Whitepaper Marketing Ops Role In Marketing Roi Becker
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Marketing operations (MO) plays a key role in setting a measurement agenda for the marketing department. This white paper lays out the five ways MO can drive measurement of marketing ROI. ...

Marketing operations (MO) plays a key role in setting a measurement agenda for the marketing department. This white paper lays out the five ways MO can drive measurement of marketing ROI. (Originally appeared in August Lenskold Group newsletter.)

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Whitepaper Marketing Ops Role In Marketing Roi Becker Document Transcript

  • 1. Marketing Operations Role in the Measurement of Marketing ROI Prepared by: Mayer G. Becker National Practice Director, Enterprise Marketing MarketSphere Consulting, LLC
  • 2. Marketing Operations Role in the Measurement of Marketing ROI (Parts of this paper were originally published in mROI Insights: The Path to marketing relies on its own tools, insights, strategies Marketing Profitability, August 2009 Newsletter, Lenskold Group) and creative to manage its part of the supply chain, This year for the first time since the annual study began operating independently to accomplish assigned in 2004, the Lenskold Group’s Marketing ROI and objectives. In addition, because marketing is historically Measurement Study included questions on marketing a cost center, transparency into how the marketing operations. This new information can prove helpful to budget is spent is low. marketing leaders who want to create and empower a With Sarbanes-Oxley (and similar laws internationally) marketing operations staff to improve the “business” of and other pressures to increase transparency, marketing – managing resources, systems, and marketing has come under increased scrutiny. The processes that make marketing more successful. A difficult economic conditions of recent years bring a marketing operations department in turn can champion renewed focus on spending every dollar wisely, and for and facilitate a “measurement mindset” within marketing the greatest return. Boards of directors and business that will help the Chief Marketing Officer (CMO) achieve leaders recognize that they must treat marketing strategic advantage through marketing ROI-based differently, especially because it is one of a company’s decision-making. This article introduces five ways largest expense categories. marketing operations can support and improve marketing measurement capabilities. As a result, the CMO has the imperative to demonstrate marketing’s value like any other company investment. The results of the 2009 Lenskold Group / MarketSphere Marketing now has among its mandates the Marketing ROI and Measurements Study show that responsibility for delivering free cash flow from a companies with marketing operations in place are twice combination of increased effectiveness of programs, (11% vs. 5%) as likely to be high performing companies, and improved efficiency of operations. To accomplish i.e., companies who report having highly effective and this, executives must treat marketing as a profit center. efficient marketing. Those companies with dedicated Over sixty-five percent (65%) of firms responding to the marketing operations, while reporting a broad range of Lenskold Group study said, “…their CEO/CFO’s are responsibilities, indicated overwhelming responsibility making greater demands than last year to show ROI as for marketing project management (83%) and marketing part of securing budgetary resources for marketing governance, i.e., budget and finance (73%). As well, efforts.” firms with marketing operations are more likely to have dedicated marketing analysts, versus firms without marketing operations (45% vs 17%). These are just a few indicators of why the presence of a dedicated The Move to Improve Operational Efficiency marketing operations team improves measurement capabilities. There is a new focus on marketing operations, or operational efficiency, according to a study conducted this year by the CMO Council (www.comcouncil.com), and sponsored by global software company Alterian. From Cost Center to Profit Center – Marketing Sixty percent (60%) of survey respondents said the In Transition transformation of their marketing operations is an essential area of focus, regardless of company size. Marketing operates an underlying “supply chain” of Fifty percent (50%) said they consider “marketing ideas and content whose purpose is to deliver the right operational effectiveness” one of the least developed information through multiple communication channels to aspects of their organization. Marketers themselves, the right target audience at the right time. The supply schooled and experienced in their area of specialization chain produces a combination of programs that address like advertising, direct marketing, promotions or public new customer acquisition, sale of products, customer relations, realize their shortcomings in trying to master retention and customer service, or enhancement of the operational issues while at the same time delivering on company’s brand and reputation. Each discipline of © 2009 MarketSphere Consulting, LLC 2
  • 3. Marketing Operations Role in the Measurement of Marketing ROI the traditional mandates of marketing – brand, product Promoting Marketing Measurement and ROI and innovation, life cycle revenue management, and Analysis being the voice of the customer. With responsibility for financial governance, marketing Adding to the challenge, marketing is much more operations is the logical entity to champion and facilitate complex than ever before and is required to respond in a “measurement mindset” within the marketing hours to market conditions, as well as operate 24x7 in a department, in five important ways. global market. With the internet now a thriving sales and communication channel, the business never closes. In 1) Ensure alignment of the marketing budget, and response to pressures both internal and external, marketing activities, to corporate and departmental marketing executives are recognizing the need for a objectives. Marketing operations works with the central function to manage resources, systems and leadership team during the budgeting process and processes. This central function is marketing operations aligns budgets with measureable objectives. Its planning -- fifty-nine percent (59%) of respondents in the 2009 and oversight ensure that the marketing investment Lenskold Group / MarketSphere Marketing ROI and portfolio supports only those measurable objectives Measurements Study say they have a dedicated (with slight exceptions where may be a strategic reason marketing operations team or person. to fund other programs, such as research into new communication channels.) Then, throughout the financial year, marketing operations monitors alignment and performance in cooperation with finance. The Role of Marketing Operations – Best Practice Approach 2) Provide the tools for measuring and reporting marketing performance. Marketing operations Because marketing operations is an emerging provides the automation and technology infrastructure to discipline, many CMO’s struggle with how best to define support the department. Key to gathering data for mROI its mission. The best practice developed by calculations is a marketing resources management MarketSphere promotes a Center of Excellence led by (MRM) application for connecting budgeted and actual an operations executive, preferably with PMP (Project spending with activities, tasks and related objectives. Management Professional) or relevant operations Another important tool is a business intelligence and management experience. As well, the head of marketing reporting platform that collects data from many sources, operations serves as chief of staff to the CMO, including the general ledger and the procure-to-pay managing a staff of professionals who own and operate application, and delivers information through the department’s processes and project management, dashboards and reports, alerts, drill-downs and “what if” oversee its finances and governance, and provide analysis. shared services (i.e., creative, production, agency management, procurement, traffic) and technology 3) Establish the framework for measuring marketing support to the rest of the marketing organization. performance and calculating ROI. A marketing organization must first decide what it wants to measure. In the MarketSphere model, marketing operations Marketing operations leads development of key should manage the “business of marketing,” which performance indicators (KPI’s) from the collective allows marketers to concentrate more fully on their customer, financial and operational data as a first step respective functional areas. This alleviates the project in creating a framework. As an organization evolves to management and financial reporting burdens from more fact-based decision-making, additional layers of marketers, for example, leaving the brand team the time analysis, including marketing ROI (mROI) analysis of and resources to develop programs that enhance the each program will become the standard. Marketing brand and drive market awareness. operations manages the mechanics of measurement, performs the mROI calculations, and publishes them along with other relevant metrics and KPI’s. © 2009 MarketSphere Consulting, LLC 3
  • 4. Marketing Operations Role in the Measurement of Marketing ROI 4) Translate between the languages of marketing and finance. The languages of the two departments are fundamentally different, with marketing accustomed to talking about the long-term value of a customer, or the cost of acquiring a new customer. Finance, on the other hand, has a shorter-term focus on line-item budget performance and quarterly results. Marketing operations interprets marketing metrics in a language familiar to finance and operates a “marketing dashboard” to facilitate translation between budgets, marketing activities, and accomplishments. 5) Create the environment for a “measurement mindset.” Acceptance for fact-based mROI analysis will not just “happen.” Marketing operations, in its financial governance role, should construct and maintain an environment that allows marketing leaders to better use marketing metrics and analysis. Over time and in tandem with the deployment of a technology infrastructure, training and change management, the marketing organization will adopt a “measurement mindset” and use mROI as a key measure to guide decision-making. Summary About the Author Marketing is more complex than ever, and under Mayer G. Becker increasing pressure to be more transparent and demonstrate the value it contributes to the organization. National Practice Director, Enterprise Companies are creating marketing operations teams to Marketing focus sharply on achieving operational efficiencies, “to do more with the same, or less.” Combining Mayer G. Becker has over 25 years responsibility for project management, systems of marketing experience, including infrastructure, and financial governance, marketing executive roles with United Airlines, operations is the logical entity to create the framework, Tribune Company, Computer Associates, ITT Corp. and tools, training and environment that facilitates ADP. He is a member of the American Marketing measuring and reporting the value received from the Association Chicago Chapter, Direct Marketing investment a company makes in its marketing. Association and the Marketing Executives Networking Group. Mayer has been featured by the AMA, Aquent, Henry Stewart, and others in numerous presentations and seminars. He is an acknowledge thought leader in the field of marketing operations. He can be reached at mayer.becker@marketsphere.com. For more information on the Center of Excellence visit www.marketsphere.com/improvingmarketing. © 2009 MarketSphere Consulting, LLC 4