Marketing Performance ROMI The House Of Marketing

How to measure and improve your marketing performance The road to Performance driven Marketing Bringing the hard science into marketing February 2009 www.thom.eu

Source: Marketing NPV

Measuring return is the solid n°3 challenge for marketeers 43% Differentiate from competition Building customer loyalty and trust Measuring return on marketing efforts Building a strong brand Communicating through online media Innovation, Product development & R&D Increase the efficiency of marketing processes Identifying all customer’s “moments of truth” Realizing an integrated communication-mix Integrating online & offline marketing initiatives 38.5% 38.4% 37.3% 36.3% 35.1% 32.5% 30.3% 30.2% 28.5% % of respondents Source: The House of Marketing 2008 Yearly Marketing Survey , Belgian marketing community, N = 714 respondents Not in 2007 Top 5 Legend: In 2007 Top 5

Marketing challenges 2004 2006 2007 2008 Differentiation from competition Building customer loyalty and trust RoMI (return on marketing investment) Communicating through online media Building a strong brand Innovation Efficiency of marketing processes Knowing all customers’ moments of truth Realizing an integrated communication mix 1 n.a. 1 4 7 6 n.a. 4 n.a. 2 1 3 8 4 6 7 8 5 1 2 6 5 4 3 9 8 7 1 2 3 4 5 6 7 8 9 Ranking of marketing challenges (according to % of occurrence) 2005 2 8 3 1 n.a. 6 n.a. 9 n.a. Source: The House of Marketing 2008 Yearly Marketing Survey , Belgian marketing community, N = 714 respondents … just as it has been over the past 5 years

Marketing still has little impact in the boardroom Respondents (%) Total sample 100% 41.6% 24.9% 22.9% 4.5% 2.3% 1% Sales Marketing Finance Production R&D HR According to you, which department has the biggest impact in the boardroom? 2.9% Others Source: The House of Marketing 2008 Yearly Marketing Survey , Belgian marketing community, N = 515 respondents

To improve boardroom impact, marketeers need to measure and display the return on marketing efforts

Measured among respondents who think marketing has the biggest impact

Measured among respondents who think marketing does not have the biggest impact

What should be improved to increase marketing impact in boardroom? (1) What should be improved to increase marketing impact in boardroom? (2) Better metrics Make results visible Better communication Marketing orientedness board Network with other departments Boost financial skills Techical product knowldge 51.7% 38.2% 37% 26.9% 22.5% 20.4% 11.1% 12.5% 12.5% 21.1% 20.4% 23.4% 46.9% 35.2% 32% 60% 0% 0% 60% N = 387 N = 128 Boost financial skills Techical product knowldge Network with other departments Marketing orientedness board Make results visible Better communication Better metrics Source: The House of Marketing 2008 Yearly Marketing Survey , Belgian marketing community, N = 714 respondents

Even CEOs confirm the importance of these metrics and communicating results What should be improved to increase marketing impact in boardroom? 50% 38.3% 36.2% 26.6% 20.2% 16% 14.9% 0% 60% Better metrics Make results visible Better communication Marketing orientedness board Network with other departments Boost financial skills Techical product knowldge Source: The House of Marketing 2008 Yearly Marketing Survey , Belgium, N = 94 respondents

Using financial ROI pays off Companies with sound ROI management expect to outgrow competition (1) Marketing departments able to prove return get higher allocated budgets (2) ROI not used ROI used To what extent do you expect to outgrow your competition? % respondents (TOP 2) 42% 66% To what extent is sufficient budget allocated to the marketing department? ROI not used ROI used % respondents (TOP 2) 29% 51%

Sources :

Lenskold 2008 Marketing ROI & Measurement study

VisionEdge Marketing MPM Survey 2008

Typical issues that indicate marketing performance interest

High marketing budget but no financial evaluation on return of the various marketing activities is done

Quantification of marketing performance lacking to steer decision process. Quantified priority setting for new campaigns is needed

Interest to revise marketing budget allocation process: to be based on expected return rather than percentage of revenues or last year’s figure. Difficulties to convince CFO/CEO to approve planned marketing activities

Challenge to balance short term sales objectives versus long term strategic brand positioning objectives

From our experience, companies face five challenges to improve marketing performance

Aligning marketing metrics with business objectives

Balancing brand building & sales conversion

Calculating Marketing ROI, report & assess

Accessing the right data & bridging data gaps

Setting up the right capabilities within your organization

Results Objectives Data management & Measurement Capabilities Do Check Plan

Marketing

Actions

3 1 2 3 4 5 Boost your efficiency & increase customer value by addressing these challenges Source and © The House of Marketing 2009 www.thom.eu 1 4 3 5 2

Our recommended approach in measuring and improving marketing performance

Gap analysis of marketing effectiveness vs. best in class:

Customer interview checklists

Scoring & benchmarks

Identification of improvement areas

360° QuickScan Starting point Dashboards

Strategic model mapping brand position to value creation:

Interviews

Data collection & data mining

Analysis of strategic options

Value Capturing

Quantify return & prioritize marketing campaigns & projects:

Define business objectives

Calculate costs & investments

Decide metrics to use

Build the ROI model

Marketing ROI

Define performance metrics:

Define business objectives per department and process

Define dashboard structure and KPI, targets to reach and measurement process

Monitor performance

The House of Marketing has a unique approach by combining a holistic marketing view with in depth quantitative modeling.

Based on its unique position in the market, combining marketing and consulting expertise, The House of Marketing is perfectly placed to offer ROMI (return on marketing investment) services: