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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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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.

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Maximizing Lead Generation Marketing ROI

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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.

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CMO Guide to High-Performance Integrated Marketing

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by Jim Lenskold

CMO Guide to High-Performance Integrated Marketing

As integration across the complex mix of multi-channel marketing improves, the increase in marketing effectiveness and efficiency greatly improve ROI. After all, the collective impact of those multiply contacts is needed to drive customer purchase decisions. However, the significant benefits from tightly integrated marketing require addressing the operational and culture challenges inherent in organizations that plan and execute marketing in silos.


The CMO Guide to High Performance Integrated Marketing is the third white paper in our Marketing Profitability Management series. You’ll learn how integration advances through three levels, starting with basic “cohesive” marketing, progressing to a “cumulative” level of integration and ultimately achieving “customer relationship integration.” This paper outlines how to improve integration through targeting, messaging, marketing mix, and engagement at each of these three levels. The 5-step process helps to address strategic development, operational issues such as aggregating data, and processes that help overcome the cultural barriers.


As with the other white papers in this series, we outline the priorities for CMOs to achieve success and include a “quick tips” checklist for easy reference.

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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, 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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CMO Guide to Maximizing Current Customer Marketing ROI

Lenskold Article Series

by Jim Lenskold

CMO Guide to Maximizing Current Customer Marketing ROI

Marketing to current customers is different than new customer acquisition, at least is should be. With current customers, there is an opportunity to capture intelligence on purchase history, profiles, and engagement activity to shed light on their interest and needs. This CMO Guide addresses the challenges and opportunities to maximize customer growth with more effective marketing. We map out an approach using intelligence, analytics, measurements, and ROI to better guide strategic and tactical decisions.

These sophisticated techniques equip the CMO and their marketing team to leverage customer relationships and create competitive advantages through more profitable marketing. Better measurement and ROI capabilities provide insights that marketers can act upon to earn credibility and demonstrate accountability to the CEO and CFO.

The white paper features rich content, a customer case study, tips, and an at-a-glance checklist to maximize performance and ROI from your current customer marketing. This is the first release in our series of CMO Guides intended to improve marketing profitability management. We thank Citrix® GoToWebinar® for their sponsorship and support.

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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 Study8 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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The Brand-Value Connection

Lenskold Article Series

by Jim Lenskold

The Brand-Value Connection

The image that your target audience has of your brand will have a significant influence over your sales and marketing effectiveness. Investments specifically to establish brand image can have a variety of objectives including brand awareness, emotional bonding, differentiation, and preference. In some industries brand marketing can serve as a lead driver of sales while in others its role is primarily to support salesforce initiatives.


As with all marketing investments, it is essential to understand and plan where the financial return from increased sales is expected for each investment. Are there certain target segments or regions that should experience increased sales? What is the timing for the impact in terms of short-term and long-term sales? Long-term brand equity is critical but it is dangerous to avoid an ROI analysis of brand investments based on the assumption that some small impact is occurring over a long period of time. The goal is to establish a framework where insight into the value of branding investments can guide the type and level of brand marketing.


Making the connection between branding initiatives and the incremental profits generated requires effective identification of the underlying drivers where the brand can influence customer behavior. The correlation between these key brand attributes and the value created is done through a combination of market research and modeling.


Modeling is a significant initiative that requires quality historical data. Companies with existing data should determine how modeling and marketing analytics can better guide brand investment decisions. Companies that lack historical data or the support to begin a modeling initiative at this time may want to at least lay the groundwork by preparing for future analysis. Put the processes and systems in place to capture detailed information on branding expenses, customer behavior objectives, target audience reach, contact timing, media channels, media mix and integration, pre and post marketing sales data, and attribute measures (if collected). You can gain additional benefits by also setting aside a control group that receives no contact, if that is feasible.


Even where detailed measurements and analysis are not possible, there is significant benefit that is gained by projecting the impact of branding activities on customer behavior completely through the sales cycle. This can eliminates gaps such as awareness advertising that lacks a subsequent call to action contact or brand differentiating marketing that reaches the wrong target audience or brand investments that far exceed the potential returns that might be generated. The marketing ROI process provides financial intelligence that can and should be used to shape strategic and tactical marketing decisions.

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Monitor Long-Term Buying Behaviors When Growing Short-Term Sales

Lenskold Article Series

by Jim Lenskold

Monitor Long-Term Buying Behaviors When Growing Short-Term Sales

When you think of marketing metrics, it’s not likely that the customer experience immediately comes to mind. The warm and fuzzy stuff isn’t as easy to calculate as your typical marketing measurements. Yet leading CMOs will tell you that customer experience is key when building solid marketing measurements.


At Dow Corning, for instance, the marketing organization has done a terrific job implementing Six Sigma methodologies—the discipline of improving predictability and precision through structured measurements and processes—to drive marketing success. CMO Scott Fuson describes Dow’s “voice of the customer” as the cornerstone of its process, guiding the company’s marketing measurements toward clearly defined critical customer requirements.


Measurement of such key performance indicators supports sales and marketing in developing stronger customer loyalty and proactively addressing issues that negatively impact long-term customer profitability. The results have been significant in both shifting Dow’s culture and generating more than 20 times the financial returns on external spending.


I co-chaired a conference that featured more than a dozen CMOs from companies such as Hewlett-Packard, The Home Depot and Allstate. The topic: measuring marketing’s impact on the bottom line. As you would expect, these CMOs provided insight into their journeys toward greater profitability management. They talked about the difficulties in developing their measurement infrastructure and acknowledged the need for building accountability.


But the theme that was most prevalent—and least obvious in terms of relating to marketing measurements—was the importance of managing the customer experience.


When you think about it, how can you really manage marketing profitability without thinking about the customer experience? After all, for the vast number of companies, the real profits roll in not with new customer acquisition, but with repeat purchases from the most profitable customer segments.


Paul Koulogeorge, vice president of marketing at EB Games, an electronic game retailer with more than 2,000 stores worldwide, is attentive to customer experience numbers and knows that repeat business is critical to his company’s success. He tells a story of how the company occasionally receives letters from concerned parents complaining about how store employees had a Mohawk haircut, tattoos or “a bit of an attitude.” Koulogeorge describes his typical reaction to these letters as: “Great!”


“We hire raving fans and include free trials and midnight openings for new games to ensure the store experience is unique and completely focused on the young male audience who are avid gamers,” says Koulogeorge. “The in-store experience has to be centered on this core audience and entice them to return again, whether they make a purchase or not at that time.”

In the Pipeline

Funnel management is a major component of marketing profitability management. A customer funnel lays out the progression from unaware prospect to long-term customer; it is central to marketing measurement because it creates the link between marketing activities intended to motivate customer behaviors and the impact of those behaviors on financial outcomes for the company.


Allstate, HP and Siebel all include the customer funnel as part of their management of marketing measurement and the overall customer experience. CMO Joe Tripodi describes how Allstate’s marketing scorecard tracks customer progression through key milestones such as quote rates, close rates, cross-sales and renewals. His Balanced Scorecard broadens to include business results (quote volume generated, ROI), brand health (awareness, consideration) and customer experience (retention, customer loyalty, referrals). Given that Allstate’s advertising is intended to generate incremental business by building strong emotional bonds, measurements around the customer experience before and after the initial purchase are critical.


Think about it this way: Your marketing efforts through all of your touch points influence a select segment of customers to be more inclined to buy from you. At any point in the funnel, leakage can result from a single gap in the experience, such as a failure to communicate a critical piece of information, a disconnect in positioning, or delivery of products and services that fall below expectations. Leakage points represent lost profit opportunities. Your marketing measurements must be structured to uncover the leakage points in the funnel in order to guide new strategies, tighten integration across diverse marketing initiatives and motivate a common commitment to improving profitability.

Finding Your Inner Customer

The former CMO of a leading heating and air-conditioning equipment company told me that, shortly after joining the company, he recognized that the real opportunity for growing profits lay in taking ownership of the customer experience. His efforts to get the company to become more customer-centric, integrate sales and marketing, and manage the complete brand experience were largely driven by the work he did to establish the right metrics for the organization.


While there are many lessons to be learned from this CMO, I saw four key steps that really made the difference in his success. Initially, he took the approach of questioning the obvious. He came into a sales-driven organization where the primary business metrics were transaction-based and reflective, tracking products sold by region. There were no predictive metrics to indicate how current performance would affect future sales and no customer-based metrics to indicate who the top customers were.


On the surface, the current metrics indicated overall business performance was going well. To get a deeper understanding of the customer and sales process, he met with top sales executives, conducted customer focus groups and initiated customer satisfaction research. He discovered that the likelihood that recent customers would repurchase from his company was 50-50 at best, so he knew the current metrics were not telling the full story.


He then mapped out the customer experience with a close look at all touch points, including the sales process. The sales approach shifted from pushing products to selling customer-specific solutions. He also sought to move the company from being product-centered to being customer-centered. Such buy-in was significant, since the introduction of new metrics would mean a disruption in the current sales compensation plan.

The last critical step before initiating the transition was defining key metrics for the organization. Its core metrics were shifted to align with its customers’ success metrics.


A carefully constructed customer satisfaction measurement was designed to correlate with sales performance. Other customer-driven metrics included contribution to the customer’s speed to market, total cost of ownership and compliance with customer regulatory requirements. Common metrics were established across all sales and marketing groups. Now the company’s sales and marketing culture is attentive to not only customers’ satisfaction but also the satisfaction of its customers’ customers.

Analyze This

Consider what your current marketing metrics actually tell you in terms of the entire customer-funnel progression. If you are measuring awareness and consideration, do you look at your performance as a single metric across your broadly defined target audience? Or do you assess your position for noncustomers, new customers and loyal customers differently? The results for each group provide very different insight into your potential success.

And if you are running marketing mix modeling, are you content with the correlation between advertising spend and total sales volume? Or are you drilling down to uncover the underlying behavioral shifts by new customers, short-term shifts in buying patterns or sustainable shifts in loyalty? Are you completing the right research to identify how the customer experience influences future purchase decisions or leads to leakage from the funnel?

I encourage you to bring your analysis down to the customer level, whether it’s through mining your customer database, creating a new approach to modeling, running quantitative research studies or observing the actual customer experience. As you learn how your marketing influences the behaviors of prospects and customers over time, you’ll be better positioned to design future strategies and tactics and project the financial outcomes from those initiatives.

Copyright © 2005, CXO Media Inc., reprinted by permission from CMO Magazine.

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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.


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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The Defining Moments of Marketing ROI

Lenskold Article Series

by Jim Lenskold

The Defining Moments of Marketing ROI

How does your company define marketing ROI? A survey conducted by Forrester and the Association of National Advertisers (ANA) found “a lack of consensus among marketers on how to measure/define their return on investment (ROI) in marketing.” The top choices were Incremental Sales Revenue Generated by Marketing Activities (66%) and Changes in Brand Awareness (57%). Other top choices referred to purchase intentions, attitudes, market share and leads. There is a lack of consistency in the industry, but more importantly the industry is still slow in embracing marketing accountability with measures that have financial integrity.

Is there a right answer to how marketing ROI is defined? If you were to ask individuals how they defined and measured the ROI on their stock portfolio, what kind of responses would you expect? Most investors will not be satisfied if their stock portfolio returns are defined as most popular or most likely to grow. They also won’t be satisfied if they get high growth rates that are more than offset by high commission fees. Bottom line is the return on investment means exactly that – the profits (not revenues) generated in excess of the initial investment, discounted to net present value and shown as a percent of the initial investment.

Even with agreement on the ROI definition at this high level, the quality and success of your marketing ROI processes are dependent on establishing additional definitions for your calculations and measures. Definitions provide consistency, which is especially important for areas where some interpretation or judgment is required.

The marketing ROI process requires definition of:

  • The marketing investment – The marketing budget for a campaign or activity is typically obvious but what about brand campaigns running concurrently, salaries and overhead, supporting technology and the sales channel? You have choices here that will influence the ROI calculation.

  • Incremental customer value – Your definition must consider the immediate purchase, incremental future purchases, and the time period for future value, less deduct costs that are sales-driven.

  • Return vs. investment categorization – Certain expenses fall on both the return and investment side of the equation, such as price discounts, rebates, and sales premiums.

  • Baseline measures – A clear and consistent definition is needed for the baseline projection from which the incremental profits are derived. Control groups, modeling and other measurement methodologies are part of this definition, along with decisions for the frequency and precision of the measures.

  • Customer behaviors – Even basic terms we take for granted require definitions. When is a customer fully acquired? After the first sale, a repeat sale, or a steady purchase level? Is defection clearly defined as well as retained, saved and won back customers?

These are just a few key categories that are part of implementing a highly effective marketing ROI process. This is where errors often exist. Setting definitions requires good planning and is driven by one primary principle – will this drive the right decisions in creating and executing more profitable marketing strategies? Once the standards are set, the same principle is used as the quality check to make improvements.