Marketing ROI: 7 quick easy ways to build marketing ROI

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A presentation made at a CFO conference on how to get more ROI out of marketing... and what CFOs can do.

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Marketing ROI: 7 quick easy ways to build marketing ROI

  1. 1. Marketing ROIReal Or Imaginary7 Ways to make it real
  2. 2. BackgroundMarketers CFOs• 8/10 believe their • I have never found CFO marketing budgets are that didn’t believe a lot of under-funded marketing investments are wasted But 75% of the value of most companies is the Brand… so maybe there is some common ground
  3. 3. Measuring ROI ( (Acquisition (#) * Margin (€) ) + retention effect - Investment ROI = Investment (€) Price Premium (€) x Market Share (#) ROMI = Marketing Investment (€) 3
  4. 4. What is the biggest issue …• People don’t know and are not measuring Without measurement R or I It doesn’t make sense to talk ▫ R = Return About techniques ▫ I = Investment• Because it is difficult, does not mean it should not be done… or you shouldn’t worry about it.. 4
  5. 5. Which is closest to your company’s current definition of marketing ROI? description Cus tom er lifetim e value 17 Financial value of brand equity 19 Media pos t buy analys is 21 Cos t per s ale 23 GRPs delivered 30 Reach/frequency 30 Cos t per lead 34 Ratio of ad cos t to revenue In 34 Num ber of leads 40 Market s hare 49 Attitudinal changes 51 Purchas e intent 55 Total s ales from m arketing 55 Changes in brand awarenes s 57 Increm ental s ales 66Source: ANA – Forrester 2005 If a perfect world you would measure profits you can also measure profit drivers … 5
  6. 6. 6
  7. 7. QUICK AND EASY WAYS TO BUILDYOUR MARKETING ROI
  8. 8. Most marketing doesn’t work …you gotta get started measuring
  9. 9. According to nielsen research• A study of 862 packaged goods promotions. ▫ 50% no impact, ▫ less than 1 in 10, plus 10% As long as you are not measuring what is working You are burning money… 9
  10. 10. Finance people can improve marketing decisions You might not want to get involved but you should
  11. 11. Diversity trumps ability• Imagine you have 2 groups ▫ 10 smartest people ▫ 10 random people• The random groups almost always outperforms ▫ A different toolset ▫ “Stupid” questions that spark thinking 11
  12. 12. Solving marketing problems…• Research at KU Leuven over 2 years… 10 groups working on 10 marketing tasks ▫ All non-marketers ▫ All male marketers ▫ All female marketers Relative results ▫ Mixed marketers Absolute results ▫ Mixed marketers + non-marketers 12
  13. 13. Most Advertising doesn’t sellGet Involved… keep your marketing team focused on the basics
  14. 14. Half my advertising doesn’t work..That would be a bit optimistic Depending on the study… 80-90% of advertising does not work… Why …. ▫ Lack of a benefit ▫ No reason to believe ▫ No call to action If you’re confused… ▫ No clear message Consumers are also likely to confused 14
  15. 15. 15Quick test...What is it?
  16. 16. 16ClarityConfusion is not a good strategy forsuccess.
  17. 17. A golden rule of advertising Let a customer say NO because what you offer doesn’t apply to them.But NEVER let a customer say NO because they don’t understand what you’re offering. 17
  18. 18. Most products faillearn to shoot the ugly puppies early
  19. 19. My shoot the puppychecklist• Is there a benefit (real or perceived)• People willing to pay (enough)• Cost of cut-through acceptable• People will see the benefit buy again / recommend to others• Will someone hate the product 19
  20. 20. Target ROI’s for new products Investment Investment Return ROI Cum_invest Cum_Return Cum ROI 1 100 2000 2000% 100 2000 2000% 2 100 150 150% 200 2150 1075% 3 100 100 100% 300 2250 750% 4 100 100 100% 400 2350 588% 5 100 50 50% 500 2400 480% 6 100 50 50% 600 2450 408% 7 100 25 25% 700 2475 354% 8 100 25 25% 800 2500 313% 9 100 10 10% 900 2510 279% 10 100 10 10% 1000 2520 252% 11 100 5 5% 1100 2525 230% 12 100 4 4% 1200 2529 211% 13 100 3 3% 1300 2532 195% 14 100 2 2% 1400 2534 181% 15 100 1 1% 1500 2535 169% 16 100 1 1% 1600 2536 159% 17 100 1 1% 1700 2537 149% 18 100 0 0% 1800 2537 141% 19 100 0 0% 1900 2537 134% 20 100 0 0% 2000 2537 127% Totals 2000 2537 127% Throw out 4 losers and your ROI increases 159% Throw out the winner and your ROI falls to -72% 20
  21. 21. We get bored long before consumers Stop changing…Repeat what works, until you are sure it is no longer working
  22. 22. WhiteFresh OdoursOff the market Boring ! But market Leader 22
  23. 23. 231 * 1 * 1 * 1 = Beauty1 * 1 * 1 * 0 = Failure
  24. 24. We often offertoo much choiceCut, kill, eliminate extra choice
  25. 25. Less is more !• Proctor & Gamble reduced the number of Head and Shoulders SKUs to 15 from 26, eliminating the least popular varieties, and saw an increase in sales of 10%• The Golden Cat Corp. eliminated 10 of its worst- selling kitty-litter SKUs, and saw sales rise 12% (while cutting distribution costs in half) - resulting in an 87% increase in profit 25
  26. 26. Pricing is too often forgotten Work together… sell value and talk about pricing
  27. 27. 27
  28. 28. A good starting point… explain break-even analysis Unit Price - Cost = Profit * Volume = Profit Today 10 - 9 = 1 * 100 = 100 Break-even 11 - 9 = 2 * 50 = 100 Expected 11 - 9 = 2 * 90 = 18028
  29. 29. Summary• Make a commitment to start measuring ▫ No perfect solution is no reason not to start now• Help build transparency (so you can repeat what works) ▫ Investments , Return• Cut and kill: ugly puppies, new cute advertising, weak brand extensions• Get involved with marketing ▫ Keep them focused on the basics ▫ Get involved in the pricing game 29
  30. 30. In the Fast Bridge network we have ex-entrepreneurs (20), academics (12) and industry experts (30+). Our specializations are: • Helping companies expand their business internationally • Leveraging social media to build brands • New product and brand development • Innovation coaching and support About half our clients work on a retainer basis. For others we get paid based on the results we deliver. The 3 things that make our company different from most other consulting companies are: 1/. A stronger focus on business execution 2/. We work with more senior consultants 3/. We are willing to link our payments directly to a client’s business results. MINDS&MORE cvba MC Square Building, Lambroekstraat 5A, 1831 Diegem Tel: +32 (0)2 719 02 55, fax: +32 (0)2 719 00 10, info@mindsandmore.bizContact www.mindsandmore.bizbryan@fast-bridge.com+32-475-860-757
  31. 31. 31Test Layout 10/2/2012

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