Michael L. Perry (e) MLPerryNY@mac.com (t) @mlperryny (fb) www.facebook.com/mlperryny (LI) www.MLPerryNY.com (m) 973.229.4695 Ready For What Happens Next? Published: 17 Dec 08, Direct Magazine http://directmag.com/roi/1217-new-marketing-practices/

The brave new world needs a brave new marketer. Being a traditional CMO — a schooled and experienced marketer — is no longer enough. A new breed of CMO, which shares more of a resemblance with COOs than with its marketing comrades, is beginning to come to prominence.

COOs use a set of operational measurements very different from marketers. Depending on the industry, this set ranges from pick and pack costs to call center average handling time to up-time of a site to selling opportunities created by a sales staff. Marketers tend not to factor those things into their strategy evaluation and campaign results. Marketing metrics — ROI, ROMI, and challenger v. champion — have little power to measure where businesses are going. They measure where they’ve already been.

A glaring example of the efficacy of these types of measurement results came with the rising gas prices over the last two summers. Economists produced studies and articles that stated the blatantly obvious: people were driving less, vacationing less, and spending less. No kidding. What very few understood was which segments or audiences were impervious to this event or, conversely, which were hit really hard.

Similarly, marketers didn’t understand which segments to continue to target and which segments we were better off holding back on. This is because our metrics aren’t created to measure those things. They’re not asked to predict; they’re asked to explain. Marketers must become better equipped to identify and react to changes in consumer behavior.

Although we continue to face economy-related change, we’re still no better equipped to intelligently mitigate the risk. Small and large events alike have the power to impact us if our tools don’t indicate how they impact our strategies.

Is there any way to predict these events? Of course not. That’s not our job. As marketers our job is to be ready when events occur, to be able to help drive our organizations toward continuous growth, especially in turbulent times. We need to start by examining our current analytics, and how they measure the work we do.

ROI is traditionally expressed as:

ROI = (Gain from Investment – Cost of Investment) / (Cost of Investment)

Pretty simple, pretty clean, right? Well, it isn’t a pretty and clean market place. If you want simple results then use ROI, but if you want insightful results you need to start thinking differently. What is needed is a measurement strategy and plan that matches the strategy and objectives of the marketing effort. How are you measuring loyalty? Is loyalty even the right thing to measure? What about the customers who were serviced poorly or the lost opportunity costs because the product or service was presented to the wrong segment or at the wrong time?

By bringing these considerations into play, a ROI calculation could look like this:

ROI = (Gain from Investment + Loyalty Points) – (Cost of Investment + The Customers Serviced Poorly) (Cost of Investment + Lost Opportunity Points)

Should we take into account loyalty and poor servicing? Well, if we did, we wouldn’t be measuring ROI. We would be measuring something else. And that’s exactly the point: We need to equip ourselves with analytics that helps us stay on strategy.

How should CMOs take this quasi-COO approach? These 5 steps may help:

1. Reexamine the campaign’s test objectives. What segments are you trying to stimulate and why? How is that setting you up to continue to drive your business forward?

2. Have a clear statement about what you want the consumer to do and then do next. If the intent is to get a segment of an audience to take a specific action, how is that behavior setting up the next sale, engagement, or Web site visit?

3. Identify all the places in the business that the campaign can have an impact, such as warehousing, call centers and technology. Then find out how those functions measure their success.

4. Create a reporting dashboard that addresses the metrics needed to show how the campaign is doing against the core and the test objectives. That dashboard should also show the impact it is having on the other business units.

5. Evaluate that dashboard in real time. This starts the marketing organization thinking forward. This also allows the marketing organization to have pro-active conversations on a real time basis and that is good for everyone.

So how does this help marketers better prepare when a major event strikes, or help us understand the impact of smaller events? By taking a quasi-COO approach to measurement helps to focus discussions related to the tactics needed to maintain strategy.

For example, if one of the objectives was to move 20% of customer segment A into the next price tier, understanding the burden put on the rest of the organization helps the decision-making process. Perhaps the analysis shows that to move Segment A to where it needs to be will increase average handling time during a contact center interaction. At least there can be a robust discussion as to what the whether or not increasing average handling time is the right course of action.

We are all getting leaner organizationally, we are being asked to do more with less. To be successful in this environment, a new approach to measurement is needed or the results will always continue to be the same.