Happy New Year to all! I thought I would start the year with one of the most pressing issues that Marketing faces - proving its contribution to the bottom line. I recently blogged about my speech at the M-Planet conference, but I also continued the ROI discussion with some of the other great panelists.
Here is an abstract of our email conversations.
Chip Reeves - Director Marketing and Sales Process at Dow Corning
As I think back to our interaction at Mplanet on Marketing Metrics, it strikes me that two of the most important ideas are
1) structuring metrics in order to learn and
2) engaging teams in experiments at the marketing program level.
Metrics are best used for making better decisions about what to do next, not just to take stock of what has happened. One of our best examples is from our Electronics group that tested several marketing variables on a small scale then implemented a larger program with better confidence on the expected results. Everyone loves to imagine the big corporate level metrics that yield strategic insight, but almost nothing at that level is valid unless it sits on a foundation of consistent definitions and global process at the marketing program level. We are focusing on instilling excellence in measures at the program level so that aggregated metrics are more meaningful. We have made progress down that path, but there is a long way to go. It was great to share ideas with you and the other conference attendees.
Jim Lenskold - President Lenskold Group
In looking back on our Mplanet panel session, “Driving B2B Marketing Success with Marketing ROI,” it make sense for me to share the highlights of my opening statements since Ann Handley did a great job at summarizing my key takeaways from the session. My opening statement covered three key points that help marketing professionals get the right mindset about Marketing ROI.
1) I suggest you think of marketing ROI as a process that encompasses 1) financial impact analysis, 2) a discipline of measurement and analytics, and 3) applying this insight to strategic and tactical decisions. The ROI process is designed around managing customer progression through the buying decision funnel and identifying the contribution of each marketing initiative to that funnel progression. Marketers need better insight into the key drivers of profitability to effectively improve their bottom-line contribution.
2) It’s also important to recognize that we’ll never measure everything in marketing. There are too many options that can influence your overall effectiveness and too little staff and budget resources to measure and analyze. So a key part of this process is to measure smart and prioritize based on the highest profit opportunities and our ability to apply that knowledge to significant portions of our budget.
3) In today’s world, marketing is most often viewed as a “discretionary expense.” Many marketers that decide to implement marketing ROI practices do so to move to the level of a “justified expense.” That is certainly a good step forward but you should take this a half step further to have marketing viewed as a “managed investment.” There is a subtle but important difference between the two, When you seek to justify your expense, you look back at what the marketing just finished and measure for the purpose of reporting out on your results. But with the mindset of a managed investment, you measure for the purpose of spending our next marketing dollar smarter to generate a more profitable impact. You’ll choose what and how we measure quite differently.
ROI measurements and processes are clearly an opportunity for the marketing organization to achieve credibility and respect as we improve alignment with business objectives and demonstrate our ability to deliver impact by applying the insight gained.
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