The Long and Short of It

February 27, 2014 By Rick Shea Leave a Comment


Introduction

Are you a short-term thinker or a long-term thinker? Both? Neither? Maybe you’d like to think about it and get back to me?

Well, today’s post has a little something for both of you, or all of you. However you think, marketing measurement has benefits for you!

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Early in my career, I worked for a guy who believed that one of the biggest problems facing the country was an epidemic of short-term thinking. At the time, given my youth and inexperience, I didn’t give this epidemic of his a lot of thought. Over the years, though, I’ve come to realize that he was onto something.

Consider these common examples of short-term thinking:

  • Politicians who seem primarily motivated by getting elected or re-elected, rather than by doing the right thing in the long run for the citizens whose interests they supposedly represent.
  • General managers of professional sports teams who trade away young talent for veteran players. They sometimes make the playoffs and a little extra money for their owners, but rarely do they go on to build championship teams without investing in the long-term development of their young players.
  • Business executives might want to invest in the future but will tend to favour taking actions that contribute to meeting shorter term objectives. Missing those objectives can disappoint financial markets and can cost those executives their bonuses and maybe their jobs.

Short-term thinking can also cause companies to be reluctant to make marketing measurement a priority. It can be difficult to allocate scarce marketing resources towards something they perceive as having a longer-term payback.

Marketers will tend to allocate their resources and budgets towards activities that deliver customers and revenue today. They might think, “Why spend money on measurement, something that will help me next year, when I could spend that money on programs to find more customers this year?”

The pressure to think and behave that way is real, but the perception that marketing measurement’s benefits are exclusively long-term isn’t quite right. The long-term benefits from measurement are significant, but there are also important short-term benefits. Let’s look at both.

 

Long-Term Benefits of Measurement

Better Decisions, Better Results: This is the main and most obvious reason to measure marketing. What you learn will make your marketing more effective.

Optimize Spending, Reduce Waste: Measurement helps you to learn which marketing programs are the most and least effective, so you can do more of what works and less of what doesn’t.

Organize the Chaos: We live in very data rich times. As technology evolves and as the ways marketers interact with customers become more diverse, you’ll have even more data and it will be harder to make sense of it all. A good measurement system will keep your data from becoming a chaotic mess and will support making the decisions you need to make.


Short-Term Benefits of Measurement

Clear and Measurable Objectives: To commit to measurement, you must also commit to setting objectives for your programs. Proper objectives clearly define success and set expectations. This makes it easier for organizations to initially determine which activities to fund and afterwards, to measure whether they met expectations.

More Scrutiny = Better Marketing: Having to define success and set objectives will require that you examine why you want to do each program before you commit budget to them, and that scrutiny will help prevent bad programs from seeing the light of day. By merely planning to measure, the cream will already start to rise to the top.

Get on the Same Page: To do measurement well, you have to involve people from key functional areas of your business in the development and implementation of your process. The discussions you’ll have will help get everyone on the same page about the intent of your marketing programs and the impact across the organization of the resulting customer behaviour.

Understand the Drivers of Value: Marketing’s purpose is to incent customer behaviour that creates the most value for the organization. Measurement helps you to learn how various types of customer behaviour either create or erode value across your business. That understanding also helps to ensure alignment between your marketing and corporate objectives.

 

We may well live in a world plagued by an epidemic of short-term thinking, but that statement is probably a bit too dramatic, and anyway it’s always best to focus on what you can control.

If it’s short term benefits you need, then marketing measurement will deliver. As a great bonus, you will simultaneously be investing in your long-term marketing effectiveness. Those long-term investments will also help you to meet future short-term objectives.

The long and short of it is that measurement will improve your marketing effectiveness, today and in the future. If you’re not already measuring, what’s stopping you?

 

 

Filed Under: Approach Tagged With: Alignment, Effectiveness, Investment, Management, marketing, Marketing Plan, marketing planning, Measure, measurement, objectives

Marketing: Expense Or Investment

September 15, 2011 By Rick Shea Leave a Comment

At the risk of stating the obvious, we live in challenging economic times. This week the focus is on the potential for Greece to default on its sovereign debt and what that might mean for the Euro zone, and beyond. Against a backdrop of high levels of consumer debt and unemployment, and low levels of consumer confidence and spending, it can be hard to be optimistic about the economy.

At times like these, companies quite naturally react with caution by controlling and reducing expenses. For example, they might reduce travel, cut staff or postpone capital expenditures. From my perspective, the really bad news comes when they cut marketing spending.

Marketing budgets can become a target for cutting at companies whose executives view marketing as a non-essential expense that could be cut without dire consequences, at least not in the short term. This view of marketing as expense rather than investment creates pressure on marketers to reduce spending during tough times.

Here’s the issue for marketers. If other executives view the money you control as an expense with no obvious measurable benefit, it’s a lot easier for them to want to cut that expense.

On the other hand, if they understand how marketing helps to acquire, develop and keep profitable customers, then they’ll be more inclined to see marketing as an investment that is essential to delivering great business results in the short, medium and long term. The path to that understanding is measurement.

Organizations that see marketing as an expense generally don’t understand how it creates value for the business, or don’t believe that marketing spending decisions are being made in a way that helps to optimize business value over time. Marketers who want to shift the Executive Team’s perspective to view marketing as an investment need to show that these “investments” are being evaluated using data that means something to the whole executive team.

How can you use measurement to help your executive team view marketing as an investment? Here’s a five point plan to begin that shift:

1. Commit to Measurement: Pick one standard approach to measurement that you can apply consistently to each and every marketing program. Applying one approach consistently is what enables you to compare each program to the others, so you will know which are most and least effective and be able to adjust marketing investment strategies accordingly.

2. Involve Key Individuals: To develop an approach to measurement that will be considered valid, involve those that determine how money gets allocated during budgeting, and where to cut when it’s time to cut. Typically, this can include the President and/or CEO, and the heads of Finance, Marketing, Sales, Operations, Technology, and Human Resources. With their involvement, you’ll be measuring the things that matter to the people that matter.

3. Determine What to Measure: This step is about making sure your marketing measurement process will measure the right things. You need to understand all the Key Performance Indicators that your key individuals monitor. These should be included in your measurement process, provided marketing can actually impact those KPIs. You also need to consider the organization’s objectives and the specific objectives of each individual program. You’ll be measuring results vs. these objectives.

4. Make Measurement Someone’s Responsibility: You can do it yourself, delegate it, put a team together or outsource it. Just make sure everyone is clear about who will do the measurement, when it’s supposed to happen, and how they’re going to get the data they’ll need.

5. Integrate Measurement: Ensure some of your marketing metrics become part of the organization’s KPIs that get reported and monitored regularly. Review and share your results which you can integrate into your planning process. This integration will help connect your marketing investments to business results.

Marketing budgets commonly come under pressure during tough economic times. Measurement can help you to defend those budgets but if you end up having to cut your budget, at least your measurement process will help identify where to cut.

Here’s an idea. While your competitors are diligently cutting their marketing, instead of cutting along with them, keep investing in your most effective types of programs (as identified through measurement) and you’ll steal market share from your thrifty competitors!

That incremental market share will help replace lost revenue should your market shrink and will really pay off in the longer term if you can maintain your share when the market grows in a stronger economy. That sounds like a good investment to me!


Filed Under: Approach Tagged With: Investment, Management, marketing, Measure