The Key To Scaling Marketing Returns 30 X K. Chettayar

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Identifies key factors that drive improvements in marketing ROI.

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The Key To Scaling Marketing Returns 30 X K. Chettayar

  1. 1. 1THE KEY TO SCALING MARKETING RETURNS 30X: A SPECIAL REPORT FOR RETAIL AND CONSUMER GOODS MARKETERS – A LESSON FOR ALL By Krishna Chettayar © All Rights Reserved
  2. 2. About the Author2 Krishna Chettayar is currently Industry Solutions Executive for Acxiom Corporation and has over 12 years of experience in marketing and product development in the marketing services space. Prior to Acxiom, Chettayar held executive level positions at Information Resources Inc, (IRI), D&B, GE Partnership Marketing Group, and small start ups serving companies across such industry verticals as business services, information solutions, high-tech, financial services, retail and consumer goods. Chettayar was named one of the “Top 100 Marketers” by B-to-B Magazine in 2004 and is a frequent contributor to publications such as DM Review, DM News, DestinationCRM, and B-to-B Magazine. Chettayar holds a Master of Marketing from Northwestern University, a Master of Product Development from Northwestern University, a Bachelor of Arts in Marketing from California State University, Fullerton, and he is a graduate of the Executive Program at MIT for Marketing Information Technology. Krishna Chettayar ©
  3. 3. Research into marketers needs3 Identify new solution opportunities, re-organize our solutions around core process, identify GAPS, determine what high performers do that low performers do not, share findings, collaborate with customers and prospects on findings. Define Core Budgets and Use of Values and Factors of Process Returns Process Needs Performance •Define marketing •Analyze the •Examine how high •Assess key values •Determine factors process for companies marketing budget and performing marketers and needs of that explain the in retail and consumer returns of companies allocate their marketers and performance goods in retail and consumer resources versus low determine how this differential among goods performers differs by industry as high performers vs. •Structure marketing well as marketing low performers process in terms of •Segment marketers •Identify differences in expertise activities, process, based on return on allocation and •Share findings with tasks and steps marketing investment determine the role of •Identify new solution key customers to assist multiple the difference in development areas in driving better performance returns Krishna Chettayar ©
  4. 4. Retail & Consumer Markets needs, value & spend survey: Completed in January of 2010, it is the second year of research.4  RCM Needs & Spend Survey 2010  Budget growth expectations  Size of budget RCM Industry Segments  Budget allocation  Needs and values Retail  Target industries: 64.2%  Retail  CPG  Restaurant  Annual sales Restaurant  Greater than $100 million 14.2%  Title and level CPG  Manager or better 21.7%  120 survey responders  Retail – 77  CPG – 26  Restaurant – 17 Krishna Chettayar ©
  5. 5. 5FINDINGS
  6. 6. ROMI performance by industry: Little variance in ROMI performance across industries.6 Industry ROMI Performance $9 Consumer Package Goods $12 $17 Restaurant $17 $15 Retail $16 $- $2 $4 $6 $8 $10 $12 $14 $16 $18 Dollars Generated for Every Dollar Spent On Marketing DMA 2YR Average Third-Party Survey Est. 2YR Average Krishna Chettayar ©
  7. 7. ROMI performance by company size: Relatively small ROMI variance across company size.7 Company Size ROMI Performance Small Company ( < $400M $10 and ≥ $100M) Midsize Company (< $2 bn $16 and ≥ $400M) $14 Large Company (≥ $2 bn) $- $2 $4 $6 $8 $10 $12 $14 $16 Dollars Generated for Every Dollar Spent On Marketing 2009 Krishna Chettayar ©
  8. 8. ROMI segmentation by performance: High Performers outperform Low Performers by 11:1.8 ROMI Performance Segmentation (2010 for 2009) Retail High Performer $ 32.08 $32 High Performer Average Performer $ 8.09 Low Performer $ 3.25 $8 Restaurant Average Performer High Performer $ 34.75 Average Performer $ 8.43 Low Performer $ 3.00 $3 Low Performer CPG $- $5 $10 $15 $20 $25 $30 $35 High Performer $ 30.71 Dollars Generated for Every Dollar Spent On Marketing Average Performer $ 8.17 Low Performer $ 3.46 Note: employee size, annual sales, and industry were all equally represented across segments. Krishna Chettayar ©
  9. 9. ROMI segments: Most segments performed worse in 2009 versus 2008 but High Performers suffered the greatest decline in return.9 ROMI Performance Segmentation $42 High Performer $32 $10 Average Performer $8 $3 Low Performer $3 $- $5 $10 $15 $20 $25 $30 $35 $40 $45 Dollars Generated for Every Dollar Spent On Marketing 2009 2008 Krishna Chettayar ©
  10. 10. ROMI segment 3YR average financial performance: High Performers have greater sales and earnings growth.10 ROMI Performance Segmentation - Sales & Earnings Growth Comparison 25.0% 23.0% 21.0% 19.0% 3YR Average Annual % Growth 20.0% 17.0% 15.0% 8.0% 10.0% 6.0% 5.0% 0.0% Low Performer 3 YR Average Performer High Performer 3 YR Average Average Annual Annual Earnings Sales Grow th Grow th Krishna Chettayar ©
  11. 11. Sales performance of ROMI segments: Sales trend declined for all ROMI segments but High Performers suffered less decline than other segments.11 ROMI Performance Segmentation - YOY Sales Growth Comparison 25.0% 23.0% 19.0% 21.0% 18.0% 20.0% 17.0% 15.0% 3YR Average Annual % Sales Growth 10.0% 6.0% 5.0% 0.0% Low Performer 2008 Average Performer High Performer 2009 Low Performer Average Performer High Performer 2009 6.0% 17.0% 21.0% 2008 18.0% 19.0% 23.0% Krishna Chettayar ©
  12. 12. Earnings performance of ROMI segments: Sales and earnings trend also declined for most ROMI segments but Low Performers suffered the biggest declines.12 ROMI Performance Segmentation - YOY Earnings Growth Comparison 24.0% 25.0% 23.0% 19.0% 20.0% 19.0% 15.0% 15.0% 3YR Average Annual % Earnings Growth 10.0% 8.0% 5.0% 0.0% Low Performer 2008 Average Performer High Performer 2009 Low Performer Average Performer High Performer 2009 8.0% 19.0% 23.0% 2008 15.0% 19.0% 24.0% Krishna Chettayar ©
  13. 13. Size of marketing budgets: High Performer’s budget remained flat during 2009 while all other segments suffered small to substantial declines.13 Size of Budget as a % of Sales 2.96% High Performers 2.97% 2.14% Average Performers 2.10% 1.93% Low Performers 1.68% 1.50% 1.70% 1.90% 2.10% 2.30% 2.50% 2.70% 2.90% 3.10% Percent of Annual Sales Spent on Marketing 2009 2008 Krishna Chettayar ©
  14. 14. Marketing budget growth expectations: High Performers more likely to see increases in their budget for CY 2010.14 ROMI Performance Segmentation - Budget Growth Expectations 69% 70% 60% 54% Expected Marketing Budget Change 60% 50% 40% Stay the Same 31% Decrease 30% Increase 23% 23% 22% 20% 9% 8% 10% 0% Low Performer Average Performer High Performer Krishna Chettayar ©
  15. 15. Expected growth in marketing budget in 2010: Low performers will likely experience a small decline while High Performers will likely see modest increase in budget.15 ROMI Performance Segmentation - % Budget Growth Expectations 6.4% High Performer 2.6% Average Performer -0.5% Low Performer -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% Weighted Growth Expectations for the Marketing Budget Krishna Chettayar ©
  16. 16. Resource allocation to core marketing process varies: High Performers invest their budget and resources differently compared to others.16 Marketing Activities Prospect Acquire Retain Grow Marketing Process Market & Market Strategy Campaign Marketing Tracking & Shopper Insights & Planning Development Communications Measurement integrate data define objectives form action plan select target market universe track program performance segment customers set budget create program brief buy media channel analyze campaign results conduct market research develop strategy develop budget & timeline final creative approval conduct post mortem predict behavior define segment objectives develop contact plan produce campaign integrate learnings pinpoint top opportunities define segment strategy design in-store displays set up personalization system determine next steps build database align timeline with mfg message, offer and creative set up loyalty system create sales forecast w/ROI design test & control execute test & control present, review & approve present, review & approve launch campaign Krishna Chettayar © manage response
  17. 17. Budget allocation to marketing activities: High Performers spend more money on prospecting / acquisition and service than other segments; increased from 2008.17 Marketing Budget Allocation to Activities 30% 23% 24% 23% High Performer Prospecting / Acquisition 25% 19% 28% 29% Average Performer Service Retention / Loyalty Growth / Cross-sell 22% 19% 33% 26% Low Performer 0% 20% 40% 60% 80% 100% 120% % of Marketing Budget Krishna Chettayar ©
  18. 18. Budget allocation to marketing process: High Performers spend more of their budget on forming Market Strategy and Planning and Tracking and Measurement. Low Performers spend more on campaign development and marketing communications.18 Market Budget Allocation to Process 16% 19% 20% 29% 16% High Performer Market and Shopper Insights 18% 16% 22% 30% 15% Market Strategy and Planning Average Performer Campaign Development Marketing Communications Tracking and Measurement 15% 13% 25% 37% 10% Low Performer 0% 20% 40% 60% 80% 100% 120% % of Marketing Budget Krishna Chettayar ©
  19. 19. Market and Shopper Insights: High Performers spent more resources integrating data, identifying top opportunities and building database; departure.19 Marketing Budget - Market and Shopper Insights - Task Allocation 24% Key Points 22% High Performers % of Market and Shopper Insights Budget 20%  Use their existing assets (data) to drive returns. 18%  Suggests an understanding of the valuation 16% and return of using customer data.  Previous study they invested more heavily in 14% segmenting and predicting behavior; suggests they are leveraging that investment. 12% 10% Integrate Data Segment Conduct Market Predict Identify Top Build Database Low Performers Customers Research Behavior Opportunities Low Performer Average Performer High Performer  Played catch up by investing in segmentation and predicting behavior.
  20. 20. Market Strategy and Planning: High Performers more focused on set their budget and creating sales forecast during the 2009 meltdown.20 Marketing Budget - Market Strategy and Planning - Task Allocation Key Points 28% 26% High Performers % of Market Strategy and Planning Budget 24%  Focus on protecting and allocating 22% resources to drive return. 20%  Think like financial managers, which is a consistent theme from past year’s study. 18%  Flexible and adaptable in utilization of 16% resources and strategy to meet objectives. 14% 12% Low Performers 10% Define Set Budget Develop Define Align Create Sales Present,  Heavy focus on re-thinking or adjusting Objectives Marketing Strategy Segment Objectives Timeline w/Partner Forecast Review and Approve their strategy. Low Performer Average Performer High Performer  Shift (you can almost see it) to a direct-to- customer orientation. Krishna Chettayar ©
  21. 21. Campaign Development: High Performers continue to focus on contact optimization, test and control, and campaign planning while Low Performers focus on message, offer and creative.21 Marketing Budget - Campaign Development - Task Allocation 30% Key Points % of Campaign Development Budget 25% High Performers  Careful to plan out an efficient contact 20% plan – direct-to consumer.  Will emphasize a test and control 15% approach to marketing efforts.  Review the elements of their plan and get 10% the necessary buy off. 5% Low Performers Form Create Develop Develop Desing In- Message, Design Review Action Plan Program Budget and Contact store Offer and Test and Campaign Brief Timeline Plan Displays Create Control and Approve  It’s all about the message, offer and Low Performer Average Performer High Performer creative – very tactical. Krishna Chettayar ©
  22. 22. Marketing Communications: High Performers continue to seek scale for their efforts by being selective in the audience, using loyalty systems, and using test and control strategies to learn. Low Performers primarily focused on media buys, campaign production and execution. 22Marketing Budget - Marketing Communications - Task Allocation Key Points 25% % of Marketing Communications High Performers 20%  Selective with who they target their marketing efforts to. 15% Budget  Leverage systems and technology to build 10% engagement and retention.  Buy media but target their buys as 5% narrowly as possible. 0% Low Performers l se se l ia va em em n n tro ig ig ed r on o Focus is on media buys, campaign ve on st st pa pa pr M sp Sy Sy  ni C Ap am am y U re d Bu lty n production and launch – “got to be doing C C an e et io e iv ya ag ch at e rg at st uc Lo iz Ta an un Te re something.” al od lC p M La on ct t -u e Pr le ut na rs Se Se ec Pe Fi Ex p t -u Se KrishnaPerformer Average Performer Low Chettayar © High Performer
  23. 23. Tracking and Measurement: Low Performers more likely to focus on tracking and analysis while High Performers focus more on interpreting results.23 Marketing Budget - Tracking and Measurement - Task Allocation Key Points 30% High Performers % of Tracking and Measurement Budget 25%  Spend more on tracking and 20% measurement.  Balance their analysis across all of the 15% critical tasks.  Spend the time to determine what worked 10% and what didn’t work and what to do next. 5% 0% Low Performers Track Program Analyze Campaign Conduct Post Integrate Determine Next Performance Results Mortem Learnings Steps  Much more time on tracking and Low Performer Average Performer High Performer analyzing campaigns but they don’t appear to use the insights as much. Krishna Chettayar ©
  24. 24. Media Mix: High Performers spend more of their marketing dollars going direct-to consumer whereas Low Performers spend the majority of their marketing dollars in mass marketing or in-store efforts.24 Low Performer Average Performer High Performer Budget Allocation By Channel Budget Allocation By Channel Budget Allocation By Channel In-store TV / Cable In-store TV / Cable In-store TV / Cable 8% 16% 17% 11% 19% 13% Other Other Radio 5% Radio 3% 6% Other Radio 5% 2% 4% Print 14% Print Print 18% Direct Direct Direct 25% 30% 39% 30% Digital Digital Digital Advertising Advertising Advertising 14% 7% 15% Krishna Chettayar ©
  25. 25. The key factors that drive results of High Performers: Leveraged data reduction, factor analysis, to churn through responses to identify the top factors of high performers.25 Rotated Component Matrix No. Marketing Tasks Factor 1 Factor 2 Factor 3 Factor 4 Factor 5 Factor 6 Factor 7 Factor 8 Factor 9 Factor 10 1 Select Target Universe -0.891 2 Present, Review & Approve -0.834 3 Analyze Campaign Results -0.785 4 Create Sales Forecast w/ROI -0.783 Example: Avoid over analyzing and planning 5 Design Test & Control Groups -0.75 6 Review Campaign, Approve & Set Timeline -0.557 7 Develop Contact Optimization Plan 0.874 8 Predict Behavior 0.835 9 Set-up Loyalty System 0.813 10 Executve Test & Control 0.797 11 Define Marketing Objectives 0.752 12 Produce Campaign -0.536 13 Create Program Brief 0.512 14 Develop Budget & Timeline 0.463 15 Launch Campaign -0.454 16 Final Creative & Offer Approval 0.881 17 Integrate Customer Data 0.632 18 Buy Media -0.547 19 Determine Next Steps 0.500 20 Set Budget & Co-ordinate w/Dept 0.748 21 Develop Marketing Strategy -0.708 22 Track Program Performance 0.594 23 Manage Response 0.864 24 Set-up Personalization System 0.594 25 Conduct Market Research -0.879 26 Build Database 0.583 27 Design Message, Offer & Creative -0.501 28 Identify Top Opportunities 0.874 29 Define Segment Objectives 0.497 30 Form Action Plan to Support Dept. 0.834 31 Conduct Post Mortem -0.444 32 Segment Customers 0.877 33 Align Timeline w/MFG 34 Archive Results 35 Design In-store Displays Krishna Chettayar ©
  26. 26. The key factors that drive results of High Performers: Leveraged data reduction, factor analysis, to churn through responses to identify the top factors of high performers.26 1. Avoid over analyzing and planning 2. Seek scale 3. Set objectives and measure 4. Personalize marketing messages 5. Manage budgets like investments 6. Focus on effectively managing customer interactions 7. Trust behavior from transaction experience, less so on the research 8. Target individuals 9. Define plans to provide support to partner functions 10. Segment customers Krishna Chettayar ©
  27. 27. 27RECOMMENDATIONS
  28. 28. Employ the key factors of High Performers Help your people change. Use the 10 factors as new principles for managing the marketing efforts of your company.28 1. Avoid over analyzing and planning 2. Seek scale 3. Set objectives and measure 4. Personalize marketing messages 5. Manage budgets like investments 6. Focus on effectively managing customer interactions 7. Trust behavior from transaction experience, less so on the research 8. Target individuals 9. Define plans to provide support to partner functions 10. Segment customers Krishna Chettayar ©
  29. 29. Manage the customer life-cycle: Don’t under prospect and over retain or vice versa. 29 Marketing Budget Allocation to Activities Average marketing $ spent for each $ generated per customer segment 30% 23% 24% 23% High Performer ROMI Scale Average Performer 25% 19% 28% 29%$£¥€ 22% 19% 33% 26% Low Performer Cumulative sales $ per customer segment 0% 20% 40% 60% 80% 100% 120% % of Marketing Budget Prospect Acquire Retain Grow Prospecting / Acquisition Service Retention / Loyalty Growth / Cross-sell Krishna Chettayar ©
  30. 30. Define and manage your marketing process: Think Six Sigma Marketing; leverage process to produce outcomes.30 Market Budget Allocation to Process Key Points High Performer 16% 19% 20% 29% 16% • Think of marketing as a process that can be designed to produce superior outcomes. 18% 16% 22% 30% 15% • Define and balance your marketing Average Performer process like High Performers. • Develop a strategy with defined metrics and track results. 15% 13% 25% 37% 10% Low Performer • Avoid the tendency to jump straight to campaign development and execution. 0% 20% 40% 60% 80% 100% 120% % of Marketing Budget Market and Shopper Insights Market Strategy and Planning Campaign Development Marketing Communications Tracking and Measurement Krishna Chettayar ©
  31. 31. Seek scale in your marketing tasks: Focus on things that will drive higher ROMI multiples. Avoid unnecessary strategy and planning; opt for more test and learn.31 High Performers Task Allocation Key Points • Not all marketing tasks yield the same kind of return for the time and resource investment. • Focus your time, resource and attention on tasks that lead to higher scale in returns (e.g. build a database, develop an efficient contact plan). • Be careful of marketing tasks that have the potential to be counter productive if done in excess. Krishna Chettayar ©
  32. 32. Re-balance media to direct, addressable options: Greater returns, more predictable cause and effect.32 High Performer Media Mix Key Points Other • High Performers are more likely to In-store 8% 3% channel their media mix to direct, TV / Cable Direct addressable channels. 17% 39% • Direct, addressable channels can demonstrate a return and that attracts Radio the High Performer. 5% Print • Do not abandon mass media but rather Digital Advertising 14% 14% narrowcast your message as much as possible. Krishna Chettayar ©
  33. 33. Beware of the Detrimental Marketing Archetypes: As we analyzed Low Performers we started to see hints of detrimental marketing archetypes lurking, some of which you may have run into in your career. These archetypes are things to avoid.33 The Gambler The Campaigner The Big Idea Guy The Adman The Artist “I’ll bet they buy more “People, let’s get one “I’ve got a great idea. “We need more “I can’t be bothered with If we give this stuff more campaign out the Let’s use a MONKEY in advertising. Let’s use results. I’m trying to away for free.” door – let’s win one for the our promotion! Guys love stupid pet tricks change the world here… Gipper - that’ll fix it.” animal humor. I know I do.” to get people to LAUGH. Duh!” That will drive sales.” Krishna Chettayar ©
  34. 34. 34 THANK YOU!Krishna Chettayar © 2011

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