Five Steps to Success with Marketing Performance Measurement

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One of the largest and most experienced cleaning specialty franchise organizations in the U.S. set an objective to increase revenue per customer and thereby drive additional sales over fifty franchises. The company’s mass media program was creating awareness, but there were no measures that indicated ROI.

Company marketers set out to establish a measurable marketing campaign that would enable them to gauge campaign performance more accurately and determine its overall effectiveness. A pilot direct campaign was designed to engage customers by thanking them for their business and reminding them of upcoming service needs. Should the pilot campaign meet the objectives established at the onset, the proven program could then be rolled out and offered to the other franchises.

Improving Marketing Performance: A Good Idea in Any Economy

There is plenty of buzz these days about the need for marketing performance management, yet many marketers face challenges to implement a performance management system due to budget constraints, data challenges and lack of technology support. Part of the issue is that performance management systems are not out of the box solutions and require the right data, assistance from the technology team to structure that data and the right visualization and analysis tools.

The economy has accelerated the need for accountability, yet marketers must not mistake that better economic times will eliminate the need.

Good solutions combine metric knowledge, process automation and software tools to reveal customers’ insight and diagnose why a campaign performed well or didn’t perform at all. A performance management system delivers insight and information which allows marketers to make better decisions about their marketing investments and to demonstrate to C-level managers marketing’s contribution to revenues and profits.

Like the marketers in the aforementioned example, as economic pressures continue to intensify, the need for marketers to demonstrate ROI and demonstrate marketing’s contribution to sales and profits has also intensified. According to the 2009 “Market Sphere ROI and Measurement Study” (Lenskold Group), “8 in 10 marketers (79 percent) report the need to measure, analyze and report marketing effectiveness is greater in 2009 (over 2008) due to current economic pressures.” The economy has accelerated the need for accountability, yet marketers must not mistake that better economic times will eliminate the need.

Enlightened marketers began years ago to develop automated systems to measure marketing performance and to integrate campaign execution capability. In 2004, the CMO Council published the “Measures and Metrics Report.” In 2006, the Aberdeen Group published a benchmark study of over 300 companies in an effort to quantify the value of measurement and technology integration in the marketing process. The study found that best in class companies were achieving an increase greater than 15 percent in marketing return on investment, customer retention rates and customer acquisition rates.

Today, the payoff continues. Lenskold’s “Marketing ROI and Measurement” revealed that “companies that indicated their marketing was highly effective and efficient showed much greater strength in having data, facts, and insight to better guide marketing spending decisions.” The study also cites that having “good measurements, using customer analytics, and having marketing operations processes improve the business of marketing.”

So the question marketers should be asking themselves today isn’t why a performance management system, but how can I implement a performance management system within my own marketing organization?

Overcoming the ROI and Cost Obstacles

There’s a myth that haunts many marketers today—that integrated software systems are too expensive. True, enterprise marketing technologies was, and in some cases continues to be, a significant investment. And since many marketing performance management systems rely on disparate data within the entire enterprise, marketers mistakenly assume that implementation of a performance management system will be cost prohibitive. According to Forrester Research, the top barriers to implementing marketing technology are cost and unclear return on investment (Marketing Technology Adoption 2009). Unclear ROI is certainly understandable in the case of a performance management system since the technology itself doesn’t provide the ROI. The intelligence (output) supplied to the marketer for better decision making and the speed of the actions taken by the marketer to improve campaign performance drive ROI.

The second obstacle is cost. To overcome this obstacle, marketers should consider software-as-a-service (SaaS) solutions versus enterprise solutions. The SaaS model allows marketers to pilot a performance management system without investment in infrastructure. Once a pilot performance management is in place, and resulting insight is acted upon, marketers can demonstrate impact of a performance management system to the C-level executive, and expand their pilot throughout their marketing activities.

The cleaning company from our previous example established a performance management system to monitor the objectives in real time as the pilot campaign was launched to the customers of the corporate owned franchises. The pilot campaign met most of the objectives, and where the objectives fell short, tweaks and tests were done to improve the results. In the end, marketers achieved full transparency via dashboard delivered reports along with resulting analysis performed along the way, which informed any follow on changes to the campaign. As a result, trust within the franchisor group increased and operators became eager to adopt the program.

On a small budget, the pilot launched a national campaign to increase revenues for both corporate and locally owned franchisees. In addition, processes are now in place for execution of additional programs.

Steps to Success

By following these five steps, marketers can build a pilot program similar to the company mentioned above that is scalable to a larger solution as ROI is demonstrated.

  1. Build a data repository or data mart for marketing use.

    Data marts are unique to each business and should be designed based on marketing’s objectives, key performance indicators and the collection of customer data. To build a marketing data mart, start with an understanding of what you want to measure and determine the information you need on your customers. In most cases, marketers include campaign measures, customer measures and transaction measures. From there, you can work backwards to identify where the data sources live in your organization. Consider the following possible sources: web analytics, CRM, service groups, call centers, financial data, sales data, campaign data and product data. Applying extract, transform and load routines (ETL) into your data mart, and automating those routines will provide real time information for performance reporting and analysis.

    Many companies have data structure specialists within the IT organization. These specialists can help you through the technical processes. As an alternative, some marketing technology service providers specialize in data mart design and development, and can host your data mart in the software-as-a-service model.

  2. Add Dashboard Visualization.

    To monitor marketing performance effectively, create a visual marketing dashboard. With data contained in your data mart and through program calculations, a dashboard can display campaign ROI, actual versus projected by campaign, sales, conversions or visual representation of performance measures established in step one. Visualization tools are not expensive and most mining and analysis tools provide them.

  3. Analyze and Understand Performance.

    The addition of an analysis tool provides drill down ability and deep understanding of campaign results. Analysis tools answer marketing’s critical questions such as: How did my campaign perform? Why? How did customers react? How can this campaign performance be improved? And because your data mart is capturing response data, the closed loop methodology creates a continuous improvement cycle and provides complete transparency and accountability for marketing. Business intelligence tools are available in software as a service model. Also, data mart solution providers typically provide the hosting of an analysis tool in addition to providing the hosting of your data mart.

  4. Mine the data for customer insights.

    Since the data mart contains interaction data from multiple customer touch points within your organization, you can begin to understand the behaviors of your customers. You can also identify customer channel preference(s), design offers or loyalty programs based on what the customer values, and develop strategies that extend the relationship life of your most valuable customers. Customer insight drives improved campaign performance.

  5. Take Action!

    Insight is only valuable when you take action through targeted campaigns and programs. The insight you gained in data mining can be made actionable through improved segmentation or targeting, the elimination of programs that prove not to work and investing in those that do. It’s the action you take and the incremental profits you achieve that delivers the ROI on the performance management system.

The ultimate goal of performance management is to get to the root of whether, and to what extent, marketing investments are contributing to revenues and profit. But solutions don’t need to “break the bank” and ROI can be demonstrated through pilot programs using software-as-a-service. The return on investment for a performance management system is found in the actions marketers take as a result of analysis. These actions take the form of improved campaigns and programs.

Through continuous application, marketers gain greater insight and move through a cycle of continuous improvement, delivering greater profitability. As one senior marketer of a large insurance firm said after implementing these steps, “We now deliver more value as a service and support unit. Trust in the group has increased.”

1 COMMENT

  1. Hi Connie,
    I completely agree with your post. However I must say that given the proliferation of marketers during the last decade it’s becoming more important to emphasis on the importance of campaign ROI than ever before.

    I think that many marketers are overlooking the importance of effective communication and just try to do “big things” whether or not achieving the expected results, hence investing in ATL more than needed and keeping CRM as a different organizational silo. In a recent post i wrote in my blog, I question whether we are investing correctly our A&P budget. http://tavovalencia.wordpress.com/2011/07/31/how-to-use-your-ap-budget-wisely/

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