best option is to find and empower a champion within the organization.

 

Executive Sponsors drive the scale and speed of adoption.


The ideal situation is where executives within marketing or at the C-level establish a vision for a high-performing, results-driven organization and align the stakeholders to implement change. Sponsors are in the best position to set priorities, bring key stakeholders together, fund required resources, and shift the culture at a faster pace than a Champion’s grass-roots efforts.

 

If this role is missing in the organization, the Champions must demonstrate how marketing ROI and measurements provide opportunities to align marketing to business objectives, delivering measured results and increased profits.

 

Momentum and proven processes provide a path for Followers.


When it comes to new processes, adding a quantitative function to marketing, and addressing first-time challenges, you may not find many in marketing fighting for that Champion role. There will be plenty of “Followers” who will take the “wait and see” attitude as others forge ahead.

What is necessary to prepare this group for success is 1) education, 2) success stories from initial marketing ROI initiatives, and 3) simplified tools and processes.

 

Watch for the Artful Dodgers trying to slow you down.


It’s not uncommon to find “Artful Dodgers” in marketing, who manage to generate excuses and create delays to maintain the status quo. And don’t be surprised to find Artful Dodgers in fairly senior roles within the organization. This is a difficult group to convince since challenges with data, performance measurement, and financial analyses in complex marketing environments make it easy to create excuses instead of solutions.

 

The best solution to motivate these individuals is executive sponsorship and a mandate to measurably improve performance.

 

There will always be Cynics and some can be helpful.


The “Cynic” for marketing ROI will go beyond avoidance and proactively stand against marketing ROI practices. There will be some cynics protesting measurements and analytics that interfere with the creative strengths of marketing and others who doubt the validity of the data or conclusions coming from the measurement process.

 

This latter group of cynics is the one that can provide insight into potential gaps and flaws in the process. It’s best to give them a voice and validate their short comings, but have solutions-oriented people address their concerns.

Gain Support from Extended Team Players

Marketing ROI capabilities involve many different organizations outside of marketing. You’ll find the same roles within these groups that have to be managed accordingly to adjust their culture as well. Here are tips for winning over the teams that can make or break your successful adoption of comprehensive capabilities to manage and improve marketing ROI.

Motivate Sales team alignment with this sales-driven process.


The sales organization can often be the hardest group to win over, yet it is the group with the most to gain. The challenge is overcoming the perception of marketing. In companies with a sales organization, marketing is dependent on the sales team for better tracking and outcome reporting (not a task that is sales-friendly). Sales teams can be won over using ROI scenarios or small scale pilot initiatives that show how ROI analyses and measurements deliver increased sales and revenue (definitely an outcome that is sales-friendly).

Get Analytic resources in place.


Marketing analytic and research teams may or may not reside within the marketing organization. This group is typically an advocate and sometimes the source of Champions. It’s not unusual for this group to be understaffed which might lead to the culture of “no” when additional work to support marketing ROI is requested. Analytic resources can make a significant difference in the pace of adoption, so staff appropriately.

Show potential revenue impact to rank as a priority for IT/Operations.


Companies committed to building comprehensive marketing ROI and measurement practices need the IT organization for 1) access to data and 2) marketing automation for campaign tracking and dashboards. IT prioritization is very often driven by business cases tied to revenue potential, making it challenging for marketing to rise to the top of the list. The revenue potential for marketing ROI and measurements may not be apparent at the start, but a few initial success stories will make a difference to show huge upside potential.

Leverage your Agency’s strategic insights to interpret and act on results.


Marketing agencies vary in their position on supporting marketing ROI measurements. There are Artful Dodgers and Cynics that push against adoption and Champions that step up to motivate clients to assess and improve ROI. The most critical contribution an agency can make is adding a strategic perspective on expected and actual campaign outcomes (i.e., how is marketing influencing customer behaviors and ultimately their purchase activity?).

What marketing organizations must do to make agency involvement constructive is to not use ROI measurements as pass/fail assessments. Marketing ROI measurements are intended to provide insight to improve strategies and tactics. The agency and marketing groups must work together to constantly increase marketing effectiveness.

Set expectations with the C-Suite.


Finally, the C-Suite executives must be properly managed to ensure a successful marketing ROI adoption. Senior executives may demand accountability without understanding the requirements for quality measurements and improvement processes. The key to success is setting expectations that better measurements and ROI insights are necessary to understand the constantly changing customer behaviors, competitive environments, and market conditions. This insight builds with effort and time to become a strategic advantage.

To summarize, the most critical actions that are necessary to create a culture where marketing ROI practices can grow and thrive are:


  1. Empower Champions to build capabilities, conduct pilots for new initiatives, and refine the process for easy adoption by Followers.
    2.  
  2. Engage executives to serve as Sponsors, align stakeholders, and set expectations that are consistent with an effective marketing ROI process.
    3.  
  3. Win support from stakeholders outside of marketing using ROI scenarios that show profit potential as marketing ROI insights guide strategies and tactical improvements.
    4.  
  4. Silence Cynics and Artful Dodgers with success stories from initial pilot projects to large-scale process adoption.