Transcript Lenskold310 - International Planning & Research

How to Deliver Insights
that Deliver ROI
44th CMAG Meeting
March 12, 2010
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© 2009 Lenskold Group. All rights reserved.
Lenskold Group Overview

Lenskold Group founded in 1997

“Marketing ROI” book named one
of the 5 most influential marketing
books of 2004

Marketing profitability
management
•
ROI Framework
•
Measurement & Analysis
•
ROI Tools & Dashboards
•
Workshops & Training

Global 1000 and emerging
corporate clients

Workshops conducted in 9
countries with 1,500+ marketers

Leading marketing ROI innovator
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© 2009 Lenskold Group. All rights reserved.
Partial Client List
Agenda
ROI Opportunities Exist
Marketing ROI Framework Provides Support
Key Measurement Considerations
Maximizing ROI from Market Intelligence & Research
3
© 2009 Lenskold Group. All rights reserved.
Agenda
ROI Opportunities Exist
Marketing ROI Framework Provides Support
Key Measurement Considerations
Maximizing ROI from Market Intelligence & Research
4
© 2009 Lenskold Group. All rights reserved.
Market Intelligence & Research ROI
 Why invest in intelligence &
research?
 Insights are critical to guide
marketing effectiveness and
profitable performance
 Where is the “return” from that
investment that delivers and
improves ROI?
 Insights are applied to
improve performance and
profitability
 Should MI be required to
generate an ROI?
 Absolutely.
Net Profit
ROI = -------------------------Marketing Invt
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© 2009 Lenskold Group. All rights reserved.
=
(Gross Margin – Marketing Invt)
------------------------------Marketing Investment
Challenges & Opportunities for MI-ROI
Challenges
Opportunities
 Intelligence and research are
delivered to decision-makers
who may or may not take
action on the insights
 Identify and present ROI
potential with reliable ROI
framework
 Marketing complexity often
leads to uncertainly in
interpreting insights
 Align insights to a common
customer funnel
 Measurement objectives are
not well defined by “clients”
 Guide decision-makers on
defining measurement
objectives that are strategic
and actionable
 Profit drivers critical for ROI
are often neglected
 Use ROI to build and maintain
executive support
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© 2009 Lenskold Group. All rights reserved.
Goal is Performance & Profitability
Financial
Assessment
Σ Profits – Investment
ROI = -----------------------------Marketing Investment
Marketing
Strategy & Position
Customer & Sales
Analytics
Marketing
Performance
Measurements
& Metrics Tracking
Decision &
Mgmt Tools
120,000
Campaign & Ad Increment Split
BaseBase
Campaign
vs. Enhanced
Promotion Periods
100,000
300
250
Sales $
80,000
60,000
40,000
Enhanced
Ad
Incremental
Incremental
Impact
Impact
Base
Base
Campaign
Campaign
Impact
Impact
Baseline
Control
Control
200
150
100
Market
Baseline
50
20,000
0
1
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© 2009 Lenskold Group. All rights reserved.
N
ov
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M
ar
M
ay
N
ov
Ju
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Se
p
M
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M
ay
Ja
n
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2
3
4
5
6
7
8
9
Contact-to-Impact Provides Strategic Insight
Marketing Strategy
& Execution
Customer Behavior
/ Response
Sales
Activity
Financial
Contribution
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© 2009 Lenskold Group. All rights reserved.




Target
Media
Offers
Message
 Funnel Progression
• Perceptions/Attitudes
• Actions/Response
Budget
ROI
 Customer Base/Activity
 Transaction Volume
 Transaction Size/Mix
 Revenue
 Less CGS/Expenses
 Less Incremental Expenses
Profit
Traditional Metrics - Incomplete
Marketing Budget
$200,000
Target
100,000
Brand Aware
Response Rate
Leads
Cost Per Lead
8,000
$25
4,000
$50
Sales Conversion Rate
Net Sales
25%
2,000
40%
1,600
Cost Per Sale
Profit Per Sale
$100
$150
$125
$200
$300,000
50%
$320,000
60%
Total Profit
ROI
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© 2009 Lenskold Group. All rights reserved.
Campaign A Campaign B
80%
40%
8%
4%
Users See Only Two Types of Insights
GOOD NEWS
OR BAD NEWS
Intelligence is…
 Filtered
 Cherry-picked
 Sugar-coated
 Marketing ROI is an improvement
process, not a pass/fail evaluation
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© 2009 Lenskold Group. All rights reserved.
Insights Drive ROI Improvements
 What is not working & why
• A good marketer will take actions to improve strategies
 Customer behavior & influence on key profit drivers
• Customer value
• Funnel leakage
 Impact of non-controllable factors
• Competitive and market condition influence
 Evaluation or assessment of alternatives
• Drive ROI with better marketing effectiveness
• Greater success potential to improve, not replace
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© 2009 Lenskold Group. All rights reserved.
Agenda
ROI Opportunities Exist
Marketing ROI Framework Provides Support
Key Measurement Considerations
Maximizing ROI from Market Intelligence & Research
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© 2009 Lenskold Group. All rights reserved.
ROI Management Process
Objectives
Best Assumptions
ROI Measurement
ROI Scenarios
History to guide
future campaigns
Strategy
Supporting Insights
Tactical Plan
Measurement Plan
Test Variations in Plan
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© 2009 Lenskold Group. All rights reserved.
Impact &
Contribution
Measurements
Quantify ROI Potential & Outcomes
Net Profit
ROI = -------------------------Marketing Invt
=
(Gross Margin – Marketing Invt)
------------------------------Marketing Investment
Campaign inputs:
Financial inputs :
 Marketing budget
 Cost of marketing staff
 Average revenue per sale based
on target profile and products
 Assumed impact on sales
 Gross margin %
• Option to detail “funnel”
 Sales-driven costs (offers,
incentives, discounts, etc.)
 Target profile
Outputs:
 Incremental sales, revenues,
and profit
 Return on Investment (ROI)
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“Gross Margin” equals the Discounted Cash Flow (Net Present Value) of incremental profits and
costs that result specifically from the corresponding marketing investment
© 2009 Lenskold Group. All rights reserved.
Know ROI Scenarios to Prioritize Insights
Marketing Expenses (excluding offer costs)
Campaign Development
Mass Media Advertising
Direct Mail & Mailing Services
E-mail Marketing
Events & Trade Shows
Sponsorships
Trade Promotion / Channel Marketing
Social Media
Other
Other
Other
Marketing Budget
$15,000
$25,000
$6,000
$0
$0
$0
$0
$0
$0
$0
$0
$46,000
Marketing Staff Expense
Staff Level 1
Staff Level 2
Staff Level 3
Marketing Staff Expense
Daily Rate
$250
$450
$600
TOTAL MARKETING INVESTMENT
# of Days
10.00
3.00
0.50
$4,150
$50,150
Gross Margin - Marketing Investment =
Return / Marketing Investment =
15
© 2009 Lenskold Group. All rights reserved.
Marketing Impact
Target Reached
% Progression
Quantity
12,000
15.0%
100%
64.0%
100%
8.0%
100%
100.0%
100%
100.0%
100%
1,800
12,000
1,152
12,000
92
12,000
92
12,000
92
12,000
65.0%
0.50%
60
Register
for Event
Funnel Stage
1
Attend
Funnel Event
Stage 2
Accept
Sales 3Contact
Funnel Stage
inactive
Funnel Stage 4
inactive
Funnel Stage 5
Incremental Sales or Customers
Average Revenue per Sale or Customer
Incremental Revenue
$2,400
$143,770
Average Gross Margin %
Profit from Incremental Sales
37.5%
$53,914
INCREMENTAL GROSS MARGIN
$53,914
RETURN (i.e., NET PROFIT)
ROI
$3,764
7.5%
Align Insights to Customer Buying Funnel
Strategies & Tactics
Brand/Awareness
Unaware Prospects
1,000

Demand Generation
150

Sales Conversion
Revenue
Customer Experience
Retention & Cross-Sell
10

2
Profitable Sales
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© 2009 Lenskold Group. All rights reserved.
Funnel
Progression
Incremental Sales Impact
Profit Contribution & ROI
Understand Funnel Leakage
Unaware Prospects
1,000
Wrong
Target

Not Yet
Won
150

10

Efficiency
2
Profitable Sales
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Adapted from “The Leaky Funnel” by Hugh Macfarlane (www.leakyfunnel.com)
© 2009 Lenskold Group. All rights reserved.
Effectiveness
Biggest Wins for ROI Improvement
1. Target
High – Value /
High – Potential
Prospects
Initial Prospects
5. Reduce overspending beyond
progression rate
3. Reduce
leakage with
better integration
4. Accelerate
leakage of lowpotential prospects
Closing sales
Customer
retention/growth
Closed Sales
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© 2009 Lenskold Group. All rights reserved.
2. Improve
conversion later
in the funnel
Framework Provides Perspective for Insights
 ROI scenarios show required outcomes
 Customer purchase funnel provides a consistent view of diverse
insights
 Leakage points and leakage reasons can be quantified financially
 Diagnostic measures provide deeper insights
• Funnel perspective
• Segment performance (existing segments or derived from behaviors)
• Gaps in marketing and sales alignment
• Insight into customer behaviors goes beyond data points
• Influence of market conditions provides proper adjustments
• Feedback loop from sales to marketing supports better alignment
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© 2009 Lenskold Group. All rights reserved.
Agenda
ROI Opportunities Exist
Marketing ROI Framework Provides Support
Key Measurement Considerations
Maximizing ROI from Market Intelligence & Research
20
© 2009 Lenskold Group. All rights reserved.
Measure Marketing Effectiveness
1. Incremental Contribution
• Modeling
• Market Testing
• Pre-Post Trending
• Quantitative Research
Base Campaign vs. Enhanced
Base Campaign & Ad Increment Split
300
250
1
200
2
150
Enhanced
Ad
Incremental
Incremental
Impact
Impact
Base
Base
Campaign
Campaign
Impact
Impact
Baseline
Control
Control
3
100
Market
Baseline
50
0
1
2
3
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© 2009 Lenskold Group. All rights reserved.
4
5
6
7
8
9
2. Diagnostics
• Data Mining
• Funnel Analysis
• Linkage Analysis
• Segmentation Analysis
3. Predictive (in Long-Term)
• Planning Tools
• Modeling
• Forecasting
Pre-Post Analysis – Basic Campaign Example

Track value and behaviors prior to marketing treatment to establish
baseline for comparison to campaign period results

High risk of outside influence (non-marketing) on sales levels decreases
the validity of results analysis
Pre-Campaign
Average per Average per
Week Week Baseline
Campaign
Campaign
Total Revenue $121,043 $137,849 $150,422 $147,828 $159,264 $172,543 $166,020 $149,215
Sales Volume
151
172
188
185
199
216
208
187
Projected
Baseline
Total
Campaign
Total
Total
Incremental
$139,286
$161,761
$557,142
$647,042
$89,900
174
202
696
809
112
Sales Revenue
$200,000
$180,000
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Pre Week 1
Actual Revenue
Campaign Revenue
Projected Baseline
Pre Week 2
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© 2009 Lenskold Group. All rights reserved.
Pre Week 3
Pre Week 4
Campaign
Week 1
Campaign
Week 2
Campaign
Week 3
Campaign
Week 4
Market Testing – Basic Campaign Example
 Experimental design
• “Test” group with marketing
treatment compared to
control group without
treatment
• Isolates impact of selected
treatment
• Comparisons can go deeper
than sales and revenue lift to
include customer value and
funnel progression to assess
lead quality
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© 2009 Lenskold Group. All rights reserved.
Test Group
“Control” Group
Tactic 1
Offer 1
Sales Channel
Tactic 1
Offer 1
Sales Channel
Plus Tactic 2
Different marketing treatment to
comparable portion of target audience
RESULTS
Audience
Reached
Marketing
Responses
New Sales
New Revenue
Test Group
Control
Group
Tactic 2
Incremental
20,000
20,000
0
7,117
6,686
431
809
$647,042
696
$557,142
112
$89,900
0
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© 2009 Lenskold Group. All rights reserved.
Base/Seasonal
Trade Promotion
7/2/1999
6/25/1999
6/18/1999
6/11/1999
6/4/1999
5/28/1999
5/21/1999
5/14/1999
5/7/1999
4/30/1999
7/2/1999
6/25/1999
6/18/1999
6/11/1999
6/4/1999
5/28/1999
5/21/1999
5/14/1999
5/7/1999
4/30/1999
4/23/1999
4/9/1999
4/16/1999
4/16/1999
4/23/1999
4/2/1999
4/9/1999
2/26/1999
2/19/1999
2/12/1999
2/5/1999
1/29/1999
1/22/1999
1/15/1999
1/8/1999
4/2/1999
50
3/26/1999
100
3/26/1999
150
3/19/1999
200
3/19/1999
250
3/12/1999
300
3/12/1999
350
3/5/1999
400
3/5/1999
2/26/1999
2/19/1999
2/12/1999
2/5/1999
1/29/1999
1/22/1999
1/15/1999
1/8/1999
1/1/1999
0
1/1/1999
Marketing Mix Modeling
400
350
300
250
200
Modeling correlates
marketing activity
with sales activity
150
100
50
Advertising
Consumer Promotion
Look for correlations
to customer
behavior where data
is available
Marketing Mix Model Conclusions
300
Historical
250
200
GRP and
Carry-over
Effect Index
Optimized
150
100
TV Promo
50
NP GRP
0
RD GRP
300
Same Budget
250
4.5% lift in
Sales
200
GRP and
Carry-over
Effect Index
Total Carry-Over Current
TV Brand
150
100
Total Carry-Over Revised
TV Brand Revised
50
0
TV Promo Revised
NP GRP Revised
Results optimized with broadcast budget held constant
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Courtesy of Interlocking Analytics
© 2009 Lenskold Group. All rights reserved.
Integrated Measurement Plans
Measurement Plan (example)
3Qtr
The measurement2Qtrplan must build
more and 4Qtr
more
Sales Tracking
Sales Tracking
Sales Tracking
Sales Tracking
insight over time
1Qtr
Market Test
Segment-Level Analysis
Marketing Mix Modeling
Customer Value Research
The best measurement plans are:

Intentional measurements planned in advance

Diverse methodologies integrated for maximum insight

Designed to work together to deepen and build knowledge

Prioritized based on profit opportunity, benefit, and cost

Aligned to the ROI framework for consistent interpretation
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© 2009 Lenskold Group. All rights reserved.
What about Brand?

Does brand awareness count?

Is advertising recall important?

What about the contribution to long term brand?

Where does customer experience research fit in?
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© 2009 Lenskold Group. All rights reserved.
Brand & “Intangibles”
1. Influence customers throughout the
buying cycle today
•
Incremental sales, leads,
engagement and/or intentions
•
Assess incremental contribution
2. Influence top of the funnel metrics to
condition the market for demand
generation and sales contacts
•
Lift in effectiveness of next tactics
•
Assess integrated campaigns
3. Invest in re-positioning of key
attributes with high influence on
purchase decisions
•
Change in competitive position
•
Commitment for long-term
•
Should have lasting impact (brand
promise plus brand experience)
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© 2009 Lenskold Group. All rights reserved.
Perceived Competitive Position
Brand Attribute Position
Brand Influence on Sales
Example: Equipment Manufacturer
*Durable
*High
Performance
*Inventory
Available
*Price-Value
*Responsive
Support
*Secure
*Quality
Resellers
* Variety of
Models
*Active Supporter
of Community
Perceived Competitive Position
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© 2009 Lenskold Group. All rights reserved.
Funnel Perspectives
Buyers’ Funnel
No Need
Aware Value Prop
Interest
Consider BRAND
Need to Purchase
The buyer’s view
of the funnel
shows how
measurements
capture insight
into purchase
behaviors and
leakage points.
Company Funnel
Brand
Perceptions
Product Purchase
Intention
Brand Awareness
& Consideration
Prefer BRAND
Research Options
Prefer BRAND
Identify Solution
Visit Retailer
Prefer BRAND
Purchase
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© 2009 Lenskold Group. All rights reserved.
This view guides
the measurement
direction to
generate insights
tied to behaviors
that are valuable
for developing new
strategies.
Consumer
Actions
Retail
Experience
Purchase
Decisions
Halo
Purchases
Company view of
the funnel shows
how measurements
align to marketing
decisions and
implementation
effectiveness.
This view is used to
guide measurement
objectives and
select
methodologies.
Example of Measurement Coverage
Buyers’ Funnel
No Need
Aware Value Prop
Interest
Consider BRAND
Ad
Tracker
Survey
Web
Visitor
Intercept
Survey
Need to Purchase
Prefer BRAND
Research Options
Website
Tracking
Market
Testing
Prefer BRAND
Identify Solution
Store
Intercepts
Survey
Visit Retailer
Prefer BRAND
Purchase
31
© 2009 Lenskold Group. All rights reserved.
Sales
Tracking
Modeling
Sales
Associate
Research
Agenda
ROI Opportunities Exist
Marketing ROI Framework Provides Support
Key Measurement Considerations
Maximizing ROI from Market Intelligence & Research
32
© 2009 Lenskold Group. All rights reserved.
Managing Marketing Insights



Better objectives for marketing decision-makers
•
Quantify expected outcomes
•
Probe on decisions & options for alternatives
Integrate customer funnel into intelligence initiatives
•
Identify leakage points
•
Uncover leakage drivers
•
Present insight into behaviors
Concentrate on high value and high potential segments
•

Better vs. bigger
Quantify ROI scenarios and run ROI analyses to motivate actions
•
Profit potential also justifies investment into marketing intelligence
33
© 2009 Lenskold Group. All rights reserved.
Calculator for ROI on Insights
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© 2009 Lenskold Group. All rights reserved.
Calculator for ROI on Insights
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© 2009 Lenskold Group. All rights reserved.
Role of Marketing Intelligence Teams

Marketing ROI process
•

Based on bringing new insights into strategic and tactical planning
Marketers need clarity in guiding intelligence
•
Strategic plans with clear path to end goals
•
Measurement objectives should tie to decisions
•
Know profit drivers

Align diverse sources of intelligence for consistent and cohesive guidance

Prioritize and integrate measurements
•
Maximum influence
•
Strategic and tactical support

Present ROI and profit potential with intelligence

Assess and track the actions taken on insight
36
© 2009 Lenskold Group. All rights reserved.
CONTACT INFORMATION
Jim Lenskold
Lenskold Group
2517 Highway 35
Building N, Suite 202
Manasquan, NJ 08736
Phone: 732-223-8886
E-mail: [email protected]
37
© 2009 Lenskold Group. All rights reserved.
Lenskold Group Advantages
Lenskold Group offers an unsurpassed
depth of capabilities in marketing ROI
processes and measurements. We
deliver practical, actionable solutions
that truly generate profit improvements.
We are a best fit for companies that:
• Require financial integrity to earn
credibility outside of marketing
• Want decision tools that leverage
insight from multiple measurement
sources instead of single-methodology
solutions
• Have a marketing organization
committed to profit improvements
• Prefer a customized solution over a
one-size-fits-all approach
• Need a marketer-friendly approach
• Value a transition plan designed
specifically to their culture and skills
• Want analysis and intelligence that
can create a clear competitive
advantage