What Problem do you Want to Solve?

April 19, 2012 By Rick Shea Leave a Comment

Earlier this week, I did a little light reading on big data. I’ve been hearing a lot about big data lately so I thought I’d investigate.

Truthfully, reading about big data is hardly light reading. Big data presents a big challenge and is emerging as a hot topic in marketing and general business management circles.

What is big data? Well, it’s not about presenting numbers in larger fonts to make it easier for people over 40 years old to read, although I’d probably appreciate something like that. Big data relates to the fact that businesses (and not-for-profits, and governments, etc.) operate in a data rich environment featuring increasingly voluminous, complex and diverse data.

For many organizations, there is more data coming at them than they can handle. The data is evolving rapidly and outgrowing their ability to analyze and glean the insights they need from the data to make better business decisions.

I liked the closing section in this article from which I’ll paraphrase advice from Christer Johnson, IBM’s head of advanced analytics in North America. To get started in tackling big data, first decide what problem you want to solve. That’s great advice in many aspects in life, including big data and it certainly applies to marketing measurement.

I’m reminded of the oft-quoted John Wannamaker, a pioneer of the department store concept in Philadelphia in the 1860s, who famously said:

“I know that half of the money I spend on advertising is wasted; the trouble is I don’t know which half.”

I think of John Wannamaker as one of the founders of the discipline of marketing measurement, as he may have been the first one to define the problem. I’m not convinced he ever solved the problem, but at least he knew what he needed to know. Here’s my take on the problem he was trying to solve.

For context, John’s quote comes from a time with a much less complex marketing environment, before there were any broadcast, internet or mobile media. John’s choice of advertising tactics was probably limited to a few simple options such as:

  • newspaper ads
  • flyers handed out to passers by
  • outdoor signs
  • a guy with a sandwich board on the sidewalk in front of the store
  • a boy cycling around the store, yelling out this week’s specials (a very primitive form of Tweeting)

Yet, in that simple world, John Wanamaker didn’t know which half was wasted. If John were alive today, he’d probably admit that he didn’t even know if it was half, or one quarter or two thirds that was wasted. All he really knew was that some forms of his advertising were more effective than others, and he wanted to know which they were.

With all due respect to John Wannamaker, I’d like to restate his well-known quotation as:

“I know that some of my advertising programs are more effective than others; the trouble is I don’t know which ones. Mostly, I just want to know the best way to spend my money.”

We can modernize this problem statement by substituting the word “advertising” with “marketing” and then it can serve as a starting point for most companies’ marketing measurement efforts. Like John, all managers with a marketing budget need to determine how to optimize that budget to meet or exceed their business objectives.

In these more complex times, with many more marketing tactics to choose from, there is also a lot more data to analyze and understand. Each program may target different customers, using different tactics with different objectives and performance metrics. Gathering the data for those metrics can involve a variety of sources, analytics tools and research techniques.

All that diverse data, big or otherwise, can certainly be a big mess if you don’t have a way to organize and analyze it. The analysis needs to happen in a way that enables comparing each program’s outcomes to the others, so you can identify the best ways to spend your marketing budgets.

A well-designed marketing scorecard can solve this problem. The key is to design your scorecard in a way that makes comparisons between diverse programs meaningful, and helps you to solve the same problem John Wannamaker was trying to solve all those years ago, to find the most effective ways to spend his money.


Filed Under: Approach Tagged With: Management, marketing, Measure, measurement, Metrics, ROI, scorecard

Measure Well, Sleep Well

March 15, 2012 By Rick Shea Leave a Comment

If you know me or have been reading this newsletter for any length of time, you may know that photography is my favourite pastime. What you may not know is that organizations sometimes bring me in to take photos of their events, which is how I found myself at the AllerGen 2012 Annual Research Conference.

AllerGen is a not-for-profit organization whose role is to mobilize Canadian science to reduce the illness, mortality and socio-economic costs of allergic disease. The conference showcased the latest research in this regard and while often over my head scientifically (not hard to do), I found it quite interesting.

During an afternoon break at the conference, a distinguished looking gentleman named Douglas Barber approached me to talk photography. Our pleasant conversation eventually shifted to the conference and he told me a story that I quickly realized fit my thinking on marketing measurement.

Douglas explained he is on AllerGen’s board and that an issue of concern to him is the cost to the Canadian economy from the “asthma drag” on productivity. He explained how asthmatics can be less productive at work or even miss entire days of work following sleepless nights caused by asthma. Parents of asthmatic children can also experience the same productivity losses. Douglas also told me how he once did a quick “back of the envelope” calculation to estimate that asthma costs our economy between $10 and $20 billion per year in lost productivity.

Sometime after Douglas did his quick calculation, a full study was done to properly analyze and estimate the economic impact of asthma’s drag on productivity. The study concluded the annual costs are $15 billion. That’s right; a costly and complex measurement process produced the same answer as one expert using a pen and the back of an envelope.

Two aspects of this story relate to my views on marketing measurement:

  • Douglas’s back of the envelope calculation relative to the full study is similar to how a marketing scorecard can be a proxy for a sophisticated and costly marketing measurement process. In both cases, the less sophisticated approach doesn’t need to be perfect, just accurate enough to support analyzing options and making the right decisions. As I like to say, it’s not about precision, it’s about the decision.
  • The back-of-the-envelope estimate worked because it was done by an expert using a sound methodology. Douglas has an extensive business background and apparently knows more than just a little about productivity and related calculations. Scorecards are a proven methodology that you can enhance with expertise about your marketing and your business.

There is another lesson in Douglas’ story, and that’s the need to right size your measurement efforts to the magnitude of the decisions you need to make.

Research Investment Decision

  • Douglas’ back of the envelope calculation and the full-blown study produced essentially the same estimate and both pointed toward making the same decision. It’s a pretty compelling proposition if investing perhaps a few hundred million dollars into research would lead to recovering even just 10%, or $1.5 billion of the lost productivity, especially as that benefit would be realized every year.
  • The problem is that any decision to potentially invest a few hundred million dollars needs to be substantiated by more than a back of the envelope calculation. In this case, the cost of the research needed and the probability of recapturing that 10% are two other variables that I think would need to be estimated. It’s understandable that a full-blown study was needed to examine the overall business case.

Marketing Investment Decision

  • Similarly, for companies that invest tens of millions annually in marketing, it makes sense to support the decisions that need to be made with sophisticated marketing measurement efforts that might cost hundreds of thousands, or more.
  • For most companies with smaller marketing budgets, a practical lower cost approach such as one using a scorecard may well be the right sized measurement solution. In most cases, the overall measurement expense likely needs to be a small single digit percentage of the total marketing budget.

I like simple and elegant solutions that deliver what you need. A marketing scorecard’s simplicity keeps measurement costs down, while its elegance allows the flexibility to include a suitable level of expertise and sophistication to right size your measurement efforts to your marketing budgets.

Whichever measurement approach you choose, be sure to combine a sound methodology with the right expertise to learn what you need to know to make the right decisions. Measuring well will help you to sleep well and be a productive marketer!

Filed Under: Approach Tagged With: Effectiveness, Management, marketing, Measure, measurement, return on investment, ROI, scorecard

Wine Scoring & Marketing Measurement

February 16, 2012 By Rick Shea Leave a Comment

Tuesday evening I was browsing the latest edition of the LCBO’s ‘Vintages Release Catalogue’. This catalogue provides descriptions and sometimes wine critics’ quality scores for the new wine products about to be released through Vintages stores in Ontario. As I browsed, two thoughts came to mind.

Firstly, I noticed that most of the scores in this catalogue were between 88 and 92 on a 100-point scale. It struck me that this suggested the majority of the wines in this catalogue were of very similarly high quality, with almost all wines rated within a narrow 5-percentage point range. I found that odd, perhaps unrealistic, and decided to think about it. Secondly, I noticed that the wine descriptions were making me thirsty.

Wine Glass, Red Wine

Seeing the wisdom in choosing the beverage that best suited the task at hand, I poured myself a glass of red to compliment my thinking, sat down with the catalogue and made a few calculations and notes. Here are some highlights.

  • Vintages published scores for 57 of the 120 wines in this catalogue. The wine critics quoted used the 100-point scale for 48 of the 57 rated wines. The other nine were based on 20, 5 or 3-point scales.
  • Of the 48 using the 100-point scale, 41 (85.4%) received a score between 88 and 92, and 30 of those were either 90 or 91, which confirmed my first observation. The other 7 wines were rated higher than 92, leaving no scores below 88.

Taking a sip from my glass, I contemplated why so many wines received such similar scores, and how all this relates to marketing measurement. Here are a few thoughts:

Wine Scoring: The LCBO is in the business of selling wine and I suspect they have a policy of only publishing scores of 88 or higher. I tested this theory by looking at the two previous Release Catalogues and wasn’t able to find a wine scoring 87 or lower. Perhaps they’ve learned that lower scores reduce sales and so don’t publish scores below 88.

Marketing Measurement: Marketers are in the business of spending money effectively to drive positive business outcomes. Instead of measuring only the best marketing programs or those you might want to cast in a favourable light, measure and rank all programs so you can identify which are most and least effective, and then optimize future strategies accordingly.

Wine Scoring: By my rough count, the 48 scores using the 100-point scale were sourced from 26 different wine critics. While each used a 100-point scale, I have a hard time believing all 26 used the scale in exactly the same way. I also suspect that some critics are more generous with their scores than others, like my calculus teacher in CEGEP. The other important issue is that scoring wine is a highly subjective exercise. It isn’t at all uncommon for two or more tasters to disagree on a wine’s quality and the corresponding score. Experts have different opinions on subjective matters.

Marketing Measurement: To minimize inconsistencies, reduce or eliminate subjectivity and personal bias from your measurement processes. Having 26 experts using similar but sometimes different methods of scoring your marketing programs based on their personal opinions would not be a recipe for consistency. One person needs to lead your measurement efforts using one methodology that your organization understands and supports.

Wine Scoring: I did a little reading on wine scoring and discovered that wine critics can be inconsistent in the scores they award to the exact same wine on different occasions. For example, the influential wine critic Robert M. Parker has apparently pointed out that he sometimes assigns different scores to the same wine at different tastings, but that those scores tend to be no more than 3 points apart. It seems that differences in tasting conditions and the taster’s emotions can lead to different scores. To address this, I believe Robert Parker publishes average scores when multiple tastings produce different scores.

Marketing Measurement: Consistency is important in making comparisons meaningful. Pick one methodology that can be used consistently across all programs. Consistency should help you to avoid having all your scores cluster within a narrow range where differences may not be significant, or actionable. Programs can differ significantly in their effectiveness at meeting your objectives, and so their scores should reflect those differences. Also, if data for one metric is collected at various times, or from different sources, you might want to follow Robert Parker’s lead and use an average score for that metric.

Advice for Wine Drinkers: Don’t worry about the difference in quality between a wine that scores 88 and another that scores 92.  Both are high quality wines and the difference in scores may come down to who tasted it, under what conditions and the tasters’ preferences. Here’s the fun part. Through trial and error, you should eventually be able to determine which wine critic your tastes best align with, and then the ratings and tasting notes from that critic will help you to make better wine purchasing decisions.

Advice for Marketers: Similarly, there will be some trial and error involved, but not nearly as much fun. Select a measurement methodology that you can apply fairly, without personal bias, and consistently across all programs. Be disciplined about measurement and it will ultimately highlight which marketing programs best meet your objectives and create value for your business. That will help you to make better marketing decisions, which you may wish to celebrate by opening a bottle of your favourite wine!

Filed Under: Approach, Objectivity Tagged With: bias, comparison, Effectiveness, Management, marketing, Measure, measurement

Do Daily Deal Coupons Work?

January 19, 2012 By Rick Shea Leave a Comment

Daily deal coupons are all the rage these days, led by Groupon and their numerous competitors. Since I have a pretty extensive background in consumer promotions, particularly couponing, I tend to get pulled into discussions on daily deal coupons and I often notice the frequent related media coverage. Setting aside all the buzz around them, they’re really just a new twist on an old marketing tactic, but do daily deal coupons work?

Traditional paper coupons and price discounts have worked quite nicely, since the late 1800s in the case of coupons, and I suppose for centuries or millennia in the case of price discounts. One of the main reasons to discount is to attract new customers to try your products or services, and then hopefully sell them more stuff and/or turn them into profitable repeat customers who will pay full price on future purchases. Daily deal coupons can certainly do this.

It is beyond the scope of this newsletter to address the dos and don’ts of daily deal coupons, but you’ll get some insights if you Google “Groupon horror stories” and “Groupon success stories”. I will say that you’ll want to have a way to limit response levels or to make sure you can live with whatever level of response you get.

To address whether daily deal coupons work from a measurement perspective, my answer leads to more questions, starting with “Well, it depends, what did you want them to do for your business?”

Drilling down a bit further, answers to the following four fundamental questions should inform the planning, objective setting and measuring of any marketing program. Clear answers should point the way to what and how to measure, and whether the program “worked” to meet its objectives.

Let’s look at each of these.

1. Who are you targeting? While many answers are possible, the best answer is often “new customers” to help grow your business.  Merchants benefit most when they structure their daily deal coupon offers to attract new customers, rather than subsidize existing customers who would have bought without a coupon.

2. What do you want them to do? You’ll want new customers to buy for the first time whereas you may want existing customers to buy something more or different than usual. In addition, you might try to prop up an under-performing aspect of your business, such as your slow month or time of day, or a product that isn’t selling well.

3. How much value will that create for your business? This one is especially important and a bit tricky. You’ll need to consider the short term (this transaction) and the long term (the customer’s lifetime). Ideally, you’d like this transaction to create enough value to at least cover your costs, but if it doesn’t you’ll need to make up the difference and ideally much more over the lifetime of those customers who buy your daily deal.

Short Term – This Transaction: Consider your variable cost of providing the products or services you will sell through this coupon and compare that to the revenue from your share of the coupon selling price, which you will split (often 50/50) with the daily deal provider. Also, consider whether you’ll receive your share of the revenue when the coupon is bought, or when (and if!) it is redeemed.

Long Term – The Customer’s Lifetime: How long is the lifetime of a typical customer? On average, how many times will each customer buy over that lifetime, and how much will they buy each time? If each new customer’s lifetime is just this one transaction, it may not be worth your while to offer this coupon. But, if you can convert enough of those new customers to loyal repeat customers for many years, then discounting to get them in the door should be worthwhile.

4. How many people do you need to do that for this expense to be worthwhile? Once you know what a customer is worth to you over whatever time frame you want to use, and you know your costs, then you can set an objective for how much value (metrics include new customers, number of transactions, transaction values, etc.) you want this marketing investment to generate. Then you can measure against those objectives.

Clear Objectives Make Measurement Easier

To measure whether or not a daily deal coupon or any marketing program worked for your business, you need clearly defined objectives. In other words, to measure whether you have succeeded, you must  first define success. Clear objectives will tell you what metrics to use and where to find the data.

It’s one thing to attract new customers with discounts, and quite another to keep them. Can you convert discount shoppers to loyal customers? Success will come down to your company’s ability to deliver a superior customer experience in the short term, and to build a positive relationship with each customer over the long term and maximize both the lifetime and the value of as many customers as possible. Of course, that’s something every business has to do well, however they find their customers.

Daily deal coupons may be a relatively new marketing tactic, but there’s nothing new about the fundamentals that determine whether you should use them, whether you’ll be successful and how to measure your success. Clear objectives will help you to decide whether to use daily deal coupons and to evaluate whether using them worked, however you define success. To compare the success of a daily deal coupon program to any other type of marketing program, well that’s a topic for another newsletter.

 

 

Filed Under: Approach Tagged With: Management, marketing, Measure, measurement, objectives, Planning

Emissions Test

December 15, 2011 By Rick Shea Leave a Comment

My car is getting old. Like me, it doesn’t always feel its age, but the reality is that by most measures it is getting old. One measure of its advancing age is that in order to renew my vehicle licence recently, my car first had to pass an emissions test.

In Ontario, when the Ministry of Transportation sends you your vehicle licence renewal application, they indicate if your car needs to be emissions tested.  This time around, my middle aged car was due for a test.

The Ministry requires the test be performed at one of the accredited Drive Clean facilities listed on their website.  I found a local facility and within 15 minutes of arriving, I drove out of there with the clean bill of health for my car that I would need to renew my vehicle licence.

While waiting for my car to be tested, I entertained myself by reading the wall poster and brochure that described the emissions testing procedure. As a guy who cares about good measurement practices, I was impressed by two things:

  1. The Ministry has a consistent and transparent measurement process.
  2. Their process includes a clear and simple scoring system.

Let’s look at how each of these illustrate what a good marketing measurement system needs to do.

Measurement Process

These are the steps that all Drive Clean facilities follow when testing a car:

  1. Perform visual inspection
  2. Drive car onto Dynamometer
  3. Insert probe into tailpipe
  4. Accelerate vehicle to 40 km/hr
  5. Computer analyses emissions and compares to standards for make, model and year
  6. Print test results
  7. If Pass, owner can renew vehicle licence
  8. If Fail, owner must repair car at a Drive Clean Repair facility, then re-test

Here’s what I like about this process, especially as the same things are true of a good marketing measurement process:

  • Its clear steps can be repeated consistently, making the results meaningful and comparable to other results, standards and benchmarks.
  • The process is well supported by documented procedures, such as the 20 page “Drive Clean Guide” that I found on line. The guide is amended and reissued periodically, as needed.  Well documented and updated procedures ensure consistency in measurement and clarify who is responsible for doing what and when.
  • The standards that define passing and failing results are clearly documented.

Scoring System

The scoring system is quite simple.  There are a few metrics for which your car must obtain a passing score.  For example, on Hydrocarbons, as measured in Parts Per Million, my car needed to be at 66 or less in order to pass. Fortunately, my reading was 3 and thus my result on this metric was a “Pass”. (I lobbied for extra points for such a low score, but to no avail!)

The key elements of this simple scoring system that relate to marketing measurement are:

  • Metric: Define the metric (Example – Revenue) and the unit of measurement (Example – for Total Company, for Specific brand, per square foot, per average transaction, etc.).
  • Objective: Define the target result, or limit, or range of acceptable results. (Example – Average revenue per transaction of $50 for Brand X in 1st Quarter of 2012).
  • Result: The actual outcome for the metric and objective as defined.
  • Scoring: You need to score how good the result is as compared to the objective. Will you use a pass/fail, a 10 or 5 point scale, a score out of 100, or some other scale?  Whichever you pick, be sure you can apply it consistently and fairly.

Summary

A properly documented measurement process will provide the consistency needed to make comparisons between programs meaningful.  A clear scoring system gives you a way to convert all your results to a common metric, which also enables comparing programs to each other.  These two essential components of a reliable marketing measurement system support making well informed strategic marketing  decisions, which comes down to making choices between programs, refining your strategies and finding the most effective ways to market your products and services.

Filed Under: Approach Tagged With: Effectiveness, marketing, Measure, measurement, Metrics

Pictures at an Exhibition

November 17, 2011 By Rick Shea Leave a Comment

I’m a long time hobbyist photographer. While I occasionally get hired to take photos for commercial use (e.g. events, product shots, architecture), I mostly just do it for fun. In fact, I had never formally exhibited my photos prior to this past weekend when I participated in an art show on my street.

Now in its fourth year, this show is basically an art walk limited to the one block of the street on which I live. I was one of 10 artists exhibiting a variety of art in 5 houses, on both Saturday and Sunday afternoons.

Reflecting on the event Sunday night I decided that it was a lot of fun, I’m really glad I exhibited and I’ll probably do it again next year. Since that simple statement doesn’t make for much of a newsletter on marketing measurement, I thought I would elaborate on how I came to that conclusion.

What I Spent

To begin with, my cost to participate was very low. Since the walls in my house were already covered with plenty of framed photos and ready to exhibit, I just needed to shuffle a few around and decide on prices. I probably spent all of about $50 to get ready, including salty snacks and chocolate chip cookies for my visitors. So, my costs were minimal.

What I Sold

I sold a total of 7 photos for $525. I’m happy with this outcome because:

  • Over the 2 days, I estimate 45 people dropped by my house. One person bought 2 photos, meaning I converted 45 prospects to 6 customers, for a conversion rate of 13.3%. This seems like a good rate for an art show, but I don’t have a benchmark to compare it to.
  • My sales surpassed my expectations. I thought I would do well to sell two or three photos and maybe pocket $200.
  • My customer acquisition cost ($50 ÷ 6 = $8.33 per customer) was much lower than my average revenue per customer ($525 ÷ 6 = $87.50 per customer) making each transaction and the overall event profitable.

What I Learned

For some background, our marketing efforts consisted primarily of:

  • Post card invitations hand-delivered to homes within roughly a 2 block radius
  • Each artist emailed invitations to their own list of contacts
  • The organizers solicited and obtained support from local politicians who emailed local residents and tweeted our event
  • Free on-line publicity, most of which came through a new local website called GrownUps55plus, for which I’m saying thanks by this mention

Secretly wearing my marketing measurement hat while disguised as an artist, I randomly asked those visitors I didn’t know the usual “how did you hear about us” kind of questions.  I learned that, in addition to those friends and neighbours I already knew, most people either:

  • Lived in the neighbourhood, or
  • Were friends of one of the other artists

From a product point of view, of the seven photos I sold, 4 featured trees as the main subject, 1 featured a tree and a window, 1 featured a window, and the other featured a racoon. Selling the racoon photo gave me a chuckle because earlier that day two other people had separately A) cursed the racoon, and B) saluted it with a middle finger. Clearly, one person’s art is another’s neighbourhood menace. Also, people like trees.

Another interesting fact is that the turnout was much higher last year when some houses estimated traffic at 300+ visitors. Perhaps that’s a sign people are less confident in the economy this year? Imagine if I could have applied my 13.3% conversion rate to 300 people instead of 45!

What I Would Do Differently Next Time

Based on my informal measurement efforts and observations, and input from the other artists, here are some thoughts for us to consider for next year:

  • Proximity and familiarity seem to bring people out, so we should expand our post card coverage beyond 2 blocks and each artist could invite more people.
  • Recruit more houses and artists to participate; the additional artists can invite their contacts, and a larger event with more art for sale should appeal to more people.
  • Continue to solicit free publicity and politician support.
  • Find a volunteer with public relations expertise, perhaps a student looking for experience, to help us get more local and on-line media coverage.

Conclusion

I didn’t apply measurement to our marketing efforts in any sort of disciplined way, yet maybe that’s appropriate for such a low budget event. Still, by simply looking at what I spent, what I sold, what I learned and what I would do differently next time, I should be able to improve my sales next year, and that’s what counts.

Whether for a small event like this, or a major marketing initiative, the best way to improve next time is to make sure you have a way of learning from what you did this time. Measure, review, reflect and capture what you’ve learned, so you can optimize future strategies.

There’s other soft data to consider, too. I had a great time, met some neighbours, saw some friends and enjoyed seeing people enjoying my photos.  I look forward to next year and in the meantime, I’ll be out shooting windows and trees, or maybe even a racoon.

 

Filed Under: Approach, Effectiveness Tagged With: Effectiveness, Management, marketing, Measure, measurement

Separating Fact from Opinion

October 20, 2011 By Rick Shea Leave a Comment

Megan Kalmoe rowed for the United States at the Beijing Olympics and is a 2011 World Silver Medalist. While she’s obviously a great rower, I hadn’t heard of Megan before reading Randy Starkman’s article in the Sports section of the Toronto Star on October 13, 2011.

The story focused on the fact that Megan named two Canadian men to the 2011 edition of her “20 Hottest Male Rowers” list, which she recently published on her blog. Not surprisingly, I didn’t make the list. One reason is that I’ve never rowed in my life. There might be other reasons, perhaps many, but more on that later.

I’m happy when Canadians do well in any international ranking, but being a marketing measurement guy, my interest in this article was to learn about Megan’s rating and ranking process.

Here’s what I learned:

  • You must be a world class male rower
  • You may lobby Megan to get on her list
  • Megan’s female friends can nominate you and lobby on your behalf
  • If Megan thinks you’re hot, she might add you to the list

As far as I can tell, Megan’s approach is pretty subjective and unstructured, and the resulting list reflects her opinion, which is fine.  I can’t tell whether lobbying influences Megan’s decisions, but it really doesn’t matter.

It is worth noting that Megan is just having fun with this and important strategic decisions aren’t being made because of her list. But, consider this. What would happen if the top three rowers on Megan’s list landed endorsement deals because they topped her list?

I think the fun and friendly lobbying might get a little more intense for the 2012 list, and Megan might feel the need for a more structured approach to minimize the impact of bias and personal opinion on the rankings.

For now, since this is all in good fun, Megan’s methodology for measuring male rower hotness is perfectly appropriate and as good an approach as any. However, when it comes to measuring marketing program hotness, marketers need a more rigorous approach.

What if you used a similarly unstructured method for measuring marketing programs? Brand managers would lobby you to have their programs highly rated. People working in sales, finance, customer service or operations would also offer their opinions. You wouldn’t have much fact-based data and you’d end up having to make an opinion-based judgment call.

The impact on your judgment call of everyone lobbying to influence your opinion might come down to:

  • The clout of each person doing the lobbying, perhaps related to their role in the organization
  • Each lobbyist’s communication skills and powers of persuasion
  • Your ability to separate fact from opinion, and to somehow remain objective

Here’s the problem. You don’t want the most effective lobbyists to skew the rankings in their favour.  Nor do you want personal opinion and bias tainting your overall approach. Opinions are interesting, but not very actionable.

To be able to take action, make good decisions and adjust strategies, you need data to identify your most and least effective programs. A structured and disciplined methodology will give you that data, while filtering out opinion.

To remove as much personal bias and opinion as possible from your marketing measurement efforts:

  • Involve the Right People: Create a cross-functional group to pick an approach that balances everyone’s needs and interests, so the approach is fair and equitable for all.
  • Involve Unbiased People: People with no vested interest in which programs get the highest rankings could include an analyst, someone from Accounting, or an independent consultant.
  • Set Clear Evaluation Criteria: Disclose how you will consistently evaluate each program, so everyone knows and plays by the rules.
  • Set Objectives Up Front: This prevents people from later setting lower objectives than they would have up front, thus making both their successes and failures look better.

Whether you need to identify your 20 hottest marketing programs, or which types of marketing spending should be increased or decreased, make sure your measurement methodology gives you the unbiased and opinion-free data and facts you need to make better decisions.

As for the fact I didn’t make Megan’s list, I think if I was at least 20 years younger, 10 pounds lighter, 5 times as athletic, a lot hotter and a world class rower, I could have been a contender. Of course, Megan might have had a different opinion!

Filed Under: Approach, Effectiveness, Objectivity Tagged With: bias, Effectiveness, marketing, Measure, measurement, objective

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
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