The recession has brought an unprecedented drive for accountability in the marketing world. At the same time, we have a vast array of new tools that enable us to quickly measure results and ROI and adapt our marketing messages almost instantly to drive better results. With all the new tools available, making sense of what to apply is vital. Here are eight strategies marketers can apply easily and efficiently to become more accountable :
1. Start with the basics
If you want to understand the impact of your marketing efforts you need to start with measurement. Then, move on to analysis of the results and finally use the insights from the analysis to optimize your marketing efforts. Now that marketing budgets are under increased scrutiny, many companies are looking for instant optimization by skipping measurement and analysis. This never works. You need the foundation of metrics and insights before you can optimize.
2. Align metrics to objectives
Measure what you need to measure, not what you can measure. Many marketers get over-excited about modern measurement tools that allow them to track everything. This often means they end up drowning in metrics. Starting from the business, marketing and communications objectives and then aligning your metrics to them will ensure you focus on the metrics that matter. Mapping metrics to objectives also often improves the quality of the objectives themselves.
3. Use more than one metric
The last couple of years have seen a number of efforts by marketing professionals and academics to summarize marketing’s performance in one metric. Reicheld’s Net Promoter Score, Peppers and Rogers’ Return On Customer and Doyle’s Increase in Shareholder Value are examples of such efforts. While some of these metrics can be useful performance indicators, they will never be able to explain the workings of marketing in its entirety.
4. Use a mix of financial and non-financial metrics
Finance departments everywhere are forcing marketing departments to adopt financial metrics. This is a good thing. Focusing on financial metrics only, however is not. It does not improve the understanding of how marketing works. Counting the money is not enough. Marketers (and finance people) also need to understand where the money is coming from. London School of Economics professor and marketing accountability guru Tim Ambler once compared the exclusive focus on financial metrics to the effects of cannabis – it distorts the reality and thereby creates the illusion of control.
5. Build a results repository
A results repository which stores all marketing related metrics in one place is probably the most important asset a marketer can have in the quest for accountability. Though this sounds very obvious, it is surprising how few companies have one. This doesn’t have to be a sophisticated database. A simple excel sheet or access table can often be a great improvement. It’s not about the technology, it’s about having the discipline of consistently capturing marketing performance metrics over time.
6. Track marketing cost data
It is interesting how few companies adequately track metrics related to the costs of marketing. Cost metrics tend to be stored in financial systems and kept at a very aggregate level. This often makes them useless for performance analysis. Keeping track of your marketing costs by marketing objective, program, channel, geography, segment and medium can greatly improve your ability to understand the effectiveness of your marketing investment.
7. Use statistical modeling to identify drivers of business performance
Econometric modeling has been around since the 1950’s and its power in helping understand marketing effectiveness is well documented and understood. A recent study of the IPA Effectiveness awards however revealed that only 15% of the submissions used econometric modeling to measure performance. In my experience, even companies who do econometric modeling often struggle with integrating them in marketing decision making. This is a shame as econometric modeling can often identify the key marketing drivers that are correlated with business outcomes and help marketers focus on them.
8. Build a marketing dashboard
Marketing dashboards are a very visible and tangible output of your measurement efforts. This not only makes them popular, it also means dashboards can become the catalyst for doing the seven things mentioned above. If you build a dashboard you start with measurement. The design of a dashboard usually leads to a conversation about what metrics are important. You will need a set of metrics to populate the dashboard, which usually includes both financial and non-financial metrics. The financial metrics will require the discipline of tracking marketing cost metrics. And all metrics need to be stored in results repository that powers the dashboard. A typical results repository also usually holds 80-90% of the data required to do econometric modeling.
Dimitri Maex ([email protected]) is managing director, marketing effectiveness at Ogilvy.
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