If you answered “yes,” “yes,” and “not exactly,” you’re not alone.
In a recent survey of U.S. marketers conducted by the Association of National Advertisers (ANA), Forrester Research, and Marketing Management Analytics (MMA), 66.5% of respondents said measuring marketing ROI was “important” or “very important”, yet 59.5% reported dissatisfaction with their company’s ability to measure marketing ROI.
Recognizing the need for better standards when it comes to marketing accountability, the ANA has convened a task force to survey members and help establish industry “best practices.” Meanwhile, Kolbrener has a few experience-tested tips which can make your marketing not only more measurable, but also more successful.
First, marketing accountability can’t be confined to the marketing department. Definitions of “marketing success” can vary from company to company — and from individual to individual — so it is crucial to involve executive leadership in outlining mutually agreed upon marketing ROI parameters. If the CEO’s measuring stick is brand equity, but the VP of Sales is focused on increasing direct response, efforts in both directions may be undermined. Good marketing starts by bringing the leadership team together and helping them reach consensus on the desired ROI.
Second, seek out, facilitate, and, if necessary, demand cooperation and open dialogue with other departments in the organization. Depending on the nature of your business, it may be valuable to involve sales, accounting, product development, and even customer service teams in refining the practical definition of marketing ROI. An ongoing relationship with finance and strategic planning leadership is particularly essential to ensure fruitful marketing metrics and analytic methodologies.
Third, integrating executive leadership definitions of ROI with input from finance, strategic planning and any other relevant departments, spell out objectives and marketing measurement models so everyone is on the same page. Once a model, or combination of models, has been established, apply it consistently from campaign to campaign. Common measurement models include:
(1) predictive models for direct response
(2) customer lifetime value models
(3) brand equity models
(4) recency, frequency and monetary value models
Last, and perhaps most importantly, develop a marketing ROI capability plan to gauge where you are on the marketing accountability spectrum and what areas need improvement. In response to the survey mentioned earlier, the MMA developed a helpful capability maturity model that looks at how well marketers define metrics around brand equity and marketing performance and whether they manage their business against marketing ROI metrics on a consistent basis. The MMA model describes five stages:
Level One — companies have little measuring capability and must rely on their agencies to tell them how to measure marketing efforts
Level Two — “brand builders” understand the importance of brand equity but haven’t established effective metrics to measure results
Level Three — “efficiency experts” have developed metrics, but tend to focus on the past rather than the future
Level Four — “customer converts” have visibility into customer touch points across the enterprise and have established marketing goals directly aligned with business objectives
Level Five — “profitability pros” can boast a marketing process that’s defined, structured, and valued as a corporate asset Unfortunately, based on the survey, only about 2% of marketing organizations have attained level five. And over 60% are only at level one or two. To improve marketing metrics — and marketing effectiveness — start with an honest evaluation of where your company is on the MMA spectrum. Identifying what areas you need to work on is a crucial first step toward becoming a “profitability pro.”
Feel Free to share this article with others. Simply copy and paste the text below into your webpage or blog.
