Decisions, decisions: How to measure marketing value

Failure to measure performance against corporate metrics is undermining marketing’s value to the business according to David Arrowsmith. But without consistent, replicable processes throughout marketing, how can any marketing director either ascertain true performance or drive ongoing improvements?

By David Arrowsmith, Aprimo

The explosion in borderless online marketing opportunities over the past decade has added unprecedented complexity to the marketing process. Whilst the ability to measure the performance of individual activities has increased, the marketing director’s actual understanding of overall performance has reduced dramatically due to this complexity. With the spotlight turning increasingly towards the corporate value delivered by the marketing function, just how can any marketing director justify the decisions taken at every level throughout a campaign?

Understandably, the majority of marketing individuals are firmly focused on their own area of expertise – from customer segmentation to the design of buy one get one free (bogof) offers – and their own geographical reach. However, this highly focused approach makes it impossible to understand whether or not these functions are individually or collectively doing the right thing for the company or how effectively they are performing - not individually but as part of the overall marketing team.

Indeed, the marketing industry is awash with anecdotes about great campaigns that have met marketing targets yet failed to deliver business benefit. Many credit card companies have used fantastic marketing campaigns to dramatically boost the number of cards in circulation only to discover that these new accounts are, in the main, unprofitable. Using traditional measures of campaign success, the marketing team has done a great job; yet this marketing has actually undermined corporate profitability.

Marketing complexity

How many marketers have any understanding of the wider implications of their decision making? Not only do they have no visibility of the effect on the international organisation, but also they are not following the implications of their decisions through the marketing campaign supply chain.

The problem is exacerbated by the increasing complexity of international marketing. With upwards of 70 people involved in each campaign, (a big number but just think about all the legal, creative, brand, packaging, database, translators, agencies, and more individuals who touched your last project) marketing directors actually have less control today than in the past despite a growing culture of performance monitoring.

When just one individual makes the incorrect decision or fails to make a decision on time, the business implications can be severe. As one international FMCG company discovered: failure to consult the packaging technologists early enough in the campaign development process actually resulted in the cancellation of a £2 million time sensitive campaign.

Such decisions are being made, often without consideration, on a day to day basis by marketers used to relying on experience and gut feel. And even if the majority of decisions are good, it is nigh on impossible for any marketing director to know just which decisions have caused a problem. Yet without that knowledge, how can the marketing team avoid mistakes in the future or achieve improvements in productivity and efficiency?

Real-time assessment of logistics costs, the cost of procuring packaging or the implications of delay for trademark or legal approvals is now essential to drive efficient decision-making. This information can highlight potential problems early, enabling appropriate action to be taken to keep the campaign on track.

Rapid decision-making

Visibility of decision-making is proven to streamline marketing processes and drive improvements in control. One major international retailer has reduced its shelf marker creation process from a 10 to 12 week cycle by more than 50%. By creating highly visible standard processes supported by excellent workflow, the retailer has been able to run many operations in parallel. Potential problems are avoided, whilst the company can also see the financial implications of any delays in the process, from overrunning legal approvals to the additional costs associated with escalating print or other production costs.

This ability to understand the full implications of decisions at every point of the marketing process transforms the speed and relevance of marketing decision making. By imposing highly consistent processes across the whole organisation, far better control over every element of the marketing operation is possible.

With real-time insight into performance at every step of the process, marketing directors can measure the success of a campaign not just by response rate but by its true customer and/or corporate value.

For example, whilst a sales uplift of 5 or 10% could deliver quantifiable value, exceeding this figure would place excessive demands on the operational infrastructure, resulting in a massive cost increase, creating an overall profit reduction. Armed with this information, marketing can ensure the campaign is managed with far clearer measures and objectives.

Corporate value

In reality, this step is a natural progression of the on-going modernisation of the marketing function. Measurement is already a component of complex international marketing – the issue now is to enable measurement of not just of lead generation, segmentation or even sales uplift, but the overall value to the business. And the only way to achieve that goal is to put in place structured processes that track and monitor every decision, however minor, made by every individual across the marketing estate.

The new breed of left/right brained – savvy – marketers, happy to talk creative on the one hand and data/segmentation/return on the other is developing new techniques to move marketing back to where it should be. The new class of marketer is driving business from the centre with the respect and - dare I say - admiration of the other corporate disciplines.

It is not the replacement of gut feel, but augmenting that mix of experience and understanding with auditable, replicable processes that drive improvements in quality and measure every aspect of marketing activity that is the key to delivering long term corporate value on a global scale – not just a good local campaign.

David Arrowsmith is marketing director at Aprimo.