Marketing accountability has a dirty little secret.
The secret is that marketing-accountability programs can be a complete waste of time -- unless they are designed to inform business decisions. According to a 2006 study by the Association of National Advertisers and Marketing Management Analytics, 58% of companies surveyed have formal marketing accountability programs, but only 28% report being satisfied with their ability to use ROI metrics to take action. Often, companies are swept up in the "metrics mania" without any way to tie insights to business results.
It is not uncommon, for example, to see organizations with more than 40 metrics on their dashboards. Addicted to metrics, these marketers create new metrics every time they initiate a program. Ask them why they are capturing these metrics, and they can't tell you. Not only that, but the metrics captured aren't even relevant to the business. And they can't be acted upon.
As a starting point, we suggest marketers take a step back and determine their marketing and business objectives. These can be everything from growing key customer segments to increasing channel penetration to addressing unmet market needs (note that "ROI" is not an objective in and of itself).
Beyond the big picture, marketers need to define the specific questions that must be answered in order for them to reach their goals. We've seen many companies, for example, measure the ROI of their marketing but then not know what to do. That's because they failed to consider -- and measure -- crucial issues, such as, "What customer segments am I trying to grow?" "What are my profitable channel strategies?" and "What mix of marketing tactics supports my market goals and gives me efficiency?" The bottom line is that they haven't tied their measurement to their business objectives.
Once a measurement structure is in place, marketers need to do what Jeff Wysocki, a senior IT manager at Coors Brewing Company, calls "insight mining" to tie insights to objectives. A veteran of insight capability development at multiple Fortune 500 companies, Mr. Wysocki says leading companies develop processes to wade through their data and extract the nuggets of information that can drive big business decisions. "If insights don't directly impact business decisions, then we're all wasting our time," he says. "There's little value in metrics unless they drive your business forward."
But there is a solution. Here's a four-step framework that can help your organization make marketing accountability real:
Step 1: Recognize the problemEven if investment and resources are being directed at analytics, there's no guarantee they are being used in management decisions.
In our experience, unless business-planning processes have been reengineered, insights are likely to be underused or inconsistently used in management decision making. That's because it's all too easy for a company to default to management by guts and instincts rather than by metrics and facts. Because they can get by for a time by doing this, companies are often clueless that something is amiss until they are blindsided by a missed forecast or a competitor end-run and ask, "Where were our metrics?"
Instead of waiting for a crisis to tell them something isn't working, companies should immediately inventory their metrics. The metrics assessment should look at metric usage (what parts of the organization are using them and how often?), satisfaction (are they giving management what they need?) and performance (are they easy, timely and available?). The assessment should score the current state across these three criteria and define desired future-state scores. This will provide an organization with a clear picture of the current impact of metrics on the organization and a target for its future direction.
Step 2: Link metrics to business practicesWithout linkages in place between metrics and business practices, insights can become "fun facts" because the metrics are not grounded in business decisions. Getting decision makers to buy into the metrics requires upfront involvement in the definition of the metrics and visibility into the data and analytics that support these metrics.
Companies should align metrics with specific business objectives, business decisions, and business calendars and standing meetings. This approach ensures metrics are embedded in a business decision's DNA.
Step 3: Get management buy-inUnless a company's leaders are themselves champions of analytics and insights, will likely ignore marketing insights in favor of business as usual. Evolving into an insights-driven organization rarely is a grass-roots effort; it requires leadership from the top.
In organizations that have successfully transitioned to an insights-driven approach, we've generally seen a strong senior-level manager leading the transformation. This person usually has cross-functional experience and an analytics background that helps provide the functional knowledge and credibility to make the initiative work.
The senior management team, specifically the C-level executives, need to commit to using insights for the most important areas of the business, including strategy definition, target setting, budgeting and course correction. Nothing compromises an analytics program more than midlevel managers defining a strong process that ultimately gets ignored when those in senior management make decisions the way they always have.
Step 4: Align the right cross-functional teamOur experience is that successful accountability programs need the support of a cross-functional team comprising at least marketing and finance. Unless a team is in place, analytics programs can come unglued.
While marketing and sales together can define a robust consumption and market-driven plan strongly rooted in insights, that's as far as it will go unless operational and finance issues are addressed. Questions such as "Can we produce, deliver and service the forecast?" can be the death knell of an accountability program unless operations is involved from the start. Similarly, unless marketing can address finance's concerns, the metrics and insights won't be acted upon. Failure to address questions such as, "What are the price margin considerations based on market and cost factors?" can quickly derail a marketing-accountability program.
Step 5: Measure your successIt's not enough to have an accountability program in place unless you truly know if the program itself is working. What we're saying is that you need to take the ROI of your ROI program. Defining your success helps secure ongoing management support and investment.
Start with defining both above-the-line and below-the-line benefits from the ROI program. Above-the-line focuses on business growth: increases in share, revenue or profit driven by marketing-insights decisions. Below-the-line focuses on operational efficiency: cost savings achieved through reduction in manual work and re-work and the accompanying system retirement and organizational efficiencies. For both, it's important to define specific, time-based goals that can be measured for a business case, such as "Increase share by .5% within 18 months by targeting new segments" or "Reduce time to create and prepare management reports by 50% within a year."
When you've done that, don't forget to make someone responsible for tracking and delivering the benefits. Finally, collect and track the data. Where possible, modify internal systems to make measurement easier. For example, if a marketing program is targeted to deliver specific benefits, modify your financial systems to support a program profit-and-loss that tracks all costs and revenue attributable to the program.
Do all of this, and within 12 to 24 months, your organization will have not only robust, analytic-driven processes but also hard numbers on the business impact of the transformation.
So how do you know you've been successful? An effective measurement program is easy to recognize. Management decision support shifts from what people "heard in the hallway" or "pulled together in a spreadsheet" to a consistent, fact-based process with repeatable results and institutional buy-in. When an organization evolves from dialing for dollars to getting support for a program to relying on a consistent set of analytics that gets refined over time -- that is a mark of success. Investment in dashboards, tools, databases and researchers will remain in the dark until the spotlight of organizational transformation shines on them.
Ed See is co-president chief operating officer, Marketing Management Analytics. He was previously managing director, BearingPoint.
David Skinner is senior VP-consulting and product development, MMA. Previously he held management positions at BearingPoint.
Doug Brooks is VP at MMA. He has also held senior positions at BearingPoint and Arthur Andersen's Business Consulting Practice.