Hierarchy of Marketing Metrics: Measuring Success Like a CFO Kathleen Schaub, Vice President, CMO Advisory & Customer Experience IDC Web Conference 7 September 2017
The Bad News: Marketing ROI is an Incredible Challenge No standard definition of marketing ROI Complexity blurs cause and effect Lack of data Incredible data diversity 2
What CFOs Want to Know What criteria should I use to determine the marketing budget? How are you measuring the impact of your work on outcomes that count? 3
What criteria should I use to determine the marketing budget? 4
Recognize Uncertainty Marketing funds are risked, not spent Marketing is a behavioral science (its about people, not things) Much like the stock market Marketing is not a candy machine 5
Why Benchmark for Your Budget? Competitive Sector Types of products and services (today and tomorrow) Business model Company Size Economies of scale Share services Growth Expectations Opportunities for your product portfolio External tailwinds or headwinds Sales capacity 6
How are you measuring the impact of your work on outcomes that count? 7
IDC s Hierarchy of Marketing Metrics Level 1: Corporate Metrics Revenue Profit Market share Growth Level 2: Operational Metrics Performance Examples: Pipeline contribution Pipeline acceleration & quality Sales enablement Customer attraction Reputation management Customer satisfaction & loyalty Productivity Examples: Investment management Staff efficiency Program efficiency Capability maturity Data quality, utilization, alignment, & management Technology modernization & management Manage the Company Manage the Marketing Function Level 3: Execution Metrics Productivity & Performance of Specific Elements Examples: Campaigns Media Events Teams & individuals Product lines Regions Regions Messages / contents Websites Manage Marketing Activities IDC 8
IDC s Hierarchy of Marketing Metrics Level 1: Corporate Metrics Revenue Profit Market share Growth Level 2: Operational Metrics Performance Examples: Pipeline contribution Pipeline acceleration & quality Sales enablement Customer attraction Reputation management Customer satisfaction & loyalty Productivity Examples: Investment management Staff efficiency Program efficiency Capability maturity Data quality, utilization, alignment, & management Technology modernization & management Level 3: Execution Metrics Productivity & Performance of Specific Elements Examples: Campaigns Media Events Teams & individuals Product lines Regions Regions Messages / contents Websites Share Operational Metrics Manage the Marketing Function With the C-Suite 9
Marketing Performance Metrics Today Level 1: Corporate Metrics Revenue Profit Market share Growth Level 2: Operational Metrics Performance Examples: Pipeline contribution Pipeline acceleration & quality Sales enablement Customer attraction Reputation management Customer satisfaction & loyalty Productivity Examples: Investment management Staff efficiency Program efficiency Capability maturity Data quality, utilization, alignment, & management Technology modernization & management Some performance processes are Very Concrete: Easier to link to business results Some are Moderately Concrete: Mixed ability to link to business results Level 3: Execution Metrics Productivity & Performance of Specific Elements Examples: Campaigns Media Events Teams & individuals Product lines Regions Regions Messages / contents Websites Some are Less Concrete: Challenging to link to business results 10
The Customer Journey IDC s Customer Experience Loop Creation Loop Loyalty Loop Source: IDC 2015 11
Very Concrete Revenue! 12
Performance Metrics Pipeline Contribution (Very Concrete) Buyer s Journey Stages Exploration 4.6 Months Evaluation 3.7 Months Purchase 2.8 Months Unidentified Contact Suspect 10% 30% 50% 70% 90% Sales Pipeline Probability EXAMPLE METRICS Value of marketing-sourced opportunities Source: IDC IT Buyer Experience Study 2017 13
Moderately Concrete Sales Enablement Pipeline Acceleration Extend / Renew / Advocacy 14
Performance Metrics Sales Enablement (Moderately Concrete) Buyer s Journey Stages Exploration 4.6 Months Evaluation 3.7 Months Purchase 2.8 Months Unidentified Contact Suspect 10% 30% 50% 70% 90% Sales Pipeline Probability EXAMPLE METRICS Sales satisfaction/ NPS / content usage Win/loss rates against key competitors Quota attainment improvements Time to quota (onboarding) Faster sales cycle 15
Performance Metrics Pipeline Acceleration (Moderately Concrete) Buyer s Journey Stages Exploration 4.6 Months Evaluation 3.7 Months Purchase 2.8 Months Unidentified Contact Suspect 10% 30% 50% 70% 90% Sales Pipeline Probability EXAMPLE METRICS Value of marketing touched opportunities Customer decision-journey conversion ratios Faster sales cycle 16
Performance Metrics Extend / Renew (Moderately Concrete) IDC s Customer Experience Loop Creation Loop Loyalty Loop Source: IDC 2015 17
Loyalty Loop: Example Metrics Use and Expand Stage Renewal Stage Advocacy Stage Customer Retention Rate: Are gaining traction or losing it? Upsell/Cross-sell/Renewal Ratios: Willingness to buy other products. Adoption Ratios: Depth of usage. Share-of-Wallet: Quantifies the percentage of budget dollar a customer spends on your brand each year as compared to others. Market share: Similar to Share-of-Wallet, measures at the aggregate level. Net Promoter Score (NPS): Representation of whether a customer will recommend your products. Reference Pipeline: Number of customers willing to serve at different categories of reference and referral. 18
Less Concrete Thought Leadership Brand Attraction & Advertising Influence Social Media Public Relations IDC 19
Performance Metrics Attraction and Influence (Less Concrete) Buyer s Journey Stages Exploration 4.6 Months Evaluation 3.7 Months Purchase 2.8 Months Unidentified Contact Suspect 10% 30% 50% 70% 90% Sales Pipeline Probability 20
Why CFOs Don t Care about Attraction & Influence Time Lag: Early interactions often don t impact revenue for several quarters Conflicting priorities: CFOs may care more about other investment opportunities Lack of proof: Little data to link early interactions and influence to business results Low understanding: CFOs often not knowledgeable about behavioral science, user experience, persuasion, and innovation adoption And.Marketing is not always right 21
3 Ways to Assert Attraction & Influence Value Conversion Metrics Connect early interaction results to more concrete downstream outcomes Proxy Comparisons Compare influence metrics to more well-understood metrics or to competitors standing Advanced Analytics Lots of data and sophisticated algorithms Search results to web visits Ad/campaign responses to key content downloads Total new visits to web New logos in key segments attending webcast Share-of-voice (higher or lower than market share) Influencer perception of innovation messages Social media sentiment Brand perception Brand recognition Propensity to buy Hidden correlations Behavioral indicators 22
Marketing Productivity Metrics Level 1: Corporate Metrics Revenue Profit Market share Growth Level 2: Operational Metrics Performance Examples: Pipeline contribution Pipeline acceleration & quality Sales enablement Customer attraction Reputation management Customer satisfaction & loyalty Productivity Examples: Investment management Staff efficiency Program efficiency Capability maturity Data quality, utilization, alignment, & management Technology modernization & management Are you in control? Trust Transparency Tracking Level 3: Execution Metrics Productivity & Performance of Specific Elements Examples: Campaigns Media Events Teams & individuals Product lines Regions Regions Messages / contents Websites 23
KPIs for Company Assets Entrusted to the CMO Money People Data Technology IDC 24
Essential Guidance 25
Essential Guidance Keep it Operational Level 1: Corporate Metrics Revenue Profit Market share Growth Level 2: Operational Metrics Performance Examples: Pipeline contribution Pipeline acceleration & quality Sales enablement Customer attraction Reputation management Customer satisfaction & loyalty Productivity Examples: Investment management Staff efficiency Program efficiency Capability maturity Data quality, utilization, alignment, & management Technology modernization & management DO Share Report outcomes not activities Level 3: Execution Metrics Productivity & Performance of Specific Elements Examples: Campaigns Media Events Teams & individuals Product lines Regions Regions Messages / contents Websites Keep these to manage marketing 26
Essential Guidance Keep it Simple Limit the number of KPI s: Most CEO s use 5-10 metrics to manage their business. Be consistent: Avoid the metrics du jour. CMO will gain credibility by reporting on the same metrics over long periods of time. Single source: Some metrics should be shared between two groups (ex. Marketing and Sales). Consider your dashboard to be a company dashboard rather than just marketing. Talk business language, not marketing. 27
Essential Guidance Crawl. Walk. Run. Race to Data!! 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Percentage of Campaign Spend that Can be Quantified LOW Data HIGH Data Period 1 Period 2 Period 3 Period 4 Period 5 Data-supported Heuristics Not Measurable IDC 28
Essential Guidance Benchmark Identify critical KPIs Relative comparison Areas for improvement IDC 29
Questions? Kathleen Schaub Vice President IDC CMO Advisory Service and Customer Experience kschaub@idc.com @kathleenschaub 30