AMA Marketing Effectiveness

Online Seminar Series

Anna Carbonara

American Marketing Association

Check out the AMA website

Marketing Analytics

HelpingYouStayAccountable,Op5mizeRevenueandSleepatNight

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Agenda

1. Marke5ngischanging‐wherearewetoday?2. Outcomebasedmeasurement3. Performancedrivenmarke5ng4. Keyanaly5cprocesses5. Casestudy:howMarketomeasuresmarke5ng

performance

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FaddishMissingthebroadperspec5veThegroupthatmakes“colorbrochures”Metricsthatdon’t(directly)impactthebusiness–awareness,leads,andcoverageCostcenter

Fundamentalproblem:otherCXOsdon’tunderstandtheroleofmarke5ng,andmarke5ngdoesn’tcommunicateit

Marketing has an Image Problem

© 2009 Marketo, Inc. Marketo Proprietary and Confidential

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The Changing Role of the CMO

Strategicandfinancialleadershiptotheorganiza5onCustomerfocusExcep5onalmeasurementandanaly5calcapabili5esRigorousfinancialandbudgetmanagementHardfinancialmetricslikerevenueandcashflow(“thefinanciallanguageofbusiness”)

© 2009 Marketo, Inc. Marketo Proprietary and Confidential

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LessonslearnedfromSales:DefinedprocessandmethodologyMeasureoutcomes,notinputsForecastresults,notspendingUseautoma5ontechnology

WhoOwnsRevenue?

Salesowns“in‐period”revenue

Marke>ngowns“out‐of‐period”

revenue

Earn a Seat at the Revenue Table

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…andigniteexplosiverevenuegrowth.

“InoursecondyearofusingMarketo,wenowdrivesignificantlymoresalesopportuni5eswiththesamebudgetandhaveincreasedsales‐readyleadsby400%.“‐JohnWaEon,ShipServVPMarke5ngandB2BMagazine2009MarketeroftheYear

...tochangethewaymarke>ngandsalesworktogether…

Priori5zeanddeliverhighqualityleadswithlesseffort

Understandandinteractwiththehofestleads

Closemorebusinessfaster

Achievesmartersellingandhigherwinrates

• Lowersriskandtotalcostofownership

Morethan300mid‐marketandenterprisecompaniesuse…

• ‘BestMarke5ngAutoma5on’appbySalesforcecustomers

…MarketoLeadManagementandMarketoSalesInsight…

• Uncompromisingsolu5onsformarke5ngandsaleseffec5veness

Introduction to Marketo

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Foundedin1999andheadquarteredinAus5n,TX,VisionEdgeMarke5ng,Inc.servesmorethan100customers,andcoun5ng.

VisionEdgeMarke5ng,Inc.isadata‐drivenandmetrics‐focusedmarke5ngfirmthatspecializesinimprovingmarke>ngperformanceandcrea>ngcompe>>veadvantagedesignedtoafract,secureandretainprofitablecustomers.

Servicesinclude:

Marke5ngperformancemanagement

Marke5ngandsalesalignment

Productandstrategicmarke5ng

Pipelinere‐engineering

Professionaldevelopment

VisionEdge Marketing: Experienced Practitioners

© 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential

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Marke5ngbudgetswerecutover20%onaveragein2009vs.levelsin2007/2008AccordingtoB‐to‐BMagazine2010Outlook:Marke5ngPriori5esandPlans”survey,“in2009nearly60%ofmarketerscuttheirmarke5ngbudgetsinresponsetotherecession.”

Thenumberofcompaniesthatcutmarke5ngbudgetsin2009is25%higherthanpredictedinJanuary2009Inonesurvey(Forrester)lessthan20%ofcompaniesareexpec5ngmarke5ngbudgetincreaseswhileover40%areexpec5ngfurtherreduc5onsin2010.

The State of Marketing Budgets

© 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential

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Theproblemfacedbymanymarke5ngprofessionalsisthat,tradi5onally:

marke5ngbudgetsarebasedonapercentageoflastyear'srevenuesorbudgetwhichignorestherela5onshipbetweenmarke5ngspendingtoeffec5venessandhasashort‐termfocusleadingtolimitedsuccess.

Op5mizingthemarke5ngbudgetisavaluablestrategictool

A Never Ending Cycle

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Show Me the Money

VEMMPMStudy2009

•Whereisthemoney?•Whatisthebusinessimpact?

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Understandthemarketandcustomers

Developandexecuteastrategytocreatepreferenceandconsidera>onthatenablestheorganiza5onto:

Acquiremoreofsomething

Acquireitfaster

Acquireitcheaper

Otherwise,youmightaswelljustputmorefeetonthestreet

Needtodemonstrateweare“geqngthejobdone”

Why Companies Invest in Marketing

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Customers Connect Marketing to the Business of Business

“Thepurposeofabusinessistocreateacustomer.”

‐PeterDrucker

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Marketing’s Three Primary Roles:

FindProfitableCustomers/Consumers Theprocessofacquisi5on Newcustomeracquisi5on–netnewbusiness

KeepProfitableCustomers/Consumers Theprocessofreten5on/renewals

GrowProfitableCustomers/Consumer Theprocessofincreasingthevalueofyourcustomerfranchiseandbrand‐Cross‐selling

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Our 3 Roles Enable Us to Move 3 Business Needles

Find/SecureProfitableCustomers

Acquisi>on

KeepCustomers

Penetra>on

GrowCustomerValue

Mone>za>on

MarketShare Life>meValueBrand/

CustomerEquity

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The Impact of a Job Well Done

•EnjoyEconomiesofScale•MaintainGreaterProfitability•MoreLeveragewithSuppliers

•Higherreferralrate•Lesscosttoserve•Lesspricepressure

•Lessvulnerabletocompe55on•Befersuccessrate•Higherprices

Acquisi>on MarketShare

Life>meValuePenetra>on

Mone>za>onBrand/CustomerEquity

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Our Objectives Aren’t Aligned with the Business

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And Neither Are Our Budgets

Ahypothe5calbutalltoocommonmarke5ngbudget:

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As A Result, We Have Trouble Demonstrating Our Value

VEM MPM Study 2009; n=232

Lessthan20%ofC‐SuitegiveMarke>ngan“A”vs.nearly50%ofCMO/VP

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Time for a new approach and a new way to budget

•BuildIni5a5vesAroundBusinessOutcomes

•Alignbudgetandmeasureourimpact,valueandROIonwhatmaferstotheC‐Suite

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Performance Management

…theprocessofmeasuringprogresstowardachievingkeyoutcomesandobjec5vesinordertoop5mizeindividual,groupororganiza5onalperformance.

CMOCouncil's2008Marke4ngOutlook

“ThetopchallengeformarketersremainstobeEerquan>fyandmeasurethevalueofmarke>ngprograms,"inspiteofimprovementsinaccountabilityoverpreviousyears.

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Performance Management Best Practices

MeasurementCompetence

Analy>csandSkills

MoreStrategicMetrics

BeEerToolsandProcess

Nearlyeveryonesaysbusinesswithexis5ngcustomersisimportant,fewusemetricssuchaslengthofcustomertenure,purchasefrequencyandrecency,valueoftheoverallcustomerbase,customerlife5mevalueandshareofwallet

•Otherthanleadstoconversion,tracklifleelse.(VEM2009)

“Shockinglylowinvestmentsinmarke5ngtechnologyands5llimmatureprocesses”(IDCDec2008)

“Realsuccesswillcomefrombeingsmarterandmorestrategicinopera5ons”(B‐to‐B2009)

“Lackemployeeswithspecificmarke5nganaly5csexper5se”(Forrester2008)

“Lessthanhalfofrespondentsuseanaly5cs”(Alterian2009)

“Pressurehasmountedonmarketerstoaccuratelypredict,measure,andop5mizeresults”(Marke5ngSherpa2009)

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Requires Performance-Based Marketing

Haveasetofmeasurableperformancestandards,apointedfocusonoutcomesandclearlinesofaccountability‐allofwhichareimportantifamarke4ngorganiza4onwantstoproveitsvalue.

© 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential

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Measurement Competency

Seemeasurementandmetricsatpowerenablingmarke5ng

Influencedecisions Communicateimpact Demonstrateaccountability Recommendac5on Playastrategicrole

Takeanoutcome‐basedapproach

UsePerformanceTargetSeqngforcon5nuous

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It all Starts with Business Outcomes

Name Descrip5on/Defini5on Examples

Outcome Aconsequence,result,effect

Howtheorganiza5onwillmeasuresuccess

Ranked#1intheregionformyage

Achieve#1marketshareinXYZmarket

MeasurableObjec5ve

Stateswhatistobeachievedandwhenresultsaretobeaccomplished

Whatyouwilldotomovetheneedle?

Accumulatethemostpointsperraceinmyagegroup

IncreasepreferenceforABproductamongtopsharedeterminersinXYZmarkets

KeyPerformanceIndicator(KPI)

TheonlydifferencebetweenametricandaKPIisthataKPIembodiesastrategicobjec5veandmeasuresperformanceagainstthatobjec5veand/oroutcome.

RaceWins

Shareofpreference

ProductAdop5onRate

PerformanceTarget

Acommitmenttoachieveaspecificandbeferqualityorlevelofperformanceoveraspecified5meframe.

Usedtoevaluateperformanceachievedcomparedtoperformanceexpected

Pace(miles/hour,mins/mile)

#ShareDeterminerQualifiedLeads

#ShareDeterminerRFPs

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A Vital Relationship:Outcomes and ObjectivesOutcomes

Tiemarke5ngtothebusinessoutcomesattheoutsetUnderstandwhatyourcompanyistryingtodoandwhichofthosethingsyoucandirectlyandindirectlyimpactAimforcustomer‐centricoutcomes Finding Keeping Growingthevalueof

customers

Objec5vesEstablishmeasurableobjec5vesandstrategies5edtocustomer‐centricOutcomesYouranalysisservesasthebasisforseqngperformancetargetsforyourobjec5vesandstrategies

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Improve customer advocacy score by 10% by YE2009

Performance Based Marketing Objectives

Realis5c

Measurable

Timespecific

Alignedandconsistentwiththeorganiza5on’spriori5es

Establishperformancetargetsthatare:

25% of existing customers will adopt new XYZ product within 6 mos. of launch at launch price $A

Contribute 25% of the qualified new opportunities to the pipeline quarterly

Increase referral rate of existing customers by 40% by YE2009

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WhatWouldTheShi`LookLike:

FROMMeasuringAc>vity

• Runsixhalf‐pageadsinallTieronetradepublica5ons

• Exhibitattheprimarytradeshowforeachver5cal

• Createproductbrochurefornewproduct

• Reviseonlinedemo• Generate500leads• Implementapromo5onwithtwo

distributors• Distributenewslefer65mes• Sendemailblaststoprospectsmonthly• Conductcustomersa5sfac5onsurvey• Researchcustomerproduct

requirements

TOLinkingtoOutcomes

• Add7‐8newstrategicaccountstosupportNAMarketPenetra5on

• Increasecustomerlife5mevaluefromXtoY• Growshareofwalletamongourtopcustomers

fromAtoB• IncreaseTieronecustomerspurchaseto2or

moreproductsfromtheYFamily• Add3newVARsineachofthreeprimary

ver5cals• Addonenewchannelpartnerineachregion• GrowTieronedistributorssalesbyX%• GrowourproductcategorybyX%• Increasepenetra5onofABCproductinTier

onecustomersby15%• ImproveourNASfrom10.2to16• ChangeourMVIfrom<100to>100

Howdoesthischangethebudgetprocessandconversa>on?

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Adopt a Metrics Framework:Tactical Strategic

Ac>vity‐Based

Opera>onal

Outcome‐Based

Leading‐Indicators

Predic>ve

Coun>ngMediaMen5onsTradeshowleadsClickThroughRatesSiteRegistra5onsDemoDownloads

EfficiencyLead/RepLeadAgingCampaignROIProgram:PeopleRa5o

BusinessOutcomesMarketShareCategoryOwnershipLife5meValueAdop5onRates

LikelihoodofOutcomeShareofWalletRateofGrowth:MarketBrandPreference

Cost/BillingDollarProgramspend/headcountProgram/TotalSpendAwareness:DemandRa5o

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Illustrating the Importance of Selecting the Right Metric:

CaloriesorPacevs.Running5x/week

Lose20lbs.bytheendoftheyear

Finisha5Kinunder28minutes

Differentoutcomesmeandifferentmetricsofsuccess,eventhoughmayusethesametac>cforeach

What’sthemetricforthe:

Loseweightoutcome?

Finish5Koutcome?

MeasuringAc5vityvs.Outcomes

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Outcome-Based Measurement

Characteris5csofEffec5veMetricsAccurateandPreciseReliableRelevantAlignedOwnedPredic5veAc5onableEasytounderstandTransforma5veStandardized

ConnectMarke>ngInvestmentsandMetricstotheBusiness

1. Beginwithbusinessoutcomes

2. Iden5fymostimportantmeasuresofsuccess

3. Defineperformanceindicatorsconnectedwiththesemeasures

4. Determinewhichdataprovidesnecessaryinforma5on

5. Focusonthemostrelevant,essen5al,&valuableac5ons

6. Analyze&report

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Select Outcome-Based Metrics Based on Marketing’s Job

BusinessOutcomesandMarke5ngObjec5vesProvideInsightintoMetric

CertainFacetsofPerformanceMoveNeedlesforEachGauge

5Customer/BrandEquityIndicators

• PricePremium

• NetAdvocateScore

• CustomerFranchiseValue

• NewProductAcceptance/Adop>onRates

• ProductMargins

4Life>meValueIndicators

• PurchaseFrequency

• ShareofWallet

• Advocacy/Loyalty

• Tenure

5MarketShareIndicators

• ShareofPreference

• ShareofVoice

• ShareofDistribu>on

• RateofCustomerAcquisi>on

• RateofGrowth:Market

© 2009 VisionEdge Marketing VisionEdge Marketing Proprietary and Confidential

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1. Engage‐theleadershipteamtounderstandtheorganiza5on’semphasisintermsofresourcesonfind,keepandgrowtocreateanalloca5onmodel

2. Establish‐measurablemarke5ngobjec5vesaroundcustomeracquisi5on,reten5onandvaluegrowth.

3. Develop‐programstosupporteachobjec5veandlinkeveryprogramtooneoftheseobjec5ves.

4. Iden>fy‐everyelementinthemarke5ngmixanditsassociateddollarsforeachprogram.

5. Tally‐theinvestmentneededforeachprogram,objec5veandoutcome

6. Allocate‐thedollarsbasedonthemodel

7. MonitorMonitorhowwelltheprogramsperformedagainstyourcommifedtargetsandbudget

Trackandmeasuretheimpactofmarke5ngprogramsTrackandmeasuretheexecu5onofamarke5ngprogram.Trackallthepeoplebothinternalandexternal,andallthesteps,includingapprovals,tounderstandthetotalcostofprogramexecu5on

8. Report‐effec5veness,impact,efficiency,valueforthemoney

Tie the Budget Back to the Business

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Measurement is the Foundation to ROI But…Itisn’ttheonlyfactor1. Designandselectmetricsthatmeasure

marke5ng’simpactonthebusiness

2. Usemetricsthatmeasureefficiency,effec>venessandpayback

3. Createameasurementmanagementsystemandconsistentlyuseit

4. Captureperformancemetricsasquicklyaspossibleinordertoins5gateimmediatechangeinexecu5on

5. Reportresultsandperformanceinreal5me

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Analy>csandthePerformance‐DrivenMarke>ngOrganiza>on

Analy5cs:Theabilitytodriveac5onableinsightsfromdataCri5caltofacilita5ngbeferandfasterfact‐baseddecisions

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Data and the Performance-Driven Marketing Organization

PerformanceDriven‐Marke5ngOrganiza5ons Embracedata‐Seedataasthe

founda5onforsuccess Getthebestdatapossibleanduseit

inapre‐defined,unbiasedway Installanduseadatamanagement

system Createandmaintainadatainventory

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Three Additional Critical Success Factors:

Processes,Systems,Tools

Skills&Training

Solu5onstotheproblemsofmarke5ngaccountabilityandcrea5ngaROMIculturebeginwithtraining(ISBM)

Culture

Create,rewardandliveameasurementculture

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Four Key Processes:

Establishaprocessthatenablestheorganiza5ontomakeadjustmentsinreal5me–ratherthanlookingintherear‐viewmirrorLeverageindustrybestprac5cesandcompanyinsightsforcon5nuousimprovementopportuni5esDeployprocessesthatallowyoutomodifymetricsandthedashboarddesignasneeded

Doyouhavetheseprocesses?

Datacollec5onandanalysisprocess

Programperformancetargetseqngprocess

Metricsandmeasurementprocess

Repor5nganddashboardprocess

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Take Your Accountability to the Next LevelCreateaperformancemeasurementsystembasedondataandanaly5csAdoptaframeworkthatiden5fiesmetricsthatimpactorganiza5on’seconomicperformanceandstrengthsLinkmarke5ngandthebudgettobusinessoutcomesEmbraceacultureofaccountabilityAddtherightskills,systemsandtools

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Marketo Demand Generation Funnel

Pend

ing

ProspectRecycled

Lead Oppor‐tunity

Cust‐omer

Awaren

ess

Name&Email In‐Profile Sales‐Ready

/Score>65SalesActive

Anony‐mous

Inqu

iry

NurturingDatabase

© 2009 Marketo, Inc. Marketo Proprietary and Confidential

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Demand Generation Model

Opportuni5es($1,550)

NewCustomers($5,166)

Leads($140)

NewProspects($72)

29%

Ac5veProspectDatabase

4.0%/month

25‐30Opps.from:‐SalesOutbound

75%

PaidInquiries($33)

7.2%FreeInquiries($0)

75%

25%50%

30%

Inac5ve

30%

52%ofprospectseventuallybecomealead

12.6%ofleads/1.4leadsperopty=9%leadtoopty

71%

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Demand Gen Metrics Dashboard

Prospect Lead Opportunity Win

Allnumbersthreemonthaverages(exceptOpportunitySources)© 2009 Marketo, Inc. Marketo Proprietary and Confidential

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Demand Generation Forecast

Leads Jun Jul Aug Sep Oct Nov Dec Jan FebJun 403 450 470 500Jul 462 470 500 530Aug 475 500 530 600Sep 521 530 600 625Oct 557 600 625 800Nov 782 650 800 825

Opps Jul Aug Sep Oct Nov Dec Jan FebJul 61 63 66 70 72Aug 65 67 70 72Sep 69 72 74 80Oct 74 74 83 85Nov 81 83 85 90

Prospects Q2 2009 Q3 2009 Q4 2009Aug 1,824 2,500 3,050Sep 2,668 4,250Oct 4,500Nov 5,200

Forecast Actual

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Lessons Learned

Today’smarketersmustearnaseatattherevenuetableMarke5ngobjec5vesandbudgetsmustalignwithbusinessobjec5vesMetricsshouldbebasedonoutcomes,notac5vi5esPuttherightprocessesinplacetocapturemetricsandoutcomesTiebudgetbacktothebusiness

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Question and Answer

LauraPaEersonPresident&Authorlaurap@visionedgemarke5ng.com

JonMillerVPofMarke5ngjon@marketo.com

©2009Marketo,Inc. MarketoProprietaryandConfiden5al

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