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A Condensed Guide to Marketing Accountability for Ceos by Oscar Jamhouri and Marek Winiarz

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A Condensed Guide to Marketing Accountability for Ceos by Oscar Jamhouri and Marek Winiarz A Condensed Guide to Marketing Accountability for CEOs By Oscar Jamhouri and Marek Winiarz All material contained in this document remain the copyright of Integration (Marketing & Communications) Limited. No part of this document shall be used or reproduced or transmitted without the express written permission of the copyright holder. Copyright 2013 by Integration. All Rights Reserved. Integration® is owner of all MCA® products, tools and trademarks. September 2013 Table of Contents Introduction ........................................................................................................... 5 Section 1 – The Road to System Thinking 1. The Marketing Problem ..................................................................... 8 2. What do the Experts Say? .................................................................. 11 3. The MCA System Provides Marketing Accountability ......................... 12 Section 2 - The Right Data 1. Marketing Data Fundamentals ........................................................... 14 2. What is “Right” Data? ......................................................................... 14 3. Data Relevance ................................................................................... 14 3.1. Interaction Effectiveness.................................................. 15 3.2. Transaction Effectiveness................................................. 16 3.3. Costs of Marketing ........................................................... 17 3.4. Marketing ROI .................................................................. 17 3.5. MCA Solution: Return in Brand Experience ..................... 19 4. Data Quantity ..................................................................................... 20 4.1. The MCA Data Quantity .................................................... 21 5. Data Quality ....................................................................................... 22 5.1. Measurement Validation .................................................. 22 5.2. Voice of the Customer – Sampling ................................... 24 5.3. Internal Data – Activity Based Costing ............................. 24 6. Data Compatibility .............................................................................. 26 6.1. Compatibility Among Outcomes ....................................... 26 6.2. Compatibility in Time ....................................................... 27 7. Timeliness ......................................................................................... 27 7.1. Leading Indicators .......................................................... 28 7.2. Early Outcome Indicators ................................................ 28 8. Cost of Data ....................................................................................... 29 9. Presentation of Data .......................................................................... 30 9.1. Executive Dashboard Metrics .......................................... 31 9.2. Performance Indicator Dashboard ................................... 32 9.3. Efficiency Indicator Dashboard ........................................ 33 9.4. Return in Brand Experience Dashboard .......................... 34 9.5. Operational Dashboard Metrics ...................................... 35 9.6. Tactical Indicators ........................................................... 36 9.7 Other Metrics .................................................................... 36 Section 3 – Management Must Manage 1. Managing Accountability ..................................................................... 38 2. Marketing Accountability Essentials ................................................... 39 2.1. System Thinking ............................................................... 39 2.2. Measurement is Compulsory ............................................ 40 2.3. Measurement is Comprehensive ...................................... 40 2.4. Measurement is an On-Going Practice ............................. 41 2.5. Universal Practice ............................................................ 41 2.6. Operational Process ......................................................... 43 2.7. Technical and Empirical Process ...................................... 43 Conclusion ............................................................................................................. 44 Appendix 1. Marketing Accountability Data Checklist ............................................ 46 Appendix 2. Marketing Accountability Process Checklist ....................................... 48 References ............................................................................................................. 49 Author’s Notes ....................................................................................................... 50 Acknowledgements ................................................................................................ 51 List of Figures Figure 1. Lack of System Thinking Plagues Many Enterprises .............................. 8 Figure 2. System Thinking in Marketing Accountability Shown Schematically ....... 10 Figure 3. Factors Affecting Profitability ................................................................. 18 Figure 4. Contact Clout Factors (CCFs) .................................................................. 23 Figure 5. Activity Based Costing Explained Schematically ...................................... 25 Figure 6. Example of Outcome Performance Indicators ......................................... 32 Figure 7. Example of Efficiency Indicator Cost per BEP ......................................... 33 Figure 8. Example of Efficiency Indicator: Return in Brand Experience ................ 34 Figure 9. Voice of the Consumer is the Only One that Matters ............................... 40 Figure 10. Finding Market Similarities in a Global Data Set .................................... 42 Figure 11. Change Management ........................................ ................................... 44 List of Tables Table 1. Metrics for the Executive Dashboard ........................................................ 31 Table 2. Main Metrics for Marketing Operations Dashboard .................................. 35 Table 3. Essential Metrics for the Tactical Dashboard ........................................... 36 4 Introduction “Marketing’s ultimate goal: delivering sustainable demand generation in every market, globally.” – Oscar Jamhouri Marketing and communications represent a large proportion of business investment. Yet research by the Fournaise Marketing Group (WARC 2012) shows that a surprising number of CEOs don’t understand what they are getting for their marketing and communications money. Although performance of other parts of the business is routinely quantified, comprehension of marketing performance remains problematic. Yet marketing performance can be as accountable as any other business function. It is not difficult and it is not expensive but it requires system thinking, the right data and a consistent process. Accountability requires little more than uniform measurement of all marketing activities using the same scale for all your brands, in all your markets, time after time. Management Accountability Essentials 1. System Thinking: The whole is more important than any part. 2. Compulsory practice: Evidence-based management is impossible without it. 3. Comprehensive process: All functional activities are equally evaluated for their contribution. 4. On-going practice: Periodic evaluation to understand performance trends. 5. Universal practice: All stakeholders and markets are evaluated on the same scale. 6. Operational process: Clearly defined procedures and requirements for all. 7. Technical & Empirical process: Knowledge derived from experience. In this publication we show you what is necessary to make Marketing accountable. In Section 1 we describe the “big picture” marketing problem and argue for system thinking. Section 2 details data requirements, and Section 3 closes with the process essentials for accountability. Each section describes the fundamental principles and then describes how Integration’s Market ContactAudit (MCA) System (Integration 2013) satisfies them. The MCA System assures understanding of fundamental marketing performance and provides tools to improve it – internally and versus competition. 6 Section 1 The Road to System Thinking Section 1 1. The Marketing Problem The Fournaise Report (WARC 2012) clearly shows business managers’ frustration with understanding the marketing function. They want to see clear links between activities and results. How does this currently work? The reality is that many organizations are unable to drill down to a local level in marketing budgets. Marketing communications are essentially atomized. Once budgets are signed off at the corporate level, the actual implementation is handled by brand managers that make decisions based on the local context, needs and opportunities. The responsibility for spending is gradually decentralized to a degree that makes it very difficult to reconcile with the original budget. If spending is the input to the marketing process, then the outcome is equally fragmented. What is happening at brand level? There are a number of marketing yardsticks. But which of them actually drove the results in sales and the bottom line? Who or what is most responsible for the hits or misses? Can we learn from this and leverage it as best practice across the
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