Implementing Effective Marketing Dashboards


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Implementing Effective Marketing Dashboards

  1. 1. How To Guide Implementing Effective Marketing Dashboards Executive Summary: Measuring marketing performance has become a top priority for almost every organization, yet most do not have a comprehensive system in place. Marketing Dashboards provide a high-level snapshot of the most critical metrics that relate to business performance. Benefits of implementing a Marketing Dashboard include:  Ability to Measure Marketing Effectiveness/ROI  Improved Visibility for Senior Management  Better Allocation of Resources This report will define Marketing Dashboards, highlight their benefits, and provide high-level Best Practices for establishing an integrated performance measurement Call a Principal Analyst: (866) 947-7744
  2. 2. 2 Table of Contents Page Introduction 3 What are Marketing Dashboards? 4 Benefits of Marketing Dashboards 4 Implementation Best Practices 5 Conclusion Call a Principal Analyst: (866) 947-7744
  3. 3. 3 Introduction Over the past 10 years there has been a distinctive shift in Marketing activities; budgets are only being allocated to investments that can produce measurable returns, such as sales support and lead generation. In a time of Sarbanes-Oxley compliance, repeatable controls, processes, and policy & procedures, have been implemented to ensure accountability. This cultural shift is spreading into Marketing as senior executives have witnessed increased efficiency & effectiveness by standardizing, measuring, and benchmarking, key metrics in functions like Finance, I/T, Sales, and Operations. Structured processes and analytics are new for most Marketing departments, so it is no wonder that in a recent CMO Council Survey, Marketing Performance Measurement was highlighted as a significant priority by over 90% of the companies. Strikingly, less than 14% of these companies reported having any type of comprehensive system to measure Marketing. Those who did have systems in place significantly outperformed their competitors in revenue growth, market share, and profitability. Clearly, it is essential that Marketing professionals learn the Marketing Performance Measurement discipline if they are to survive. No longer is it acceptable to provide gut-feel estimates of the impact of marketing programs. Results must be measured. A simple approach to measuring performance is implementing a “Marketing Dashboard.” This report will define Marketing Dashboards, highlight their benefits, and provide high-level Best Practices for implementing an integrated performance measurement system. Before implementing any MPM solution, be sure to read our summary, “Get Ready to Measure Marketing Performance” and complete the Dashboard Readiness Assessment. If you are already measuring your marketing performance, use our Marketing Measurement Maturity Assessment to benchmark your strengths & weaknesses and to identify areas for Call a Principal Analyst: (866) 947-7744
  4. 4. 4 What are Marketing Dashboards? Marketing Dashboards are comprised of the most vital diagnostic and predictive marketing metrics, structured so that executives can quickly identify trends in performance. Typically, Marketing Dashboards have 3-5 key metrics in each of the following categories:  Customer  Product  Brand  Channels  Efficiency  Organizational Development  Environment (macro-economic) Once the key metrics have been established to highlight performance for that aspect of marketing, data can be sorted by: geography, business unit, markets, or any other relevant perspective. Benefits of Marketing Dashboards There are numerous reasons why you should consider improving your performance measurement system for marketing. Some of the key benefits are:  Development of a Performance-Driven Culture  Increased Visibility for Senior Executives & Board  Ability to Demonstrate Effectiveness & ROI  Justification of Marketing Budget & Spending  Improved Sales & Demand Generation  Better Allocation of Department Resources  Financial Risk Mitigation of Future Call a Principal Analyst: (866) 947-7744
  5. 5. 5 Implementation Best Practices Following are the 7 key stages of implementing a Marketing Dashboard: 1. Discuss Project with Steering Committee 2. Assemble a Project Team & Complete Project Plan 3. Review Data Sources & Identify Gaps 4. Select Critical Performance Metrics 5. Build a Framework for Measuring Results 6. Develop a Brand Scorecard 7. Select a Marketing Dashboard Solution Next, we will examine these stages and provide practical advice to help you with each step of the implementation. 1. Discuss Project with Steering Committee Marketing Dashboards are not for every organization. If your senior leadership does not buy-in to the concept, your project will never get off the ground. Achieving cross-functional alignment on the role of marketing in your organization is a key success factor for a successful implementation of a performance measurement system. Use our Dashboard Readiness Assessment to determine how prepared your organization is for a Marketing Performance Measurement or Dashboarding initiative. Influence the key stakeholders in your organization by communicating the benefits of your business case, from their perspective. If it is a VP Sales, speak in terms of increased Sales Support, Lead Generation, and better Customer Relationship Management. For a CFO, focus on the ability to track financial returns from Marketing investments, and better allocation of resources & budgets. Use Demand Metric’s Stakeholder Analysis Matrix to identify key stakeholders and evaluate their interest, power, support level, and buy-in. Once you have achieved approval to implement a Marketing performance measurement program, and obtained a solid commitment from your peers to help you with the process, you are ready to assemble your project Call a Principal Analyst: (866) 947-7744
  6. 6. 6 2. Assemble a Project Team & Complete Project Plan First, determine the goals & objectives of your project plan. Ensure you have alignment with the general business strategy, and create high-level goals that will resonate with your sponsors at the executive level. As measuring performance and developing a Marketing Dashboard is an integrated exercise, build a cross-functional team including leaders from the Sales, Information Technology, Finance, and Customer Service departments. You will require insights from each of these areas if you are serious about keeping a pulse on your department and its effectiveness. Distribute a project plan, which includes the following: goal & objectives, scope of work, deliverables, costs & scheduling, and acceptance criteria. Having a detailed roadmap of your project will ensure that you stay on track, gain momentum as you achieve milestones, and manage expectations accordingly. Many performance measurement initiatives have failed as a result of improper planning up-front. To minimize risk, be sure you invest the time to document what you are trying to accomplish. 3. Review Data Sources & Identify Gaps Every organization contains huge volumes of information that can be converted into insightful, decision-making data, if properly extracted. Information can come in many forms: staff industry knowledge, operational transaction data, and stored information on shared drives, or filing cabinets. Following are a few areas to check first:  Historical Transaction Data - every company should have a record of past results. Examine the impact your previous Marketing efforts had on the business. Get a grip on future by analyzing the results of your past.  Marketing Research - perhaps you have some raw survey results from customers that can provide some insight into the dynamics of your markets.  Intuition & Experience - if you have access to executives who have been in the industry long enough to know that if you do this, that will happen, leverage their experience to provide at least a base level of Call a Principal Analyst: (866) 947-7744
  7. 7. 7 While you are mapping your knowledge base and gaps, you will develop hypotheses about the relationships between key data and predictive insights. For example, you may draw parallels between client satisfaction and customer retention rates which influences profitability. The whole goal of a Marketing Dashboard is to help you understand the casual links between marketing performance and business results. 4. Select Critical Performance Metrics Reconsider the agreed-upon role for marketing in your organization to determine what information you need to be able to effectively measure your performance. Determining the questions that you will inevitably need to answer is a precursor when establishing an effective dashboard. Work backwards from the business objectives to identify what marketing needs to do to support these goals. If market share is the key performance indicator, attempt to find that kind of information, so you can put a stake in the ground. Alternatively, if you are in a mature market, your key benchmarks might be focused on client retention, or superb customer service. After you have documented what you need to know, assess the value & cost to obtain that information. Pluck the low-hanging fruit that is high value & low cost; disregard completely what is low value, high cost; ignore the low value, low cost; and work slowly towards the information that is high value, high cost. Following is an example of a matrix that you can map your knowledge needs Call a Principal Analyst: (866) 947-7744
  8. 8. 8 This mapping exercise leads to the identification of your opportunities (what you know), risks (what you don’t know), and key success factors, which in turn, limit the scope of what could be measured, to what needs to be measured. Your goal is to eliminate any potential metrics that don’t correlate to business results in a straightforward manner. In the initial stages of your dashboard, you may have an alarming number of “key performance indicators” that have been highlighted. A typical company will have anywhere from 25-40 of these measures, based on the 7 key categories of metrics. Over time, you will test & refine your hypotheses regarding the causal chains, eliminate redundant measures, sort, prioritize, and learn which are truly the most effective indicators of performance. Keep structure in mind, as it will be easier to glean insight and identify patterns if your metrics are organized in a sensible way. In the end, you will likely focus on 10-20 key metrics that help you operate more efficiently & effectively. Most companies are able to effectively measure direct mail, telemarketing, and internet marketing, as many software tools have these capabilities. While these areas are certainly important, don’t forget that branding, channel marketing, sales & marketing collateral, advertising, and market research, represent a significant portion of marketing budgets, and therefore need to be analyzed and measured. Build momentum with the easier areas to measure, but don’t omit the other aspects. 5. Build a Framework for Measuring Results The cultural shift to approve corporate initiatives that have immediate quantifiable impact is a dangerous dynamic for marketing professionals. On the one hand, it is critical that a business invests in areas that have short-term benefits and returns, but on the other, it can leave out key areas such as Brand Equity. Overcoming this near-sightedness depends on your ability to develop a measurement framework that incorporates both short-term and long-term financial results. Instead of focusing on return on investment for each marketing program individually, establish a Customer-Base Value (CBV) benchmark that you can monitor to track results. Work with Finance & Accounting to agree on the calculation for Customer-Base Value. Take the total number of customers and multiply that by the net present value of these customers (gross profit contribution) over their average lifetime. Be conservative with your estimates and only take into account the products that Call a Principal Analyst: (866) 947-7744
  9. 9. 9 customers are currently purchasing or expected to continue purchasing. It may take a few passes to have everyone agree on the formula, but once you have this benchmark you can start measuring performance over various periods of time. Using a standard benchmark like Customer-Base Value will make it easier to present business cases for investments, and track results. For short-term investments like tradeshows, you can demonstrate the impact over a few months. When measuring long-term programs like Branding, you can take a snap shot of your CBV before and 12-24 months after. Having a common denominator like CBV is also good for measuring the effectiveness and efficiency of your marketing spend. Your metric for effectiveness can now be the actual change in CBV for each period compared to the expected change in CBV. If a particular initiative, like CRM, is expected to increase CBV by a certain amount, you can now measure the effect of that program based on a real increase in CBV. Similarly, marketing efficiency can be defined as change in CBV/dollar spent. Both efficiency and effectiveness measures are best analyzed from a historical perspective and compared to targeted goals. Setting and refining goals and expectations will help your organization continuously improve and advocate performance measurement. Once you have developed your CBV benchmark, you are in a position to analyze the return on short & long-term marketing investments from a financial perspective. 6. Develop a Brand Scorecard One of the most difficult elements to measure is the impact of your brand on future economic value. Marketers tend to convince their peers that a solid brand is the foundation for retaining customers, attracting new customers, and maintaining prices in a competitive environment. In reality, measuring the long-term value of marketing investments that create “preference” and “loyalty” for your brand is critical. In many industries, over half of the annual marketing budget is spent on programs that do not clearly relate to incremental profits, but do improve the vitality of the brand in the marketplace. Since this type of investment doesn’t provide a means of generating increased revenue in the short-term, it needs to be treated as a separate asset. Given that strong brands produce returns over a longer period of time, you need to develop a method of calculating brand equity and track Call a Principal Analyst: (866) 947-7744
  10. 10. 10 improvement. This is where a Brand Scorecard can help you; it measures your brand strength in the perceptions of your customers and prospects. Diverging from the marketing Dashboard, which evaluates marketing investments from a corporate perspective, the Brand Scorecard asks “what do our customers, prospects, and employees, believe about our brand?” and “how do these perceptions translate into opportunities for economic development, or risks that need to be mitigated?” Use a Brand Scorecard in conjunction with your Marketing Dashboard to track the accumulating goodwill that has yet to transform into revenue for your business. Avoid the common mistake of thinking that achieving “brand awareness” is an end in itself. We all know many brands that we don’t buy from on a regular basis. Instead, focus on how your brand creates value for your business, by leveraging its equity to generate profits. Following is a simple brand value chain that outlines how marketing activities convert unaware prospects into loyal customers: The successful link between your Activities and Brand Image depends on how clear, differentiated, and consistent your messages are. Gaining a positive Brand Equity relies on having competitive advantages that are relevant to your market, and ensuring that you are correctly positioned in the mind of your customers & prospects. Understanding why customers buy from you, or from your competitors, will help you adjust your activities to maximize economic Call a Principal Analyst: (866) 947-7744
  11. 11. 11 Your Brand Scorecard should track how effective your activities are at developing brand imagery; how your imagery creates the right attitudes and beliefs; and how these equities are creating tangible returns in the form of Customer-Base Value (CBV). It is essential that you define, test, and demonstrate clear links between each of these stages, if you are to continue to obtain funding for long-term Branding programs. Use customer satisfaction surveys, customer relationship management tools, and internal/external branding exercises to gather the metrics & knowledge you need to add a Brand Scorecard to your Marketing Dashboard. 7. Select a Marketing Performance Measurement Solution There are many software tools in the market that can assist you with collecting & organizing data, building reports, and establishing your Marketing Dashboard. Some companies will find it suitable to build an internal Marketing Dashboard solution with help from the I/T department; most will find it easier to implement a standardized, proven solution, in the form of an on premise or on-demand platform. Click here to request more information on how to select the right MPM solution for your business. If you don’t want to invest in a software solution, try using our Sales and Marketing Performance Dashboard to collect, analyze, and communicate key performance indicators and metrics for sales & marketing. Key areas in our dashboard include:  Customers  Branding  Advertising & Public Relations  Events & Tradeshows  Direct Marketing  Website & Online Marketing  Sales  Marketing Collateral  Channel Sales  Pricing & Call a Principal Analyst: (866) 947-7744
  12. 12. 12 Conclusion The requirements for marketing departments in mid-sized enterprises are changing. It is more essential than ever to be able to measure results and demonstrate your effectiveness. Fortunately, there are many skilled experts who have helped companies transform under-performing marketing departments into strategic, aligned, and accountable profit- centers. Now that you know what Marketing Dashboards are, what benefits they bring, and have an understanding of the high-level implementation Best Practices, discuss this initiative with Senior Management. By being up-front and honest about your inability to measure the performance of your department, you will build credibility, trust, and buy-in, to implement a solution. It will be absolutely critical that your Senior Management team is committed to this initiative. Invest some time to learn if a Marketing Dashboard is right for your organization. Among other things, it can help you drive measurable increases to the top-line, and justify your existence. If you decide that monitoring the performance of your department is not a top priority, at least you will be aware of how many other market-leading companies are Call a Principal Analyst: (866) 947-7744