P Brooks, Doug 071508

Understand the past | Manage the present | Realize the possible

Initiating a Marketing Accountability Program:

Building for success

2Understand the past | Manage the present | Realize the possible

Agenda… or why stay when I can go to the beach?

•Why is this so hard? (current situation)

•What have we learned? (lessons learned from the front lines)

•What would you do?

(Reinventing the marketing organization: advice to a newly minted CMO)


Why is this so hard?


There are many reasons why companies decide to go on the marketing accountability journey

• Because the CEO is demanding accountability

• To improve marketing decisions

• To gain alignment between marketing and finance

• Because every ANA member is doing it

• Etc…


But, since our job as marketers is to drive growth strategies, there should only be two primary reasons

To increase revenue

To decrease cost


Key messages around increasing revenue

To increase revenueBusiness questions to answer:• How much to spend on

marketing to achieve a revenue or profit target?

• What is the optimal mix of marketing investments?

• How to improve the effectiveness/efficiency of marketing investments?


Key messages around decreasing cost

Business questions to answer:• How to drive the same (or

more) sales with less?

• How to manage risk?

• How to improve the effectiveness/efficiency of marketing investments?

To decrease cost


What have we learned: Getting started?


To define a path toward the future, you need to first understand where you are today

Analytics

Data

People

Process

Tools

Assess the current state…

Define the future….

Plan the roadmap

Key activities:

• Assess your current marketing capabilities (analytics, data, people, process and tools)

• Conduct a series of stakeholder interviews to capture the key business questions and hypothesis

• Assess the current data situation to define confidence levels for answering each question and identify any gaps

• Define the programs required to achieve the future vision

• Establish a marketing accountability roadmap


Establish a starting point by benchmarking your current capabilities

MMA’s Marketing Maturity Model is an industry standard framework that is used to benchmark organizations and provide guideposts and a path forward for improving marketing accountability

The maturity model will be used to benchmark and establish improvement programs for the following areas:

1. People/skills2. Process3. Technology4. Data5. Metrics

Marketing Maturity Model

Level 1Agency Hostage

Level 2Brand Builders

Level 3Efficiency Experts

Level 4Customer Converts

Level 5Profitability ProsBenefits

Increased marketing ROIIncreased accountabilityIncreased effectiveness

5%2%20062005

10%12%20062005

26%25%20062005

41%32%20062005

18%29%20062005


Level 2Brand Builders

Level 3Efficiency Experts

Level 4Customer Converts

Level 5Profitability ProsBenefits

Increased marketing ROIIncreased accountabilityIncreased effectiveness

5%2%20062005

10%12%20062005

26%25%20062005

41%32%20062005

18%29%20062005


• Brand health is measured, but execution is often inconsistent and minimal association with causal factors. (will change with new brand health tracker)

• Brand efforts are viewed as “goodness”measures and rarely directly measured against incremental or baselines sales.

• Linkage between equity movement and sales not causally related.

• Agency performance comp often related to brand measures.



• Measurement rather than analytics-relationship of what is measured to business objective is assumed, not proven.

• Historical knowledge is managed by oral tradition rather than documented norms.

• Use of measurement is limited to a few members of the organization.

• Measurements are used to justify decisions that are already made.

Level 2Brand

Builders

Level 2Brand

Builders

Level 3EfficiencyExperts

Level 3EfficiencyExperts

• Analytics are focused on measuring past performance, with insights informing future plans. Performance is tracked during execution.

• Analytics are clearly incorporated in the planning processes, but often not operationalized throughout the year.

• Analytic skills on staff, most frequently in research organization.

• Research org viewed as support function rather than decision driver.

Level 4 Customer Converts

Level 4 Customer Converts

• Organization has visibility to key customer touchpoints across the enterprise.

• Marketing goals directly aligned to business objectives.

• Marketing leadership participates in all key business strategy decisions and directions

• .Analytics identify customer value for targeting.

• Some analytics and data integration are on-demand.

• Marketing process is defined, structured, and valued as a corporate asset.

• Use of analytics is institutionalized, consistent, and demanded.

• Data for decision making is available on a continuous and ongoing basis.

• Analytics are current, and as near real-time as possible.

• Marketing decisions include stakeholders from key organizations.

Level 5 Profitability

Pros

Level 5 Profitability

Pros

What do representative organizations look like at the various marketing readiness models?


Next, define an appropriate and achievable future state vision

Analytic objectives – OverallConfidence

Low confidence for VMC, sponsorship

HighProvide accountability framework for evaluating the effectiveness of major spend areas (TV, sec. media, Promotions, POS, VMC, sponsorship, etc).

Simulation / Forecasting

HighBetter predict the impact of changes in marketing spending on the business.

OptimizationHighDetermine the optimal level of overall marketing spending.

OptimizationHighDetermine the optimal level, mix of marketing spending to achieve specific business goals for the Client portfolio. Evaluate how much to invest in each of Client’s products.

High

High

High

High

High

Priority

Marketing mixEvaluate variance in marketing performance across regions/markets and identify opportunities for optimizing by region/market.

Integration of the hierarchy of effects brand equity model

Identify the right balance between short-term and long-term investments.

OptimizationDetermine the optimal level, mix of marketing spending to achieve specific business goals for each product.

Marketing mixEvaluate the average and marginal effects of Client marketing spending.

Marketing mixEvaluate the sources of usage growth and declines year over year.

CommentsObjectives

Conduct a series of stakeholder interviews and work sessions to:

Capture/define the current situation• business objectives, nuances, business

landscape, operational/promotional strategies, brand plans

• annual planning process and calendar• marketing objectives, key campaigns, targets,

messages, and defining creative executions• internal research and learning

Gain agreement on the business questions that need to be answered through analytics

Identify required and available data sources

Define a future state

Review data gaps/issues/work-arounds

Identify key enabler and inhibitors

Educate/gain buy-in from key stakeholders on the inputs, approach, and use of the results


Work with stakeholders to align metrics with corporate goals, and key business questions…

Key questions to address:• How much to invest in marketing?• What is the optimal mix of marketing

investments across products, media, region, time period?

• What is the ROI of each media vehicle?• What is the impact of operational

factors?• What is the impact of non-marketing

factors (competition, macroeconomic, etc…)?

• Is there an opportunity to take advantage of media synergies?

• How to improve marketing ROI through better execution (timing, duration, size, message, etc…)?

• What-if?


… and you need to strike the right balance between art and science

PureGut

Pure Science

“marketing analytics should not change current processes or culture, they should support processes

and improved decision making”

Danger Zone

Danger Zone

Strike the right balance

“I know what

levers to pull”

“I can say what I am

going to do, do it, and prove it”

“… on a continuous

basis”

The key to success is “layering” incremental improvements toward the appropriate balance


MMA Data Scorecard Framework

Data impact on analytics…4 = Ideal for econometric / mix purposes, confident results3 = Good confidence in directional or better results2 = Indicative / directional results, not precise1 = Critical limitation(s), indicative reads possible.

Setting expectations for what could be done today, while planning for the future is critical

Data to be evaluated on the following dimensions during the discovery phase:

• Accuracy -- confidence in data correctness and exactness, quality of variation

• Robustness – breadth of data, capability to represent future dynamics, flexibility

• History – how much of the modeling time period is adequately supported

• Granularity – depth of data in key dimensions (geography, time period, service line, etc.)

Accuracy

Robustness

Granularity

History

Total Score: 1 – Poor 2 - Fair 3 – Good 4 - Strong

Dimensional Score:

Good

Fair

Poor


Doing this requires a marketing effectiveness roadmap

Phased approach

Key programs to build capabilities (people, process, metrics, data, tech)

The roadmap should:• Provide a multi-year, phased analytics

approach to support business priorities based on available data and resources

Guide the organization toward the optimal future-state

Be executed by the organization in meaningful phases to realize value

Allow for “quick-wins” while building toward long-term success

Addresses all capabilitiesPeople

Process

Metrics

Data

Technology

Phase 1

Phase 2

Phase 3

ROI evaluation andOptimization• Program 1• Program 2• Program 2

Ongoing Decision Support•Program 1•Program 2•Program 2

Ongoing course-correction •Program 1•Program 2•Program 2

Marketing effectiveness roadmap


What we have learned:gaining alignment and buy-in along the way


Lesson learned 1: ensure that all stakeholders know what can andcannot be done

What it cannot do:Provide insight that when combined with good judgment can support better decisions

• What are the key drivers of sales (marketing and external factors) ?

• What is the ROI of each marketing/media vehicle?

• What was a change in sales due-to?

• What is the optimal mix of marketing investments to drive sales and profit?

• How to improve the delivery of media (e.g. 15 vs 30, segments, cable vs. prime, etc…) ?

• What-if?

It can help you… … but it can’t

• Predict the impact of factors that have not occurred before (e.g. new marketing vehicle, new competitor)

• Predict the impact of a major shift in strategy (e.g. increase marketing budget by 4x)

• Explain why the creative/copy did or didn’t work

• Write the marketing strategy and plan for you (-:


Quotes from industry experts

"I always try to enter an analytic project by setting the expectations of those involved by aligning purpose, objectives, and potentialaction steps based upon findings. If there is clarity of mission and purpose prior to execution, there is less stress on the process. MMA has always provided me with the world class analytical tools, insights, and strategy; yet they also simplify the process for those without an analytics / research background. “

Joe FlanneryFormer CMO of The North Face

“While it is against the nature of most executives to tell their bosses, "No, we aren't going to address your specific question at this time," we decided early on that it was more important (to our marketingprograms and our careers!) to quickly make strategic improvements in our marketing investments.”

Jim EnsignGlobal CMO

Papa Johns Pizza


Lesson learned 2: get everyone to agree on scope

Establish a traceable scope that everyone can understand

Steps:• Define goals• Capture business

questions• Assess the current data

situation• Identify data gaps/issues• Define list of questions that

could be answered and the appropriate confidence levels


Quote from an industry expert

“Not everything that is measured is important and not everything that is important can be measured. Winners must use analytics in combination with their knowledge of the business to guide decision making.”

Ravi ParmeswarGlobal Head of Research

Citibank


Lesson learned 3: clearly define roles, responsibilities and communication points

Responsible Accountable Consulted InformedScope, actions Results

Approve the inputs, assumptions, support translation into actions

The overall program

Provide financial measures/margin

Scope Results

Bless the approach

Scope, translation into actions

Results

Provide access to data sources

Data format, availability

CEO/Sr. Mgmt

Marketing

Finance

Research

IT

This effort requires a cross-functional team



“you can't have senior leaders on the business involved just at akick off or planning meeting and then have them back at a results presentation. There have to be touch base points along the way. if you don't keep them in the loop and keep their buy-in along the way you can run into some significant problems getting buy in to theresults at the end.”

Jim NorgrenVice President

Consumer Insights VF Corp.


Lesson learned 4: keep the math/analytics simple and transparent

Gain buy-in on the inputs:

• What are the inputs?• What is the quality of

each input?• What is missing and

what are the implications?

After you gain buy-in, remind folks, then gain buy-in again








Ensure that folks understand the analytics/math:

• Take time to help people understand

• Set-up calls with other companies

• Tell stories, use metaphors, make it real

Client quote:“you cant teach statistics to folks who don’t know math”



“the math is not the issue, translating math into a decision is our biggest challenge”

“a few years ago, we made multimillion dollar decisions with limited to no information, now we argue about the precision of information used to make decisions”

CMO of a Major U.S. Retailer








Ensure that folks understand the analytics/math:

• Take time to help people understand

• Set-up calls with other companies

• Tell stories, use metaphors, make it real

Client quote:“you cant teach statistics to folks who don’t know math”

Make results easy-to-use

• Spend a lot of time on translation

• Establish “the language”• Keep it focused on

business issues• Provides answers to

business questions supported by analytics

• Demonstrate through success

Context, context, context!!!



“education, education, education! continuous training on the methods and outputs. even when you think they understand, train them some more… and it takes time”

Jim NorgrenVice President

Consumer Insights VF Corp.


Lesson Learned 5: plan for innovation and set measurement expectations

Innovation Stage Approach Methods

Pure Exploration:• Low resource commitment• Often done “just to get some learning”• No expectation of impact on actual

business results

Informal heuristics sufficient, learning objectives should be articulated. Qualitative feedback valuable

Delivery/Response metrics

Focus groups

Interviews

Experiment/Trial/Pilot• Relative dollar commitment is still low, but

more staff resource and attention.• Program structured for measurement,

evaluative criteria well defined.• Modest scale precludes meaningful

business impact, but expansion possible if successful on a limited basis.

A preliminary evaluative framework established and funded. Combine heuristics with basic quantitative measurement.Measuring impact on sales not

yet critical; changes in consumer preference or intent to purchase often sufficient.

Delivery/Response metrics

Consumer Surveys

Test and control

Expansion• Previous research qualified the opportunity,

set expectation of performance• Meaningful dollar commitment• Program monitored against critical KPIs

from the business case• Program in place to evaluate success in

terms of business impact

Formal metrics in place for ROI. Associated data is planned for in program execution.

Impact on sales or near-sales (leads) must be established.

Modeling

Test and control

Panels

Match appropriate measurement priorities to the stage of innovation.


Lesson learned 6: establish guidelines for translating/interpreting data and metrics

Lessons learned:

• Teach stakeholders how to interpret metrics

• Assign a “Chief Translation Officer”

• Avoid metrics overload… deliver the right metrics, to the right people, at the right time

Train, train, then train again!!!



“Presenting complex information in simple intuitive ways is the difference between an analysis that leads to action versus an analysis that leads no where.”

Ravi ParmeswarGlobal Head of Research

Citibank


Lesson learned 7: establish a decision process… how will you use the results?

PlanningPlanning MonitoringMonitoring RefinementRefinement

Decision Process

Cross Functional Team(Marketing, Research, Finance)

Insights Insights Insights

Other researchOther researchExperience, judgment,

strategic objectives

Experience, judgment,

strategic objectives

• Conduct analysis• Develop planning

scenarios• Establish forecast• Develop response

scenarios

• Track key metrics• Diagnose variances• Define actions

• Refine scenarios/plana• Adjust forecast



“This isn't for the faint-hearted who wants to accumulate data to CYA. Don't pursue analytics unless you have the confidence and the process to act on them.”

Jim EnsignGlobal CMO

Papa Johns Pizza

"Lee has been able to establish a successful marketing analyticsprogram, one seen as credible and sustainable, only by applying these lessons. While all lessons are valuable, to break the credibility barrier we relied on 2 key principles. Clearly defined roles, responsibilities and communication points allowed the marketing team to collaborate with Finance, Sales and Sr Management so we all had a stake in the results. Setting expectations early allowed the Sr Management team to understand what questions marketing analytics program can help answer and more importantly what questions cannot be answered.“

Liz CahillVP Marketing at Lee


Summary

“Results from quantitative research are NOT the decision…they are an input into a decision process that combines

strategy with all research and good judgement”

Lessons learned:

• Get key stakeholders involved early and often

• Make it easy to use (focus on answering business questions/issues)

• Keep the process transparent (inputs, assumptions, results)

• Ensure that the organization understands how to interpret, and the limitations



• “Unless the organization is willing to leave their collective egos at the door, they may not want to dig too deep and I would urge that they collectively agree that they are not going to be constrained by preconceived notions or opinions”

• “A company cannot settle for a really strong statistician who can’t translate the deep data into “laymen” terminology. Senior management is looking for the Cliff Notes version of

1) how do I drive more people in the door2) where do I find them 3) how can I convert them at higher rates4) how do I optimize overall profitability by playing with transaction level profitability

and conversion5) how can I reduce my advertising cost to reach each prospective customer… Not

only do they have to be really good statisticians, they also have to understand the business.”

• “Every media is different and, in some businesses, can change daily dependent on the economic forces at play. There are rarely absolutes –much more likely, there are bands that are relative and directional.”

CFO of a Major National U.S. Financial Services Company


What would you do?

(workshop)


Workshop structureTopic:Reinventing the marketing organization: advice to a newly minted CMO”

Goal:Apply what we have learned over the past two days, and share insights across the group

Workshop structure:

1. Split into two teams

2. Define the challenges/critical success factors for the followingareas:1. People and process2. Metrics and analytics3. Data and tools

3. Come together to discuss the results