Marketing Analytics & Accountability To Optimize Revenue
- 1. AMA Marketing Effectiveness Online Seminar Series Anna Carbonara American Marketing Association
- 2. Check out the AMA website
- 4. Agenda 1. Marke5ng is changing‐ where are we today? 2. Outcome based measurement 3. Performance driven marke5ng 4. Key analy5c processes 5. Case study: how Marketo measures marke5ng performance © 2009 Marketo, Inc. Marketo Proprietary and Confidential Page
- 5. Marketing has an Image Problem Faddish Missing the broad perspec5ve The group that makes “color brochures” Metrics that don’t (directly) impact the business – awareness, leads, and coverage Cost center Fundamental problem: other CXOs don’t understand the role of marke5ng, and marke5ng doesn’t communicate it © 2009 Marketo, Inc. Marketo Proprietary and Confidential Page
- 6. The Changing Role of the CMO Strategic and financial leadership to the organiza5on Customer focus Excep5onal measurement and analy5cal capabili5es Rigorous financial and budget management Hard financial metrics like revenue and cash flow (“the financial language of business”) © 2009 Marketo, Inc. Marketo Proprietary and Confidential Page
- 7. Earn a Seat at the Revenue Table Who Owns Revenue? Sales owns Marke>ng owns “in‐period” “out‐of‐period” revenue revenue Lessons learned from Sales: Defined process and methodology Measure outcomes, not inputs Forecast results, not spending Use automa5on technology © 2009 Marketo, Inc. Marketo Proprietary and Confidential Page
- 8. Introduction to Marketo More than 300 mid‐market … Marketo Lead Management ...to change the way marke>ng and enterprise companies use… and Marketo Sales Insight… and sales work together… Priori5ze and deliver high quality leads with less effort Understand and interact with the hofest leads Close more business faster Achieve smarter selling and higher win rates • ‘Best Marke5ng Automa5on’ app • Uncompromising solu5ons for • Lowers risk and total cost of by Salesforce customers marke5ng and sales effec5veness ownership …and ignite explosive revenue growth. “In our second year of using Marketo, we now drive significantly more sales opportuni5es with the same budget and have increased sales‐ready leads by 400%.“ ‐ John WaEon, ShipServ VP Marke5ng and B2B Magazine 2009 Marketer of the Year © 2009 Marketo, Inc. Marketo Proprietary and Confidential Page
- 9. VisionEdge Marketing: Experienced Practitioners Founded in 1999 and headquartered in Aus5n, TX, VisionEdge Marke5ng, Inc. serves more than 100 customers, and coun5ng. VisionEdge Marke5ng, Inc. is a data‐driven and metrics‐focused marke5ng firm that specializes in improving marke>ng performance and crea>ng compe>>ve advantage designed to afract, secure and retain profitable customers. Services include: Marke5ng performance management Marke5ng and sales alignment Product and strategic marke5ng Pipeline re‐engineering Professional development © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 10. The State of Marketing Budgets Marke5ng budgets were cut over 20% on average in 2009 vs. levels in 2007/2008 According to B‐to‐B Magazine 2010 Outlook: Marke5ng Priori5es and Plans” survey, “in 2009 nearly 60% of marketers cut their marke5ng budgets in response to the recession.” The number of companies that cut marke5ng budgets in 2009 is 25% higher than predicted in January 2009 In one survey (Forrester) less than 20% of companies are expec5ng marke5ng budget increases while over 40% are expec5ng further reduc5ons in 2010. © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 11. A Never Ending Cycle The problem faced by many marke5ng professionals is that, tradi5onally: marke5ng budgets are based on a percentage of last year's revenues or budget which ignores the rela5onship between marke5ng spending to effec5veness and has a short‐term focus leading to limited success. Op5mizing the marke5ng budget is a valuable strategic tool © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 12. Show Me the Money •Where is the money? •What is the business impact? VEM MPM Study 2009 © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 13. Why Companies Invest in Marketing Understand the market and customers Develop and execute a strategy to create preference and considera>on that enables the organiza5on to: Acquire more of something Acquire it faster Acquire it cheaper Otherwise, you might as well just put more feet on the street Need to demonstrate we are “geqng the job done” © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 14. Customers Connect Marketing to the Business of Business “The purpose of a business is to create a customer.” ‐ Peter Drucker © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 15. Marketing’s Three Primary Roles: Find Profitable Customers/Consumers The process of acquisi5on New customer acquisi5on – net new business Keep Profitable Customers/Consumers The process of reten5on/renewals Grow Profitable Customers/Consumer The process of increasing the value of your customer franchise and brand ‐ Cross‐selling © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 16. Our 3 Roles Enable Us to Move 3 Business Needles Find/Secure Grow Keep Profitable Customer Customers Customers Value Acquisi>on Penetra>on Mone>za>on Brand/ Market Share Life>me Value Customer Equity © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 17. The Impact of a Job Well Done • Enjoy Economies of Scale Acquisi>on Market Share • Maintain Greater Profitability • More Leverage with Suppliers Life>me • Higher referral rate Penetra>on Value • Less cost to serve • Less price pressure Brand/ • Less vulnerable to compe55on Mone>za>on Customer • Befer success rate Equity • Higher prices © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 18. Our Objectives Aren’t Aligned with the Business © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 19. And Neither Are Our Budgets A hypothe5cal but all too common marke5ng budget: © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 20. As A Result, We Have Trouble Demonstrating Our Value Less than 20% of C‐Suite give Marke>ng an “A” vs. nearly 50% of CMO/VP VEM MPM Study 2009; n=232 © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 21. Time for a new approach and a new way to budget • Build Ini5a5ves Around Business Outcomes • Align budget and measure our impact, value and ROI on what mafers to the C‐Suite © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 22. Performance Management …the process of measuring progress toward achieving key “The top challenge for marketers remains to outcomes and beEer quan>fy and measure the value of marke>ng programs," in spite of improvements objec5ves in in accountability over previous years. order to op5mize individual, group or organiza5onal performance. CMO Council's 2008 Marke4ng Outlook © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 23. Performance Management Best Practices Measurement Analy>cs and More Strategic BeEer Tools and Competence Skills Metrics Process “Pressure has mounted “Lack employees with Nearly everyone says business “Shockingly low investments on marketers to specific marke5ng with exis5ng customers is in marke5ng technology and accurately predict, analy5cs important, few use metrics such s5ll immature as length of customer tenure, measure, and op5mize exper5se” (Forrester processes” (IDC Dec 2008) purchase frequency and recency, results” (Marke5ng 2008) value of the overall customer Sherpa 2009) base, customer life5me value “Real success will come from “Less than half of and share of wallet being smarter and more respondents use •Other than leads to conversion, strategic in opera5ons” (B‐to‐ analy5cs” (Alterian track lifle else. (VEM 2009) B 2009) 2009) © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 24. Requires Performance-Based Marketing Have a set of measurable performance standards, a pointed focus on outcomes and clear lines of accountability ‐ all of which are important if a marke4ng organiza4on wants to prove its value. © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 25. Measurement Competency See measurement and metrics at power enabling marke5ng Influence decisions Communicate impact Demonstrate accountability Recommend ac5on Play a strategic role Take an outcome‐based approach Use Performance Target Seqng for con5nuous © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 26. It all Starts with Business Outcomes Name Descrip5on/Defini5on Examples Outcome A consequence, result, effect Ranked #1 in the region for my age How the organiza5on will measure success Achieve #1 market share in XYZ market Measurable States what is to be achieved and when results Accumulate the most points per race in my Objec5ve are to be accomplished age group Increase preference for AB product among top What you will do to move the needle? share determiners in XYZ markets Key Performance The only difference between a metric and a KPI Race Wins Indicator (KPI) is that a KPI embodies a strategic objec5ve and Share of preference measures performance against that objec5ve Product Adop5on Rate and/or outcome. Performance A commitment to achieve a specific and befer Pace (miles/hour, mins/mile) Target quality or level of performance over a specified # Share Determiner Qualified Leads 5me frame. # Share Determiner RFPs Used to evaluate performance achieved compared to performance expected © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 27. A Vital Relationship: Outcomes and Objectives Outcomes Objec5ves Tie marke5ng to the business Establish measurable outcomes at the outset objec5ves and strategies 5ed Understand what your to customer‐centric company is trying to do and Outcomes which of those things you Your analysis serves as the can directly and indirectly basis for seqng performance impact targets for your objec5ves Aim for customer‐centric and strategies outcomes Finding Keeping Growing the value of customers © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 28. Performance Based Marketing Objectives Increase referral rate of Establish performance existing customers by targets that are: 40% by YE2009 Realis5c 25% of existing customers will adopt Measurable new XYZ product within 6 mos. of launch at Time specific launch price $A Aligned and consistent Contribute 25% of with the qualified new the organiza5on’s opportunities to the priori5es pipeline quarterly Improve customer advocacy score by 10% by YE2009 © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 29. What Would The Shi` Look Like: FROM Measuring Ac>vity TO Linking to Outcomes • Run six half‐page ads in all Tier one • Add 7‐8 new strategic accounts to support NA trade publica5ons Market Penetra5on • Exhibit at the primary tradeshow for • Increase customer life5me value from X to Y each ver5cal • Grow share of wallet among our top customers • Create product brochure for new from A to B product • Increase Tier one customers purchase to 2 or • Revise online demo more products from the Y Family • Generate 500 leads • Add 3 new VARs in each of three primary • Implement a promo5on with two ver5cals distributors • Add one new channel partner in each region • Distribute newslefer 6 5mes • Grow Tier one distributors sales by X% • Send email blasts to prospects monthly • Grow our product category by X% • Conduct customer sa5sfac5on survey • Increase penetra5on of ABC product in Tier • Research customer product one customers by 15% requirements • Improve our NAS from 10.2 to 16 • Change our MVI from <100 to >100 How does this change the budget process and conversa>on? © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 30. Adopt a Metrics Framework: Tactical Strategic Predic>ve Likelihood Leading‐ of Outcome Indicators Share of Wallet Rate of Growth: Market Business Outcomes Brand Preference Outcome‐ Market Share Based Category Ownership Life5me Value Efficiency Adop5on Rates Opera>onal Lead/Rep Lead Aging Campaign ROI Coun>ng Program: People Ra5o Ac>vity‐ Media Men5ons Cost/Billing Dollar Based Program spend/headcount Trade show leads Program/Total Spend Click Through Rates Awareness: Demand Ra5o Site Registra5ons Demo Downloads © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 31. Illustrating the Importance of Selecting the Right Metric: Measuring Ac5vity vs. Outcomes Lose 20 lbs. by the end of the year Finish a 5K in under 28 minutes Different outcomes mean different metrics of success, even though may use the same tac>c for each What’s the metric for the: Lose weight outcome? Finish 5K outcome? Calories or Pace vs. Running 5x/week © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 32. Outcome-Based Measurement Characteris5cs of Effec5ve Connect Marke>ng Investments and Metrics Metrics to the Business Accurate and Precise 1. Begin with business outcomes Reliable 2. Iden5fy most important measures Relevant of success Aligned 3. Define performance indicators connected with these measures Owned 4. Determine which data provides Predic5ve necessary informa5on Ac5onable 5. Focus on the most relevant, Easy to understand essen5al, & valuable ac5ons Transforma5ve 6. Analyze & report Standardized © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 33. Select Outcome-Based Metrics Based on Marketing’s Job Business Outcomes and Marke5ng Objec5ves Provide Insight into Metric Certain Facets of Performance Move Needles for Each Gauge 5 Market Share Indicators 4 Life>me Value Indicators 5 Customer/Brand Equity • Share of Preference • Purchase Frequency Indicators • Share of Voice • Share of Wallet • Price Premium • Share of Distribu>on • Advocacy/Loyalty • Net Advocate Score • Rate of Customer • Tenure • Customer Franchise Value Acquisi>on • New Product • Rate of Growth:Market Acceptance/ Adop>on Rates • Product Margins © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 34. Tie the Budget Back to the Business 1. Engage ‐ the leadership team to 6. Allocate ‐ the dollars based on the understand the organiza5on’s model emphasis in terms of resources on 7. Monitor find, keep and grow to create an Monitor how well the programs alloca5on model performed against your commifed 2. Establish ‐ measurable marke5ng targets and budget objec5ves around customer Track and measure the impact of acquisi5on, reten5on and value marke5ng programs growth. Track and measure the execu5on of a marke5ng program. 3. Develop ‐ programs to support each Track all the people both internal and objec5ve and link every program to external, and all the steps, including one of these objec5ves. approvals, to understand the total cost 4. Iden>fy ‐ every element in the of program execu5on marke5ng mix and its associated 8. Report ‐ effec5veness, impact, dollars for each program. efficiency, value for the money 5. Tally ‐ the investment needed for each program, objec5ve and outcome © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 35. Measurement is the Foundation to ROI But …It isn’t the only factor 1. Design and select metrics that measure marke5ng’s impact on the business 2. Use metrics that measure efficiency, effec>veness and payback 3. Create a measurement management system and consistently use it 4. Capture performance metrics as quickly as possible in order to ins5gate immediate change in execu5on 5. Report results and performance in real 5me © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 36. Analy>cs and the Performance‐Driven Marke>ng Organiza>on Analy5cs: The ability to drive ac5onable insights from data Cri5cal to facilita5ng befer and faster fact‐based decisions © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 37. Data and the Performance-Driven Marketing Organization Performance Driven‐Marke5ng Organiza5ons Embrace data ‐ See data as the founda5on for success Get the best data possible and use it in a pre‐defined, unbiased way Install and use a data management system Create and maintain a data inventory © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 38. Three Additional Critical Success Factors: Culture Create, reward and live a measurement culture Processes, Systems, Tools Skills & Training Solu5ons to the problems of marke5ng accountability and crea5ng a ROMI culture begin with training (ISBM) © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 39. Four Key Processes: Establish a process that Do you have these processes? enables the organiza5on to Data collec5on and make adjustments in real 5me analysis process – rather than looking in the Program performance target rear‐view mirror seqng process Leverage industry best Metrics and measurement prac5ces and company insights process for con5nuous improvement Repor5ng and dashboard opportuni5es process Deploy processes that allow you to modify metrics and the dashboard design as needed © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 40. Take Your Accountability to the Next Level Create a performance measurement system based on data and analy5cs Adopt a framework that iden5fies metrics that impact organiza5on’s economic performance and strengths Link marke5ng and the budget to business outcomes Embrace a culture of accountability Add the right skills, systems and tools © 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential Page
- 41. Marketo Demand Generation Funnel Awareness Inquiry Pending Prospect Lead Oppor‐ Cust‐ tunity omer Recycled Nurturing Database Anony‐ Name & Sales‐Ready Sales In‐Profile mous Email / Score>65 Active © 2009 Marketo, Inc. Marketo Proprietary and Confidential Page
- 42. Demand Generation Model New Customers ($5,166) 30% 25‐30 Opps. from: Opportuni5es ‐ Sales Outbound ($1,550) 12.6% of leads / 52% of prospects eventually 1.4 leads per opty become a lead = 9% lead to opty Leads ($140) 4.0% / month 75% 29% Paid 30% Ac5ve Prospect 75% Inquiries Database ($33) New Prospects Free ($72) 71% 25% 7.2% Inac5ve Inquiries 50% ($0) © 2009 Marketo, Inc. Marketo Proprietary and Confidential Page
- 43. Demand Gen Metrics Dashboard Prospect Lead Opportunity Win All numbers three month averages © 2009 Marketo, Inc. Marketo Proprietary and Confidential (except Opportunity Sources) Page
- 44. Demand Generation Forecast Prospects Q2 2009 Q3 2009 Q4 2009 Aug 1,824 2,500 3,050 Sep 2,668 4,250 Oct 4,500 Nov 5,200 Leads Jun Jul Aug Sep Oct Nov Dec Jan Feb Jun 403 450 470 500 Jul 462 470 500 530 Aug 475 500 530 600 Sep 521 530 600 625 Oct 557 600 625 800 Nov 782 650 800 825 Opps Jul Aug Sep Oct Nov Dec Jan Feb Jul 61 63 66 70 72 Aug 65 67 70 72 Sep 69 72 74 80 Oct 74 74 83 85 Nov 81 83 85 90 Forecast Actual © 2009 Marketo, Inc. Marketo Proprietary and Confidential Page
- 45. Lessons Learned Today’s marketers must earn a seat at the revenue table Marke5ng objec5ves and budgets must align with business objec5ves Metrics should be based on outcomes, not ac5vi5es Put the right processes in place to capture metrics and outcomes Tie budget back to the business © 2009 Marketo, Inc. Marketo Proprietary and Confidential Page
- 46. Question and Answer Laura PaEerson President & Author laurap@visionedgemarke5ng.com Jon Miller VP of Marke5ng jon@marketo.com © 2009 Marketo, Inc. Marketo Proprietary and Confiden5al Page
- 47. Thank you for your Participation! To replay this webcast: www.marketingpower.com/webcasts Continue the Conversation on Twitter: #MARKETO Questions for the AMA: acarbonara@ama.org For More Information on our host, ReadyTalk, visit ReadyTalk.com/ama