The science behind the art of marketing
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The science behind the art of marketing
- 1. The Science behind the Art of Marketing Sanoma Media Parade- June 2012 Caroline Vervaeke
- 2. – Draft – The questions we ‘re facing: 1. To what result can a + - change in the marketing budget lead? 2. To what result can a change in the marketing mix lead? Presentation1 2
- 3. – Draft – Marketing Performance Calculation is complex This might be an understatement…… YMS results 2012 Marketing trends Doing more with less budget Boost of channels and media Proving the added value ofFragmented audiences & fragmented attention the marketing efforts DM becomes a mass medium with decreasingMultitasking & switching off success rates Increasingly price-sensitive customers Exaggerated focus on short term brand activation Not satisfied with the results of social media Presentation1 3
- 4. – Draft – Why NOW is the time for the right Marketing Metrics “70% of the buying process is now complete by the time a prospect is ready to engage” (SiriusDecision Inc.) “65% of CEO’s give their marketing departments an insufficient for measuring the marketing impact” (VisionEdge Marketing & Marketo 2010) Presentation1 4
- 5. – Draft – But where do we start? Share of market Customer Retention Profitability metrics Share of wallet margin Facings Number of leads Net profit Number of complaints Opening rates Advertising effectiveness Number of customers Customer Acquisition Cost Brand awareness Sales metrics per channel Conversation OTH Churn rate reputation Revenue metrics There is no 1 truth for all companies Number of visitors Click Through Rate Web analytics Sales metrics Top of Mind Growth metrics per segment Retention rate Net promotor score Customer Lifetime value conversion Brand preferences OTS Brand recognition Customer Defection Customer advocacy Share of voice Customer satisfaction Innovation metrics Redemption rate Time to market GRP Presentation1
- 6. – Draft – But where do we start? Share of market Customer Retention Profitability metrics Share of wallet margin Facings Number of leads Net profit Number of complaints Opening rates Advertising effectiveness Number of customers Customer Acquisition Cost Brand awareness Sales metrics per channel Conversation OTH Churn rate reputation Revenue metrics There is no 1 truth for all companies Number of visitors Click Through Rate Web analytics Sales metrics Top of Mind Growth metrics per segment Retention rate Net promotor score Customer Lifetime value conversion Brand preferences OTS Brand recognition Customer Defection Customer advocacy Share of voice Customer satisfaction Innovation metrics Redemption rate Time to market GRP Presentation1 6
- 7. – Draft – Think in a structured way, start by asking some relevant questions 1. What exactly influences our customers today? Check the Decision Making Progress And match the importance of the marketing mix elements with the importance of the touch points ànd the importance of the metrics Presentation1 7
- 8. – Draft – Think in a structured way, start by asking some relevant questions 2. How well informed (really) is your marketing judgment? Data remain only as useful as the expertise you bring to bear, and good judgment will remain a hallmark of the best marketers Start by formulating hypotheses about the impact of changes in the marketing mix/budget, and thèn seek analytical evidence Presentation1 8
- 9. – Draft – Think in a structured way, start by asking some relevant questions 3. How are we managing financial risk in our marketing plans? ROI risk Risk Parameters Max % of spending on unproven vehicles f.i. 20% Max % of decrease on proven vehicles f.i. 15% Create a breathing room for piloting, testing & learning Presentation1 9
- 10. – Draft – Think in a structured way, start by asking some relevant questions 4. How are we cooping with added complexity in the marketing organization? Specialists are Good integrator Clarity in processes, NEEDED Focused Responsibilities External? On the bottom line Internal/external Impact on Marketing expenditure Presentation1 10
- 11. – Draft – Think in a structured way, start by asking some relevant questions 5. Do we have a measurement plan & what metrics should we track? “44% of qualified marketers have no idea what a 10% budget increase could do for their company” (Lenskold Group’s 2010 BtoB Lead Generation Marketing ROI study) Invest up to 10% of your marketing budget in measurement, including testing. Presentation1 11
- 12. – Draft – The key question: what metrics do we choose? 1. Typical marketing metrics rarely have impact in the board, so keep them internal to marketing Brand awareness, GRP, OTS, OTH, CRT’s, OR, TOM….. 2. CEO’s only take business objectives into account. Marketing metrics have to prove impact on those objectives GROWTH MAINTENANCE REVENUE PROFIT Presentation1 12
- 13. – Draft – Business objectives Marketing Drivers Marketing Customer Equity Marketing Value Strategy THOM’s Value Capturing model Products / Technology Segmentation & Targeting Intention Behaviour Services Marketing Marketing Customer Marketing Strategy Drivers Equity Value Acquisition Awareness Purchase Process & Engine Experience Business Paradigms Price Premium Perception & Retention Communication Reputation Commitment Market Share Relationship Positioning Measurement plan, including the right metrics Preference Recommen- Building dation ànd assumptions Channel Management Scope Price Positioning Commercial Efficiency Plan Presentation1 13
- 14. – Draft – You need a plan upfront It is not about proving ROI, but improving ROI 1. Establish targets & ROI estimates upfront, based on business objectives 2. Design marketing programs to be measurable: what, when, how 3. Focus on decisions that will improve marketing programs = commercial efficiency Presentation1 14
- 15. – Draft – Key message 1: Prioritize your metrics, based on marketing priorities Marketing Drivers Products / Technology Drive sales Consolidate/ Services conversion improve Purchase Process & Experience Communication Relationship Building Channel Management Price Positioning Boost Brand Drive Building customer equity Low High Marketing Value Presentation1 15
- 16. – Draft – Key message 2: Metrics should not only make us able to take decisions today, but also for the future DECISIONS Strategical: Target group, Channel, Offer …. Operational: In store, image campaigns…. Presentation1 16
- 17. – Draft – Key message 3: avoid wrong metrics Vanity metrics: likes, press views, business cards …. Quantity metrics: GRP, leads, nr of spots/displays/leaflets… Activity metrics: nr campaigns, promotions, …. Efficiency (doing things well) <-> effectiveness (the right things) Cost metrics: cost/lead, cost/contact, OOP media budget…. Presentation1 17
- 18. – Draft – What about soft metrics? BEHAVIOUR Re- Hard purchase measures Purchase • Too often Trial marketing department Conviction excels in measuring soft measures Preference • Exceptionally the Soft link is made with Liking measures hard measures Knowledge Awareness THINKING Presentation1 18
- 19. – Draft – Key message 4: Importance to incorporate the hard metrics PAST PRESENT FUTURE Revenue metrics Lead generation Conversion rate Size prospect DB Aggregate impact on Cycle time versus trend or Mkt contrib. company revenue benchmark forecast Marketing Program Investment Response rate Expected Pipeline Lift over control contribution PM contribution group forecast Incremental contribution Program ROI of individual mkt programs Profit per customer Average selling Investment to Retention rates LTV of an incremental price acquire cust. Prod /customer customer Marginal cost to NPS serve Presentation1 19
- 20. – Draft – Key message 5: Choose no more than 5 key metrics and put them in perspective - Choose wisely because it’s hard to put organizational focus on more than 5 -Measure success versus goals for those metrics for every campaign, every channel, every product….. How did What is How will we we do? working ? be doing? Presentation1 20
- 21. – Draft – Key message 6: Assure implementation and recognition Presentation1 21
- 22. – Draft – So, suppose your CEO's kindly asks you to decrease your budget with 10%? 1. Make your homework and check the 5 questions 2. What are the most important metrics compared to the different assumptions given? 3. Decrease budget with no more than 15/20% of the less performing vehicles 4. Be sure to incorporate the impact of related marketing programs in your decision 5. Make new assumptions and calculate the impact on the revenue metrics Presentation1 22
- 23. – Draft – At a glance Link your marketing metrics to the company objectives to gain credibility Establish metrics, goals and ROI estimates upfront Don’t put more than 20% of your marketing plan at risk Invest up to 10% of your marketing budget in measurement Use data to prove assumptions Limits the number of metrics and keep focus on decisions to make 23 Presentation1
- 24. – Draft – caroline.vervaeke@thom.eu @carovervaeke www.thehouseofmarketing.be Presentation1 24
Notas del editor
- Hoe effectiefzijnonze marketing inspanningen?Ikkanjullie nu al zeggendatergeenmagischeformulebestaatomallesnetjesuitterekenen, maar de bedoeling van de komende 45 minuten is omjullie guidelinestegevenomdaarover op eengestructureerdemaniertedenken.
- Het is inderdaadeencomplexematerie en het wordternietbeter op.Onze YMS was zeerduidelijkdaaromtrentonze CEO's altijdmaarveeleisender,marges en volumes staanonderdrukdusmoetermeergepresteerdworden met kleinerebudgettenMarketeershebbengeloofwaardigheidverloren en moeten die terugwionnen door huntoegevoegdewaardetebewijzenEenaantaltactiekenlijken minder tescoren : DM, eenmassa medium geworden, met verminderdsuccesBovendienstaan de prijzenonderdruk, indexering lost de echtedrukniet op, retailers zettenfabrikantenonderdruk…..Marketeersgrijpenterugnaarkortetermijnacties, voldoendaarmeemisschoienaan de verwachtingen van hun CEO maarzoudeneignelijkmoetenkunnenaantonendatditeennegatief effect heeft op de langetermijnDe nieuwigheden, scocial media geeftniet de resultaten die men verwachtteOokalgemene trends maken het onsnietmakkelijk….
- Dus: nu is het echtwel het moment omwerktemaken van - wetenschappelijk is watoverdreven, maar in iederegevalgrondigerinzichttekrijgen in het effect van marketing op het resultaat van het bedrijf: op de juistemanier de inspanningenmeten.Eenbelangrijkereden is alvastdat marketing eigenlijkeenstedsgrotererollijkttehebben.70% van het beslissingsprocesskan door makretingwordenbeinvloed. CEO's wantrouwen …
- Metenomteweten, maarzoalsgezegd het is complexWe kunnen heel veelmetenmaar de vraag is of we daarmeewetenwat nu bijbrengt in het resultaat van eenbedrijfJammer genoieg: er is niet 1 waarheidvoorallebedrijven
- Belangrijk is om op eengestructureerdemaniernatedenken door jezelf en het team de juistvragentestellen en tebeantwoorden.Goed je huiswerkmakenzodat je op basis van aanvoelen en kennis de juistebelsissingenkannemen.Eeneerstebelangrijkevraag is: hoe zit het aankoopproces in mekaarvoormijn product of service.Eeenaankoopkan heel complex gebeuren, veelzaken of personenkunnenbeinvloeden, we wetendatergemiddeld 7 touch points nodigzijn, maar het is belangrijkste is omtekijkenwaterverander in dat process.Bijvoorbeeld Telco bedrijven, energiebedrijven .. Doen heel veelinspanningenom het beslissingsproceszo online mogelijktelatenverlopen.Datkan per sector bekeenworden, of per merk. Retail moetdit mi zeergoed in het ooghouden, hoe …..Bepaalde marketing actieskunnenmeer of minder belangkrijgenHow much worth is the advice of a specialist? Maybe peers are much more importantEnkelkwalitatiefonderzoekkanuitsluitselbieden.
- Eentweedebelangrijkevraag is: hoe goedbenikgeinformeerdomgoeie marketing beoordelingentemaken. Marketing zalnooit 100% wetenschappelijkizjn,, hoeveel data erookwordengegenereerd. Wat het is eenfeit: we hebbentonnen data terbeschikking. Voortdurendnieuwe tools, nieuweeconmetrischemodellen. Maar de realiteitblijft: de data op zichzullengeenbeslissingenaanreiken. Ikpleithiervoor het omgekeerde: eerst hypotheses stellen, gebaseerd op kennis, ervaring, intuitiezelfs, en dat de data vindenide je hypotheses bevestigen. Duslzet de data crunchers aan het werk op het moment daterduidelijkehyptheseszijn, nietvroeger, het kanalleenmaar de complexiteit in de hand werken.Is dit in tegenstrijd tot Marketing Performance Management? Neen, en zekernietalstactieken en marketing programma'smoetenbeoordeeldworden, want daarbestaangeenmagischeformulesvoor.
- Heel weiniggecumuleerdeervaring met veranderendedoelgroepen, neiwue media ….. Maarzemakenmeer en meerdeeluit van onze marketing aanpak.Eigenlijkkomtditeropneerdat het ROI risicovermeerdert. We radentochaan op opvoorhand die risico'stebeperken.Eengoeieregel is bijvoorbeeldomongekendetactieken tot limiteren tot 10 of 15% van het budget.Create a breathing room for piloting, testing & learning but don’t forget scenario planning (KIS) It will stimulate dialogue internally, over de echteafwegingen, wikken en wegen and it will aloow you to manage expectations across business units.
- Welkemaatstavengaan we gebruiken?
- 1. Talk CEO language, including risk analysis
- Complexiteit van marketingprogramma'sWegensverschillendetouchpoint, verschillendebeinvloeders en zelfsexternefactorenzoals het weer.Hoe pak je het aan?Makkelijkste is omeerstecontactpunt , of laatstecontactpuntalle credits tegevenvoorsucces.Econometrischemodellen van mediacentrales: is zeergoed, geefthistorischperspectief en laat toe meergefundeerdeassumptiestemaken. Enigenadeel: enkel en alleengebaseerd op kwantitatievegegevenshetkwantigegeven is bereik, eventueelaangevuld met specifiekeindicatorenzoals het weer, kunnengeevalueerdworden. Zehoudengeenrekening met kwaliteit: de ene DM is de andereniet, de ene spot is de andereniet. En het houdt geenrekening met veranderende consumer trends. Of veranderde decision making proces.Het is belangrijkomalletouchpointstemetenmaar je moetereengewichtaantoekennen. En niet op basis van kost….