“The challenge in a lot of marketing organizations is breaking through the defensiveness that surrounds marketing expenditures within the organization, as well as ideological barriers coming from sales, finance and other areas,” said LaPointe, who is the author of “Marketing by the Dashboard Light.”
LaPointe said that most marketing organizations have developed some form of marketing measurement program, but they have implemented these in silos, such as developing metrics for Web sites, customer satisfaction or marketing campaigns.
“It is very difficult for most companies to build stories across silos that build confidence in answer to the question ‘What are we getting for our buy?’ That is where dashboards comes into play,” he said.
LaPointe defined a marketing dashboard as a group of critical metrics, usually between 10 and 30, that are organized into logical families, such as product or customer. When the metrics are viewed side by side, they provide a picture of what is happening across the organization.
“A dashboard is not in and of itself a marketing measurement system—it is part of a marketing measurement system,” LaPointe said.
“The dashboard helps organizations easily summarize and focus decisions on metrics that the organization believes are the ones that are critically important to success.”
LaPointe recommended five steps in building marketing dashboards.
The first step is alignment—defining what marketing is trying to do and how that relates to what sales, finance and other areas of the organization are trying to do.
Second, marketers must develop a comprehensive measurement framework by identifying what is going to be measured and prioritizing those areas.
“Ignore the stuff that isn’t expected to have high value and focus on the things that are of higher expected value,” LaPointe said.
Third, marketers must be objective in their approach, and fourth, they must provide accountability to finance and other areas of the organization.
One way to provide accountability is to build a bridge between cash flow and assets, LaPointe said.
“If you propose spending money on programs that won’t pay off until the long term, you can build a model that shows, period by period, how many customers you expect to acquire and retain, what the long-term value of the customer is and when the payback occurs,” he said. “By providing the net present value, you can give the finance person information about whether the investment makes sense.”
The fifth step is the credibility that is built when marketing dashboards are implemented effectively.