How Digital and Measurement Innovation Are Changing Marketing Accountability

Digital and measurement innovation are making Marketing more accountable. And it can’t happen fast enough. Why do Chief Marketing Officers last only 28 months on average? Why, according to a recent Ernst & Young study, do less than 20% of Fortune 1000 companies have a Chief Marketing Officer? As Advertising Age noted:

A study conducted by Ernst & Young…found that 13% to 15% of Fortune 1,000 companies employ some sort of marketing position with a chief or senior-executive-level title, such as chief marketing officer or chief revenue officer…The absence of a head marketer in public filings is evidence of their potential lack of say within organizations, said Ed See, a consultant in Ernst & Young’s advisory services practice…

Why such an uncomfortable state of affairs ? In part, it’s because the return on marketing has often been insufficient, that’s why. That’s an easy thing to say. The more uncomfortable part is asking why? Are Marketers simply incompetent? Or does the rest of the world really not appreciate Marketing, as some would have you believe?

Return on Marketing Investment -- Insufficient ? (visual courtesy of peoplesuccess.com)

Why Return on Marketing is Insufficient

1. Measurement – Large parts of the Marketing budget have not been measurable. Cause and effect in the marketing mix were poorly understood. Even in great Marketing driven organizations investments were often made on good faith. Why? Because the basic data and measurement capabilities simply didn’t exist or were too costly.
2. Organizational Accountability – It pains me to say this. But, many Marketers adhere to a kind of voodoo faith in marketing. Creativity and branding are believed to be beyond data and metrics. It’s sad but true; too often Marketing organizations have not been disciplined and accountable for their spending.
3. Marketing IQ– Many organizations don’t really understand the value of a brand. CMO’s can’t just take for granted that people understand and value brand building activities and their impact on profit. Part of their  job is evangelizing the benefits of Marketing and helping the organization understand how Marketing makes a financial difference.

But things are about to change—in a big way. Marketing is in the midst of the most transformational period since the invention of the 4P’s.

Two Tectonic Changes — Digital & Measurement Innovation

1. Digital Convergence – As more Marketing is delivered digitally, more of your plans become measurable. And when your plans can be measured, they can be analyzed, drivers can be quantified, and success becomes more knowable. The inexorable drive to digital, across all mediums, means more transparency. And with transparency comes greater accountability for your Marketing organization.
2. Measurement Innovation – New measurement tools are changing what can be measured and when. Marketing mix modeling, real time evaluation of advertising effectiveness, viewer engagement and the realization of single source data—the Holy Grail in marketing—are closer than ever. And the convergence to digital is turning tool theory into reality.

These changes mean that Marketing investments and their impact will be more transparent, and Marketing organizations will be held to greater accountability. And the current challenging economic environment guarantees continued and unrelenting scrutiny of marketing spending.

What You Can Do — Play a Leadership Role

1. Set Clear Objectives and Demand Measurement – Create and use Marketing metrics. Focus on marketing efficiency and impact. A great post on this topic is Nichole Kelly’s “Return on Marketing Investment Measurement that Works.”
2. Embrace Digital Opportunities– Explore the use of digital measurement in your plans. Stay on the cutting edge of new technologies and frameworks. Learn more about digital measurement in Jonny Longden’s “How to Build a Digital Measurement Framework.”
3. Explore New Measurement Tools – Stay abreast of the newest measurement tools. Appoint an expert in your organization to follow trends and identify new opportunities. Learn how they might impact your business. Experiment.
4. Evangelize Marketing– Talk to internal stakeholders. Share information and build understanding of cause and effect marketing. Convince people that Marketing should be an investment, not a cost. Help people understand that the brand is more than Marketing, as I did in a related post “Leading Your Brand Beyond Marketing.”

Marketing will always be a complex and exciting blend of analytics and creativity. What’s changed is that the advent of digital and measurement tool innovation will create a new era of transparency and accountability in your Marketing world. Marketing will become an investment—not simply a cost.

Marketing exists for one and only one reason – to drive economic value for the business. In the past, there were plenty of excuses as to why return on marketing was insufficient. Not so in the future. Shame on us if we miss this singular and epoch making opportunity.

Get free updates of Randall Beard’s Blog by e-mail

Get free updates of Randall Beard’s Blog by reader

6 Steps for Turning Digital Chaos into Brand Equity

From my July 21 guest post on Branding Strategy Insider:

The marketing landscape is increasingly chaotic and getting more so. The old world of command and control marketing messaging is dead. And marketers are woefully unprepared to deal with this new reality. In a recent survey, over 70% of CMO’s surveyed said they feel ill-equipped to manage their brands in this new digital environment.

The explosion in new media channels, and the increasing ease with which consumers can react to, create content about, and generally discuss brands is challenging even the best marketers. How do you manage your brand in such a chaotic consumer empowered world ? How do you ensure that consumers understand your brand equity and that you drive a single minded understanding of your brand promise ?

Explosion of Media Channels

Media channels — paid and otherwise – are increasing exponentially. YouTube, Facebook, Twitter, webinars, forums, reviews, etc. are only the beginning. Everyday brings new options. Who had ever heard of Stumble Upon a year ago ? Consumers ability to access these new channels, engage with other consumers, and talk back to companies has radically changed how Marketing organizations need to behave. And it’s going to get worse before it gets better. The Social Map below by Brian Solis shows how many different options there are–and the pace of change is fast.

The Increasingly Chaotic Digital Landscape (courtesy of Brian Solis)

6 Steps for Turning Digital Chaos into Brand Equity

Here are 6 steps you can take to ensure your brand effectively engages consumers with your brand promise in this increasingly complex and chaotic environment:

1. Be Different, Special and Better — Let’s start with a basic truth. Your brand equity is what consumers think it is–not what you think it is. Unfortunately, too many brands have brand equities that are identical to competitors. So, the starting point is to have a brand promise, and delivery of it, that is truly differentiated–a basic truth too often ignored in today’s frenzied world of media and digital innovation.
2. Know Your Target’s Media Habits – Consumers consume media content differently. Know your targets media habits–traditional and new, and don’t be seduced by the latest media innovation if your target isn’t participating. Map their usage. Then, listen to the communities that are conversing about your brand, understand their priorities and beliefs, and identify respected opinion leaders.
3. Measure Marketing Contact Point Impact – Understand not just what your target is doing, but the impact of different contact points.  Quantifying the relative impact of contact points provides a data-based framework for deciding where to focus your limited resources. Word of mouth has always been important, and digital is making it even more so. Thus, it’s critical to identify your categories ”amplifiers” who drive it.
4. Equip Your Organization to Deliver the Brand Promise – Knowing your brands key contact points, you can then map organizational ownership to each of these. Many “old line” functions are being impacted by new media–e.g. PR, Customer Service, etc. Ensure that they — not just Marketing — really understand your brand promise, what it means, and how to deliver it.
5. Organize your Team to Engage Key Media Channels / Amplifiers — Establish teams to engage with consumers across your most important digital channels. Equip them with the talent and skills to publish, respond, and engage–whatever is required to focus the discussion on your key brand equities.
6. Create Value-Added Content — Consumers want more from brands than just a restatement of the brand promise. They want relevant and creative content that surrounds and supports it. Sometimes, they even want to create it. Do your homework to understand what kind of content your consumer wants, whether and how they can contribute, and how it can support and reinforce your brand promise.

Reactive, Proactive or Engaging ?

It’s natural to feel that some of your Marketing communications are reactive and some are proactive. But engaging your target audience over time in an intelligent dialogue that drives your brand promise is key:

• Lead with your brand promise in new and creative ways. Engage with consumers to interpret it based on their values and needs.
• Give consumers a voice about your brand and brand promise by enabling feedback, comments and user generated content.
• Guide consumers back to your brand promise, even when they have a negative experience or point of view. Ask “how could we do better?”
• Use value-added content that surrounds and supports your brand promise to make it easier to engage consumers.

The key point is this: focus your limited resources. Focus on the most impactful, highest consumption media channels. Focus on building relevant, value-added content to surround and support your brand promise. And then focus your organization on engaging with your consumers across the key media channels in a conversation that continues to reinforce, develop and deepen your brand promise. Why ? So that when consumers think of your brand, they think of one thing — how you’re different, better and more special than the other guys.

What is your brand doing to turn digital chaos into brand equity ?

Click here for free updates of  Randall Beard’s Blog posts by reader

Click here for free updates of Randall Beard’s Blog posts by e-mail

Will Pruning Your Business Build Your Brand ?

Nothing is more sacrosanct in Marketing than never giving up a customer. But is keeping all of your customers always the best way to build your brand? Here’s a possibly controversial view:  in the future it will become even more important to gracefully remove dissatisfied customers from your franchise–and this will be key to maintaining a healthy and growing brand.

Build Your Brand by Pruning Low Value Customers (visual courtesy of AdWeek)

This is because “recommendations from known people” is the most powerful form of advertising, and your detractors are likely hurting your brand more than you think. And as my recent blog post “How the Future Social Web will Transform Marketing” pointed out, word of mouth from friends will become vastly more important in the future.

Are all Customers Equal in Value ?

Not all customers are equally satisfied. Whether you’re using standard satisfaction metrics or Net Promoter Score, a customer satisfaction metric popularized by Fred Reichold in his book ‘The Ultimate Question,” it’s important to not just look at overall satisfaction, but to understand differences in customer satisfaction across products, channels, customer groups, acquisition channels, etc. to identify potential problem areas.

Net Promoter Scores -- Identifying High and Low Value Customers

Customers are also not equal in economic value. Some are more valuable and some are less. Measuring the profitability or life-time value (LTV) of a customer is a complex, but important marketing metric.

Customer Lifetime Value -- Some Customers Are Unprofitable (courtesy of Pear Analytics)

Not surprisingly, customer satisfaction and lifetime value are related. More satisfied customers are generally more loyal, more willing to pay a higher price, less likely to switch brands based on promotions and price deals, and are more likely to generate positive word of mouth that positively benefits your brand. Conversely, less satisfied customers are likely to generate negative word of mouth. This is critically important because “recommendations from people known” is the single most trusted form of advertising based on a recent Nielsen study.

Building Trust -- Recommendations From Friends Count Most

Measuring your various customer groups on satisfaction and customer profitability is the starting point for understanding whether pruning customers will build your brand. Slice your data to identify groups of customers with low satisfaction and/or profitability, understand why, and then determine whether the problem is economically solvable. If not, you have to ask whether it makes sense to prune the customers.

“De-Recommending” Your Brand

Because if you don’t, dissatisfied customers will be “de-recommending” your brand and eroding your hard earned brand equity. Research has shown that only about 5% of customers will complain, but of the balance 95% that don’t, they’ll not only remain dissatisfied but also tell an average of 9-10 people each about their poor experience. They are, in Net Promoter terms, brand detractors that hurt your brand.

 Examples Where Pruning Could Make Sense

• Channel Experience – Customer satisfaction by channel — web, phone, retail, etc. is often significantly different. Should you shut down a channel ?
• Product Variant – Product satisfaction frequently differs by product variant, with some variants having much lower satisfaction. Should you eliminate a product or product line ?
• Acquisition Channel– Some acquisition vehicles deliver lower satisfaction and lower profit customers than others. Should you de-emphasize an acquisition channel or tactic ?

Gracefully cutting business lines and exiting dissatisfied and vocal customers from your franchise in these and other similar situations is important to building your brand. Why? Because exiting dissatisfied, low value customers will reduce negative word of mouth, improve your average satisfaction, and improve profitability. And not doing so will become ever more risky as the future social web enables customers to bring the opinions of their friends with them as they traverse the web and interact with products and services like yours.

Are you bold enough to build your brand by pruning your business ?