Performance measures for more than results
Marketing has moved strongly in the direction of measuring performance. In the AMI’s August webinar, guest presenter Gary Singer, of Interbrand, said: “Don’t do something unless you actually plan on measuring it.” (go to webinar report)
Measuring marketing performance after the implementation is important, but there is also great value in being able to use performance measures to guide the day-to-day execution of the marketing strategy.
By linking performance measures to the resources required (e.g. investment return to channel capacity or sales to provisioning capacity), marketers can act in different ways at the different phases of the marketing plan.
Phase 1: Developing strategy
By linking performance measures and resources, the marketer can engage the CEO and CFO in their own language on how the marketing budget drives top-line revenue. In practice, such discussion will reveal several scenarios showing the trade-offs between revenue and costs. A simple example would be to rank activity by return on investment (ROI) versus cumulative costs. This can then be presented as a trade-off between ROI and budget. A further refinement would be to classify the ROI by strategy and costs by investment category
Resource levels can be argued early in the planning. The impact of resourcing decisions on plan performance can be understood and communicated.
The impact of time and timing on resources can be identified early. Subtle changes in time can have a dramatic impact on resource levels and therefore on marketing’s ability to deliver to the plan.
Phase 2: Designing tactics
In this phase, linking performance measures and resources means that the marketer can make quick changes to priorities and activities. This flexibility comes from the consequences of being easily understood and visible across the marketing team.
The wider organisation becomes part of the solution rather than the problem. Expectations and commitments are understood and agreed at an early stage.
The marketing team becomes more focused on the best outcome rather than simply getting the job done. Getting a campaign to market becomes secondary to maximising the outcome. Volume goals are relevant only at the strategy or program level, not for an individual campaign.
Phase 3: Execution
In this execution phase, linking performance measures and resources means that conflicts for resources are resolved based upon maximising performance, not on who is more effective at influencing the process.
People are rewarded based upon their contribution to the performance measures, rather than their ability to get things done.
Phase 4: Review
In the review phase, the blowtorch is focused directly on the performance of the plan, not on individual campaigns. There is ample opportunity for revalidating the underlying assumptions.
Reviews become less confronting for people as they are focused on the performance of the plan and what can be done to achieve the overall goals.
The challenges
Typically, measuring performance implies a focus on repeatability and re-use. Such a focus is hard to achieve. In fact, it is counter to the culture of treating campaigns as projects and filling the process with people. In the more conventional culture, marketers are rewarded for getting things done. There is not so much emphasis on whether they are doing the right things.
Applying the ‘measuring performance approach’ to future activity and, therefore, the development of future goals can be confronting, as it builds on a set of initially unproven assumptions.
With a project focus, the normal attitude is that the project an individual marketer is working on is more important than the projects others are working on. In this environment, it is difficult for the marketing team to understand the relevance of the overall plan to their day-to-day activity.
In practice, strategies are only worked on at a high level and only reviewed annually or at best quarterly. Normally, contacts or sales or overall product volumes are provided by individual channels or product teams and are only loosely linked to activity.
The reality is that the credibility of the marketing team within the broader organisation is undermined in situations where a plan is agreed and not pursued.
A defining moment
Linking performance measures to the required resources is not a short-term fix or a quick win. To extract value from this approach takes a conscious decision to make fundamental changes in the way a marketing department operates and it involves a long-term commitment.
However, it can make a big impact on many levels, from the relationship between marketing and the CEO through to the business outlook of individuals in the marketing team. It is an approach that requires careful planning in order to accommodate all the changes and a great deal of attention to detail.
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