Return On Marketing Investment

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Information about Return On Marketing Investment
Business & Mgmt

Published on May 19, 2009

Author: mehalchin



How to use an ROI based approach to drive your marketing strategy and demonstrate marketing's value to the enterprise.

RETURN ON MARKETING INVESTMENT A Lenati Point of View Jennifer Winter, Managing Partner Martin Mehalchin, Prinicipal 1

Elevating Marketing Using An ROI Mindset

The Marketing Executive’s Dilemma Average tenure for CMOs at the top 100 branded companies is just 22.9 months CMO Tenure – Slowing Down the Revolving Door (Spencer Stuart) Complexity & Sophistication Growth  Marketing organizations can/should take on many responsibilities for the organization –Product Marketing, Customer Research, Customer Segmentation, Go To Market Strategy, Customer Experience Programs – Pre/Post Sales, Brand, PR, Integrated Marketing/Demand Generation  Marketing channels continue to increase (search, 3rd party websites, affiliate marketing, social networking, influencer networks, viral/citizenship marketing) requiring investment trade-offs.  Marketing continues to become more dependent on data and technology to achieve results requiring left and right brained talent

Barriers to Optimizing Marketing’s Value/Promise • Access to evolving, specialized marketing capabilities and skills LEADING Strategy, • Proliferation of strategic objectives and marketing activities Structure, • Visibility and accountability for outcomes versus credit for “looking good” Process • Inconsistent connections between marketing and sales • Lack of common or shared goals • Sales not connected to campaign rollout/training efforts • Lack of systemic, reliable information to make data driven LAGGING decisions around optimizing marketing investment Data & • Typically limited ability to demonstrate the causal Infrastructure relationship between the impact of marketing and the achievement of overall business outcomes

Pathway to Tapping Marketing’s Potential - Step 1 1 Strategic Value & Intent Representative Strategic Themes Expand our Share of Mind to new Verticals and or horizontals Scale Our Offer In Our Chosen Market-space to “Be THE One” Impact Deliver The Base Promise Presence And Trust For Existing Customers Time • Create a marketing strategy roadmap • Prioritize strategic objectives and phase implementation over time • Define and charter focus areas with success criteria • Identify needed improvements to infrastructure and capabilities

Pathway to Tapping Marketing’s Potential - Step 2 2 Customer Centric Marketing Consideration / Acquire/ Awareness Evaluation Purchase Use Advocate Perceptual Interest Implement Journey of the Need to Unaware of Want to Obtain Solution Use and Want to share / Customer Understand Ready to buy Capabilities investigate and Implement Maintain engage Value Marketing Conversion Sales Conversion Post Sale Experience • Understand how customers buy, and their decision stages • Align programs and campaigns to decision points and deliver via customer-preferred channels

Pathway to Tapping Marketing’s Potential - Step 3 3 Operational Measurement & Alignment Operational Measurement & Alignment • Measurement & clear accountability for marketing outcomes • Productivity Measures – Are we delivering outcomes we committed to? • Efficiency Measures – Are we good stewards of allocated company resources? • Effectiveness Measures – Are the results achieving what we intended? • Marketing operations cadence • Monthly operations reviews • Marketing dashboards • Monthly contribution and funnel analysis • Quarterly Business Reviews (QBR’s) • Annual strategy review and evolution

Marketing Measurement Using Scorecards The typical CMO—according to our research—is able to neither measure nor systematically communicate on the fundamental business processes in the marketing function and their results. This can set the stage for a CMO's failure. CMO Council Report – Define & Align the CMO Scorecard Objectives ROI is a Mindset Clarify and define the role and value of ROI is not a financial calculation. It is a marketing measurement mindset that requires you to Enable a learning organization that makes continually ask the following questions: decisions on facts supplemented with experiential intuition rather than lots of Objectives: What am I trying to achieve? intuition punctuated by a few facts; Audiences: Who am I trying to impact? Creates a culture of performance and Metrics: How will I define success? success and provides a tool to Resources: What will I need to invest? communicate why/how marketing matters Results: How well did I do? to the business Learning: How can I do better next time? Elevate marketing accountability to earn the trust and confidence of the CEO, the CFO, and others throughout the company.

Category Spend Analysis – A 1st Step Toward ROI-driven Marketing

Structured Analysis Approach Return on Marketing Investment (ROMI) – Category Spend Analysis Framework Evaluate Spend/Cost Evaluate Share of Evaluate Within Driver Categories Spend Category • “Should we be • “Are we spending • “Are we spending on this the right maximizing the at all?” amounts?” opportunity?” • “Are we ignoring • “Should we • “Is marketing good allocate more to connected to opportunities?” `X’ and less to sales? Are we • Category `Y’?” generating examples: online, leads?” traditional media, • “Can we approach trade shows this category differently?”

Availability of Data Will Drive Precision of Analysis • Quantitative Sources – CRM data – Survey data – Benchmarking data • Qualitative Sources – Staff interviews (chiefly inside & outside sales) – Channel interviews (dealers, distributors, sales agents etc.) – End customer interviews If mostly qualitative input is available, then implement change as a series of measurable test and learn exercises

Process Based Analysis – Trade Show Example Forward Analysis Trade Activity Inside Sales Outside Sales show % of leads Resulting closed Metric # of leads resulting in sales (# & $ appts. value) Reverse Analysis Sample set Trace the history of the sale Identify of closed initial point sales Where were the marketing of contact touch points? Which touch points influenced Was it a trade show? the purchase decision? Did the decision maker attend a trade show?

About Lenati

Company Overview OUR BUSINESS OUR PEOPLE Lenati is a services firm that designs, implements and As part of our drive to be a services industry leader in optimizes marketing, sales and services experiences for helping organizations maximize their market performance, companies who want to build stronger customer we have assembled a small, high powered group of connection. We believe product innovation and pricing professionals and strategic partnerships that help us deliver are no longer sufficient to drive competitive advantage – innovative solutions that can help your organization make today it depends on a company’s ability to deliver a an immediate impact in the marketplace. compelling experience across the entire customer lifecycle. We have the solutions and the team to get you there. OUR SOLUTIONS We have five core service lines that we use to deliver stronger customer connection for our clients: • Go to Market Strategy • Market Assessment and Product Planning • Marketing Program Design & Optimization • Sales and Channel Program Design & Optimization • Relationship Management and Influencer Program Design & Optimization

Solutions Lenati offers a complete set of solutions to help your sales and marketing efforts to drive customer connection and satisfaction and increase revenue Channel Support GTM Campaign Strategy & Strategy & Plan Strategy Execution Org. Design Customer Partner Cross-Sell Business Plan Customer Customer Loyalty & Strategy & Strategy & Development Segmentation Experience Retention Management Programs Community & Tele/Online Acct Mgmt. Sales & Competitive Pricing Influencer Sales Program Strategy Marketing Assessment Programs Strategy Design Processes STRATEGIZE MONETIZE OPTIMIZE Market Go to Market Marketing Strategy Sales & Channel Service & Marketing & Sales Assessment Strategy & Programs Strategy Support Programs Optimization Market Persona Relationship Lead Gen Satisfaction Marketing Assessment Development Marketing Strategy & Programs Spend & Sizing Programs Execution ROI Product Sales & Comp & Sales & Sales & Pricing Roadmap Marketing Quota Service Marketing Strategy Development Alignment Strategy Alignment Analytics

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