Marketing ROI: It’s Simpler . . . And Way Harder Than You Think

Marketing Operations ROI: It’s
Simpler . . . And Way Harder Than
You Think
Center your business on customers as the key to growth: accountability, alignment & agility

About Your Guide: Gary M. Katz
© 2012 Marketing Operations Partners, Inc. All Rights Reserved.
• Founder and Chief Strategy Officer of Marketing
Operations Partners
• First ready-to-go COO and change management
team for the marketing department
• Chairman of Marketing Operations Future Forum
• 20+ years experience leading corporate marketing,
marcom, PR, IR, demand gen & change
management
• Certified Strategic Planning Process Facilitator (ICA)
• Noted educator, author, speaker and leader in
Marketing Operations field
• MS in Organization Development, BA in Public
Relations

» Why is Measuring Marketing ROI so Freaking Difficult?
» Marketing Operations Maturity
• What it takes to get to Meaningful ROI
» Exercise: Measuring ROI – What’s Behind the Numbers
• Marketing Operations Mini Self-Assessment
» What is Marketing Operations 2.0?
• 1.0 vs. 2.0: What’s the difference?
• Six top marketing challenges and how MO tackles them
From a Marketing ROI Fantasy to a
Marketing Operations Mindset

• Number reporting the use of ROI and profitability
metrics has remained steady since 2008
• Organizational pressure from senior
management is quite high
• Firms using ROI are more likely to report
expecting greater growth than competitors
• Firms reporting that they calculate ROI are 3
times more likely to report marketing as “highly
effective and efficient”
Key Findings – 2009 Marketing ROI and Measurements Study
Source: 2009 Lenskold Group / MarketSphere Marketing ROI and
Measurements Study Available at www.lenskold.com.
Marketing ROI Tied to Effectiveness

But There`s a Lot More to ROI than a Number

Why is Measuring ROI So Difficult?
Metrics, Metrics, Too Many Metrics …

 Revenue
 Profit
 Gross margin
 Market share
 Number of customers
 Stakeholder satisfaction
 Brand equity
 Distribution availability
External Measures
 Customer lifetime value
• Share of wallet
 Up-selling ÷ customers
 Cross-selling ÷ customers
 References ÷ customers
 Reference-driven new customers
 New customers ÷ average # of customers
 Lost customers ÷ avg # of customers
 Win-back customers ÷ avg # of customers
 % Dissatisfied, neutral, satisfied
 % customers who would rebuy
 % customers who would recommend brand
 % target market aware of brand
 % customers preferring brand
 Perceived quality vs. brand competitor
 % customers who know USP
Customer Management
 Awareness of goals
 Commitment to goals
 Resource adequacy
 Skill levels
 Freedom to fail
 Employee satisfaction
Internal Measures
Source: Used with permission: © 2008 ClearAction. All rights reserved.
Organizational

 Revenue ÷ sales calls
 Costs ÷ sales calls
 Daily calls ÷ salesperson
 Sales call time ÷ contacts
 Entertainment cost ÷ sales calls
 Orders per 100 sales calls
 New customers per period
 Lost customers per period
 Sales force cost ÷ total sales
Sales Force Efficiency
 Cost ÷ 1K buyers reached per vehicle
 % Audience who remember an ad
 Opinions on ad's content & effectiveness
 Before-ad & after-ad brand attitudes
 Inquiries stimulated by an ad
 Costs ÷ inquiries
 CTR = click-through-rate
 Effective frequency or reach
Advertising Efficiency
 Logistics costs ÷ revenue
 % Orders filled correctly
 % On-time delivery
 % Error-free invoices issued
Distribution Efficiency
 Logistics costs ÷ revenue
 % Orders filled correctly
 % On-time delivery
 % Error-free invoices issued
Sales Promotion Efficiency
Efficiency

[Valuew/Investment] - [Valuew/o Investment]
÷ Investment = ROI
 Benefits ÷ costs
 Includes non-cash benefits & costs
Return on Investment
{ [% Brand's U.S. sales in a region] ÷
[% U.S. population in the region] }
x 100 = BDI
 BDI = Brand Development Index
{ [% Category's U.S. sales in a region] ÷
[% U.S. population in the region] }
x 100 = CDI
 CDI = Category Development Index
Sales Potential
[Penetrated market ÷ target market]
 Customers = penetrated market
 Potential market: product interest
 Available market: interest + capability
 Served market: available mkt niche
Market Share
 Frequency = [Exposures ÷ Reach]
 GRP = [Reach x Frequency]
 CPM = [Ad Cost] ÷ [Subscribers ÷ 1K]
 GRP = gross rating points
= exposures
= gross impressions
 CPM = cost per thousand exposures
Advertising Potential
Performance

• Program-to-people ratio =
•% program spend/ total Marketing spend
• Marketing productivity ratio =
•marketing program $/marketing employee
• Marketing budget ratio =
•% marketing budget/overall revenue
• Marketing investment change ratio =
•% increase or decrease YoY
Operational Efficiency
Functional

Used with permission ©2008 Alex Eldemir
Performance
Management
Cause &
Effect
Accountability
ROI
What are You Measuring and Why ?

• Measurable data in 2000
Metric
Data
Fine granularity needed for better decisions
Metric
Data
• Measurable data now
Information Overload

Source: Courtesy of Aprimo, 2007
GIGO Dashboards

Product Mgmt Marcom
Lead GenSocial Media
PR
Channel MktgEvents
Web Alliances
Silos

• Enterprise
Strategic
Objectives
• Gap Closing
• Over some
period of time
• Objective #1
• Objective #2
• Decisions &
Doing
• Investments
• Measures
• Programs
• Initiatives
• Activities
• Alignment
• Gaps to
Close
•Priorities
•Leverage
•Now vs. Later
• Goals & Gaps
• Economic
• Experience
• Business
(Ethics,
Principles,
Values)
Alignment of
Stakeholders
with each
other
Balanced
Returns to
Each
Stakeholder
Maximum
Overall
Satisfaction
Success!
START
Misalignment with Enterprise Strategy?

• Your metrics for success are ill-defined
• Your people are slammed
• Your institutional memory is leaky
• Your innovation and creativity are suffering from constipation
• Your team, cross-functional or supplier relationships are poorly-
aligned
• Your decision-making process is tough to justify
• Your marketing portfolio is not delivering expected results
7 Deadly Sins, Letterman-Style

• “I’ll just hire me one of them superstars”
• “If everyone just picks themselves up by their bootstraps (or works
smarter, etc)”
• “If we can just get some of that Marketing Automation, that will solve
our problems”
• “If we can’t quantify it, we shouldn’t do it”
• “I don’t care what it takes, just get it done”
• “We can’t spare a dime to invest in research”
• “We don’t have time to examine our own navels”
Myths Marketers (& Their Bosses) Gotta Stop Buying

• Trusted Data and Actionable Insight
• A Clearly-Defined and Well-Aligned Strategy
• A Means to Mobilize People
• Processes to Manage the Chaos
• Metrics That Matter
• Technology to Aid Tracking, Measurement, Reporting
• In other words, a “Marketing Operations Mindset”
Behind the ROI

What is Marketing Operations 2.0?

Defining Marketing Operations 2.0
A Strategic Foundation for Marketing Excellence
A Holistic Framework
Alignment Integration
A Best Practice Enabler
Consistency Sustainability
An Operational Discipline
Efficiency Accountability
MO 1.0 MO 2.0
✓
✓
✓
✓
✓✓
✓✓

Scaling for
Growth
Enterprise
Strategic
Agenda
Customer
Profitability
Buying
Acceleration
Accountability Alignment with
Stakeholders
Marketing
Intelligence
Marketing Operations: Sphere of Influence

Challenge:
Converting Insight into Value
Marketing Operations: Rising to the Challenge
Lack of confidence in
business intelligence

Benchmark Best
Practices
Validate
Market Demand
Assess
Insight/
Opportunity Gaps
Baseline What We
Know/What We
Don’t
Solution:
Converting Insight Into Value
MO Breeds
Actionable
Insight and
Innovation

Challenge:
Maximizing Customer Profitability
The Price of Acquiring
& Keeping a Customer
is Growing

Calculate Customer
Lifetime Value
Capture Customer
Decision Drivers
Win Back
At-Risk Customers
Mobilize to
Meet Customer
Expectations
Solution:
Maximizing Customer Profitability
MO Delivers
Customer
Experience

Challenge:
Delivering the Strategic Agenda
Every Strategy/Budget
Cycle
— a Free-for-All

Catalyze
Shared Vision
Ensure Message
Integrity
Live the
Brand
Socialize
Marketing Change
Solution:
Delivering the Strategic Agenda
MO Realizes
Strategy

Challenge:
Accelerating Selling/Buying Process
No or Slow Growth
Disappointing Revenue
Results

Integrate
Buying/Selling
Cycle
Feed Sales
Pipeline
Optimize Sales/
Marketing
Hand-offs
Leverage Loyalty
Assets
Solution:
Accelerating Selling/Buying Process
MO Aligns
Sales/Marketing
Effort

Challenge:
Scaling Marketing for Growth
Marketing in Reaction
Mode

Diagnose Marketing
Health
Architect Enabling
Shared Processes
Optimize Marketing
Investment
Develop Marketing
Competency
Solution:
Scaling Marketing for Growth
MO Mobilizes
Resources

“Much of what marketing can contribute right now is seen as less tangible
because we lack the metrics” – Dawn Hudson, CEO, Pepsi North America
Challenge:
Demonstrating Return on Marketing
Marketing on
Defensive to Show
Contribution

Align
Marketing/Enterprise
Objectives
Track Individual and
Team Performance
Fine-tune Forecasting
thru Predictive
Analytics
Define and Track
Key Metrics via
Dashboards
Solution:
Demonstrating Return on Marketing
MO Enables
Accountability

Marketing Operations Maturity
What It Takes To Get To Meaningful ROI

Marketing Operations Best Practice Framework
MetricsProcessGuidance
Infrastructure
Management
Technology
Strategy
Ecosystem
Alignment
A MOdel for Sustainable Success

» With Sales
» With Enterprise Metrics
> 20%
CAGR
’03-’07
Strong
Brand
Identity
Execution
Excellence
Process
Excellence
» Budgeting
» Brand Management
» Customer Management
» Planning
» Product Lifecycle Management
» Predictive Analytics for Revenue
» Budget Planning Processes
Alignment
OutcomesFocus
Profile of MO Best Practices

Change Management
Competency Development
Enterprise Metrics Alignment
Org. Learning Catalyst
Strategic Management
Fundamental MO
Budget Management
CRM
Marketing Services
Vendor Management
Expanded MO
Sophisticated MO
Marketing Automation
Best Practices
Rewards Alignment
Process Design
Knowledge Management
The Roadmap to MO Maturity

Big Investment,
Heightened
Accountability
Dynamic
Competitive
Market
Need to Raise
Strategic
Game
Cross-functional
Alignment
Critical
Under
Media/
Regulatory
Scrutiny
M & A
Integration
Challenges
EXTERNAL DRIVERS VALUE DRIVERS MOBILIZATION DRIVERS
When Should You Invest in Marketing Ops?

Benefits of Mastering Marketing Ops

Internal Transportation System: MO 2.0

Highways, Roadways and Bridges . . .

Means of Transportation

Mechanics Tuning the Engine

Driver`s Ed, Training & Licensing

Driver`s Handbook

Traffic Controls & Signals

Navigational System

Roadmap

Alignment Specialist

We guide marketing organizations to become a value center
We are front-runners in Marketing Operations
to create a consultancy dedicated to Marketing Operations
to publish an article on MO
to create a college course on MO
to teach a professional symposium on MO
to conduct a benchmarking study of MO practices
© 2016 Marketing Operations Partners. All Rights Reserved.
1st
1st
1st
1st
1st
Companies we’ve influenced: (partial list)

© 2016 Marketing Operations Partners. All Rights Reserved.
Organization-wide efficiency and effectiveness raise
Marketing performance, agility and ROI
Ask us about our model for Marketing Maturity
Strategy: holistic vision, fact-based decision-making
Guidance: competency development, governance
Process: workflow, lean/six-sigma, supply chain
Metrics: profitability, predictive analytics, alignment
Technology: enterprise marketing / portfolio mgt
Ecosystem: collaboration with key stakeholders
Infrastructure: back-end integration of processes,
metrics, technology
Request your marketing maturity assessment and roadmap
ChangeMyMO@MOpartners.com

tel +1 408 243 7881
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Twitter.com/MktgFuture
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• LinkedIn Groups:
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Marketing Operations Future
• Youtube.com/c/marketingfutureforum
MarketingFutureForum.com
Join@MarketingFutureForum.com
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ChangeMyMO@MOpartners.com
Center your business on customers as the key to growth: accountability, alignment & agility

Marketing ROI: It’s Simpler . . . And Way Harder Than You Think

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Marketing ROI: It’s Simpler . . . And Way Harder Than You Think