After reading the Ad Age article along with my experience with clients I have come across an increasing need by clients to PROVE the effectiveness and efficiency of ad spend. Presently, marketing executives appear to be singularly focussed on ROI. The question we ask ourselves is that is it the holy grail of all measures? Should we move away from ROI as a single measurement of performance and add other factors to provide a (more) comprehensive view or a meaningful picture of marketing effectiveness? If so how do we share or present this data? When we ask these questions the importance of Dashboards and Scorecards become increasingly relevant and important.
Are there any fundamental (building block) principles one can apply at a tactical level to drive this initiative...Here, we list some key principles we have found useful as practitioners. Call it the 3P framework
Process & Priority
Whether you are a CPG, B2B, Telecom, or Retail it is critical to align yourself with your corporate strategy. If the priority is to democratize data then every effort should be made to integrate online and offline systems to share the data up and down the value chain. Usually creating a deployment plan for Dashboards is a good start. One doesn’t have to create an all encompassing, visually appealing dashboard from the get go. Start somewhere, even if it is excel, ensure data integrity, and most important think action/outcome as opposed to numbers. The next important area where organizations generally miss out on is creating target and benchmarks. If you don’t aim you can’t hit the target. Consider targets based on priority or goals based on historic measures and ad spend. This will be the first step towards transparency and data democracy in your business unit or organization.
Ask yourself this question: If you were the top brass in your company or your marketing organization what would you care about? This question is easy at first but as you drill in you will find yourself in a rabbit hole. At least I still do. Executives will think about Branding, Voice of Customer, and Demand Generation. CXOs will always have an interest in understanding these activities. It’s important for you as a practitioner to obtain these inputs which ought to be the second step in the Dashboard creation process.
A CFO would care about:
- Net Present Value: How much value an investment will result in? Usually, this is done by measuring all the cash flows over time to a future date. If I had 100K in 1910 how much will the 100K be in 2010? Usually calculating NPV is difficult because you don’t know what discount rate to use (rate of inflation vs. Treasury index) but one can think in these terms when considering large scale projects and it’s potential return.
- Payback Period: Say you invested 100K in your marketing program, if it returns 50K per year then you would have a two year payback period. It is a good metric for calculating and minimizing operating costs.
A CMO would care about:
- Customer Satisfaction: It measures how products or services meet or better yet surpass customer expectations? In a competitive market space, CS is a key differentiator and a key element of business/marketing strategy.
- Brand Awareness: It measures the consumers knowledge of brand existence or recall as many like to call it. It is usually qualitative in nature.
- Cost Per: These are the compound metrics which Anil has written about and it’s all about integrating disparate data sources to provide a transparent view on the success of a program. I am sure you get the idea now, having carefully selected measures will not only allow you to get a pulse on the reality, it will also allow you assign accountability to the right people. If for example, customer sat is low, consider taking immediate action on areas where this can be mitigated. If your Cost Per’s are underperforming, you can pick up the phone and ask your marketing guy/gal/agency as to where or how the money is being spent and to have them consider optimization strategies.
In the Process and Priority section I talked about this briefly. I have often seen that practitioners get too detailed. It becomes almost second nature for them to add more metrics. Usually, these are perceived to be intermediaries. It is really important to consider dashboard design. Keep in mind some best practices:
- Data overload: At most have no more than 7-10 performance measures. This way end users are not overwhelmed and data is actionable as opposed to regurgitable.
- Lack of Benchmarks: Smart marketers understand the value of benchmarking. Context is king. It allows you to measure yourself against past performances as well as set standards for ongoing campaigns.
- Scoring System: Consider the “traffic light” scoring system. This is a quick indicator and allows users to focus on areas which need attention.
Before that Kanishka worked at Gerson Lehrman Group a pioneer in proprietary research space. Kanishka and his wife Mini live in New Jersey.
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