Making Marketing Relevant to the Business 2013 MPM Study Results Webinar

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ITSMA Web Briefing | June 4, 2013

Measuring and Communicating Marketing Performance

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ITSMA Web Briefing | June 4, 20132013 ITSMA/VEM/Forrester | Marketing Performance Management Survey

Measuring and Communicating Marketing Performance

Julie SchwartzSenior Vice President, Research and Thought Leadership | ITSMA

Laura PattersonPresident | VisionEdge Marketing

Laura RamosVice President, Principal Analyst serving CMOs | Forrester

Measuring and Communicating Marketing Performance | OLB130604 | © 2013 ITSMA/VEM/Forrester. All Rights Reserved. | 3Tweet at #MPM13

The future of marketing is in your hands…

“The idea of having a separate marketing department

is going to vanish.” –Gerd, Leonhard, HBR, May 24, 2013

“In many cases, senior business leaders must open

up their agendas and recognize the importance of

supporting and even undertaking initiatives that may traditionally

have been left to the chief marketing officer…

we’re all marketers now.” –McKinsey Quarterly, April 2012


B2B Marketing is bifurcating

Marketers earning a seat at the “table”

Marketers supportingsales


Does your marketing organization present its dashboard to the executive team? % of Respondents (N=170)

76

13

11 Don't know

No

Yes

Does your marketing organization currently produce a marketing dashboard? % of Respondents (N=286)

Yes60%

No40%

Many, but not all, marketers are producing dashboards and sharing them with the executive team

Source: ITSMA/VEM/Forrester Marketing Performance Management Survey, May 2013


Only a handful of senior executives are relying on marketing data to make decisions

To what extent are your key stakeholders using the data, metrics, and/or analyses developed by marketing?% of Respondents (N~383)


Relies on marketing data

to make decisions

BU or Division Leaders

CEO

16

13

9

Sales

CFO/Finance 6


Why isn’t the executive team using the marketing data?

Three Reasons

1. Marketing activity, not business outcomes

2. Operational efficiency, not effectiveness

3. Past performance, not predictive insight


Extremely Confident = 10

9

8

7

6

5

4

3

2

Not at all Confident = 1

9

12

24

18

12

10

6

5

2

255%

Most marketers don’t know which metrics and outcomes its key stakeholders care about

How confident are you that you know which metrics/business outcomes your key stakeholders (e.g., CEO/CFO/BU leaders) care about? Mean Rating (N=394)

Note: Mean Rating based on a 10-point scale where 1=Not at all confident and 10=Extremely confident.Source: ITSMA/VEM/Forrester Marketing Performance Management Survey, May 2013

Mean Rating=6.8


Consequently, marketing dashboards typically report on marketing activity and associated costs, rather than reporting on metrics executives use to set direction

Which performance metric categories are included on marketing’s dashboard?% of Respondents (N=163)

Note: Multiple responses allowedSource: ITSMA/VEM/Forrester Marketing Performance Management Survey, May 2013

Sales pipeline (leads, conversion rates, win rates)

Marketing spend

ROI (e.g., campaign ROI, event ROI, lead ROI)

Brand awareness/equity

Customer satisfaction/loyalty

On-time delivery of marketing programs

Marketing contribution to customer penetration/expansion/share of wallet

Marketing contribution to customer retention/loyalty

Marketing contribution to market share

Marketing contribution to category ownership

Other

77

62

53

44

33

31

24

21

19

18

6

Marketing Activity

and Efficiency

BusinessOutcomes


Marketers use analytics to report on past performance

Are data analytics being used as a predictive tool or to report past performance?% of Respondents (N=342)

Note: Multiple responses allowedSource: ITSMA/VEM/Forrester Marketing Performance Management Survey, May 2013

79

30

14Not applicable,

we don't use analytics

To report pastperformance

As apredictive

tool


This is what the C-suite cares about

Shareholder Value

Customer Value

Market Share

Revenue

Profitability/Margin


To capture the C-suite’s attention, marketers need to create clear line of sight between marketing activities and investments with business outcomes

Source: VisionEdge Marketing, 2013

Marketing’s Relationship to the Business

Shareholder Value Revenue Market Share

Investor Satisfactionand Loyalty

Customer Satisfactionand Loyalty

BusinessOutcomes

Customer Acquisition Customer Retention Customer Growth MarketingObjectives

Preference and Satisfaction Endorsement/AdvocacyConsideration and Engagement

Marketing Effectiveness

Reliable/Trusted Channel Relevance Positioning

Marketing Programs

Marketing Activities


The C-suite wants marketing to paint a picture of how marketing contributes to the business

Share of preference Share of wallet Propensity to purchaseCategory growth rate Product/service adoption rate

Innovation revenue rate Price premiumPipeline volume, value, and velocity

These are the things that demonstrate marketing’s business acumen and strategic contribution:


The C-suite can’t relate marketing activity-based metrics to business outcomes

These are the things that marketers count:

Number of new leadsNumber of sales accepted leads

Whitepaper downloadsMedia mentionsTwitter followers

Click through ratesSite registrationsDemo downloads


The C-suite can’t relate operational metrics that gauge marketing efficiency to impact and value

These are the things that show what you spend on the activities you count:

Campaign ROI | Cost per leadCustomer Acquisition Cost

Marketing influenced pipelineMarketing influenced revenue

Leads per rep | Lead conversion rateProgram spend:headcount ratio

Cost per order dollarMarketing spend:revenue ratio


Marketers need to tap the power of data and analytics to advance the BUSINESS

What Marketing is currently doing: Measure and report marketing’s

performance

Allocate the total marketing budget

Justify the marketing budget

Target specific campaigns and offers to the segments most likely to respond

What Marketing isn’t doing, but had better start:

Identify new or emerging customer segments or markets

Drive innovation by developing new offerings/solutions

Predict customer buying behavior

Analyze purchase patterns to prioritize offers made/timing of offers (propensity to buy models)


A few exceptional marketers have earned that seat at the proverbial table

90–100: Marketing was able to measure and

report the contribution of its programs to the business

80–89:

Marketing programs made a difference but the contribution to the business goals were not measured

and reported

70–79:

Marketing appears to have made some impact on the business, but it is not clear if the impact was material,

nor is it measured

69 or lower:

Marketing programs didn’t make a difference—there is no clarity as to

how marketing is contributing to the business

For 2012, using a 100 point scale, please select what grade the CEO (or you, if you are the CEO) would give your marketing organization for its ability to demonstrate its value and contribution to the business.% of Respondents (N=424)


27%

38%

29%

6%

A B C D


The "A's"

Middle of the Pack

Laggards

4

5

11

33

38

50

63

58

39

Worse (decreased by5–20% or more)

About the same (decreased orincreased 5% or less)

Better (increasedby 5–20% or more)

These “A” marketers are actually moving two of the most important business outcome needles

*Indicates a statistically significant difference.Source: ITSMA/VEM/Forrester Marketing Performance Management Survey, May 2013

In your last fiscal year compared to two years ago, how did your organization perform in the following areas: % of Respondents

The "A's"

Middle of the Pack

Laggards

10

9

10

20

41

52

70

50

38

Market Share*

Customer Satisfaction/Loyalty*


What the “A” Marketers do


What the “A” marketers do that the others don’t

Speak the language of the business

Understand how the business leaders evaluate marketing effectiveness

Connect marketing activities to business results

Produce actionable marketing dashboards

Present marketing’s dashboard to the executive team

Use data and analytics to report past history and as a predictive tool

Employ analytics talent

Invest in analytical tools

Build analytical models

Alignment AnalyticsAccountability


But even the “A” marketers emphasize pipeline metrics over the business outcomes the C-suite cares most about

Note: Multiple responses allowed. *Indicates a statistically significant difference.Source: ITSMA/VEM/Forrester Marketing Performance Management Survey, May 2013

Which performance metric categories are included on marketing’s dashboard? % of Respondents

Sales pipeline (leads, conversion rates, win rates)*Marketing spend

ROI (e.g., campaign ROI, event ROI, lead ROI)Brand awareness/equity

Customer satisfaction/loyaltyMarketing contribution to share of wallet

Marketing contribution to customer retentionMarketing contribution to market share

Marketing contribution to category ownership*

8174

583332

262323

26

The “A’s” (N=57)






8357

4348

3222

141719

Middle ofthe Pack(N=63)






6353

6351

3723

2816

7

Laggards(N=43)


Despite the room for improvement, the “A” marketers are further along in their journey

How well does your marketing dashboard enable you to do the following?

Mean Rating

The “A’s”Middle of the Pack Laggards

N~58 N~65 N~44

Monitor and measure performance against business outcomes and marketing objectives

7.2ab 6.0a 5.2b

Track performance of core marketing strategies and processes

7.3ab 6.1a 5.4b

Analyze performance of campaigns or other marketing activities

7.6ab 6.3a 6.0b

Note: Mean rating based on a 10-point scale where 1=Not at all well and 10=Extremely well.ab indicate a statistically significant difference.Source: ITSMA/VEM/Forrester Marketing Performance Management Survey, May 2013


The “A’s”(N=100 )

Middle of the Pack(N=151)

Laggards(N=143)

7.9ab

6.9ac

5.9bc

What is the starting point? The “A” marketers know better what their stakeholders care about

How confident are you that you know which metrics/business outcomes your key stakeholders (e.g., CEO/CFO/BU leaders) care about? Mean Rating

abc indicate a statistically significant difference.Source: ITSMA/VEM/Forrester Marketing Performance Management Survey, May 2013


Get clarity around the business outcomes:There are three questions that every marketer needs to ask the business leaders


1 What specific, measurable business outcome will this program impact?

2How do you expect this program/activity to contribute (what needle needs to move and how far)?

3How will we know and measure that this program achieved the objective(s)?


Select the right metrics

Output-Based

Operational

Outcome- Based

Leading-Indicators

Predictive

Counting Media Mentions Trade Show Leads Click Through Rates Site Registrations Demo Downloads Number of New

Contacts/Leads

Efficiency Lead/Rep Lead Aging Campaign ROI Program:People Ratio Cost/Billing Dollar Program

Spend/Headcount Program/Total Spend Awareness:Demand

Ratio Marketing Spend:

Revenue

Business Outcomes Market Share Category Ownership Lifetime Value Adoption Rates Pipeline Contribution

Likelihood of Outcomes Share of Wallet Rate of Growth:

Market Share of Preference

Outputs Outcomes

Expected Outcomes Campaign Lift

Modeling Predisposition to

Purchase Likelihood to Defect Marketing Mix

Optimization



Set quantifiable performance targets

Increase revenue

Get more customers

Build stronger relationships at senior executive levels at existing accounts

Increase brand equity

Increase thought leadership downloads

Increase revenue for product A by 20% in EMEA strategic accounts

Add 12 new customers from key

target list

Get 3 meetings with executives at

ABC Company

Increase share of preference by 5%

Book 5 initial sales meetings with prospects

who responded to the thought leadership call to action


Establish a clean data chain between marketing activities, marketing objectives, and business outcomes

Business Outcomes

Secure net new orders from the EMEA segment; 14% market share and

company category ownership of 25%

Marketing Objectives

Improve new platform trial rate

among Tier 1 EMEA accounts by 35%

resulting in 5 RFQs

Marketing Programs

Recruit and train 50 customer ambassadors who tout new platform to at least 13 potential

targets

Marketing Tactics

Initiate online activities that touch 5,000 EMEA

customers and produce over 50

potential customer ambassadors for new

platform



Use your data chains as the foundation for your dashboard

Report results on three levels:

Executive

Operational

Functional



In which direction is your marketing organization moving?

Marketers earning a seat at the “table”

Marketers supportingsales

Remember: Marketing performance metrics and reporting should enable better alignment between marketing

and the BUSINESS (not just marketing and sales)


To be more relevant to the business, marketers need to measure and communicate the right metrics

Get clarity around the business outcomes: What needles does marketing have to move?

Select the right metrics: Outcome-based, leading indicators, and predictive

Set quantifiable performance targets

Establish a clean data chain between marketing activities, marketing objectives, and business outcomes

Use your data chains as the foundation for your marketing dashboard


Thank You!Julie SchwartzSenior Vice PresidentResearch and Thought [email protected]+1-781-862-8500, Ext. 112

Laura PattersonPresidentVisionEdge [email protected]+1-512-681-8800, Ext. 12

Laura Ramos Vice PresidentPrincipal Analyst Serving [email protected]+1 650-581-3812

mailto:[email protected]



Making Marketing Relevant to the Business 2013 MPM Study Results Webinar

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