Note: if you’re looking for a software review, stop reading immediately and Google “Gartner’s Magic Quadrant.”
You’ve finally bought into the hype. Years of rhetoric, buzzwords, and clichés proclaiming the fundamental necessity of marketing analytics – the great vessel of return on investment. So how do you scale and develop these capabilities without feeling frustrated, shaking an angry fist upward at the marketing gods? The responsible answer: I have no idea.
Here’s what I do know.
A marketing analytics culture requires a customer information strategy and infrastructure that delivers rich information across customer interactions. It must also support a dynamic, real-time flow of data across on-and-offline channels. It’s evolved into optimization, self-learning analytics, and leveraging customer intelligence to maximize marketing return on investment (MROI).
To understand how to maximize MROI using marketing analytics, you must weigh these five questions:
- What are the specific challenges to your brand caused by changes to the way consumers are making decisions?
- Do current budgets reflect where the greatest MROI value is?
- Where do you need deep analytical insights to guide marketing-mix decisions? That is, what are the real trade-offs you need to make?
- What’s the most perfect integrated analytical engine you could imagine, combining data from every source you could desire?
- What’s a good first step you can implement immediately?
Without a strategy anchor, marketing dollars are most often allocated based upon “beauty contests” rewarding the most appealing product that shouts the loudest rather than the area that most needs to grow or defend its current position. A more useful approach measures efforts based on their strategic returns, economic value, and payback window. Such scores offer a consistent lens for comparing options, and can be combined with preconditions like baseline spending, thresholds for channels, and historic and industry benchmarks.
Delivering the right metrics will allow your brand to move from backwards-looking measurement to decision-focused management. Reporting for reporting’s sake is less important than the decisions those reports enable to improve profit. In addition to fostering better strategic and resource-allocation decisions, a well-executed dashboard can demonstrate alignment between marketing expenditures and anticipated results. It is a decision support tool that facilitates strategic decisions and course alignment. To continuously drive business value through dashboard reporting, you can leverage an Empower, Optimize, Innovate (EOI) framework:
- Empower constituents with access to data and insights to make better decisions
- Optimize performance by leveraging powerful data generated from an analytics framework
- Innovate how your brand can grow by capitalizing on strategic priorities
There are no cookie cutter answers to solve your brand’s marketing analytics needs despite the off-the-shelf solutions jamming your inbox. However, there are five key questions that will help to guide your investment in marketing measurement insight:
- What are your specific objectives for marketing investment and how will we connect our investments to incremental revenue and operating profit?
- What impact would a 10% change in your marketing budget (up or down) have on your operating profit and margin over the next year? The next three years? Five?
- Compared to relevant benchmarks (historical, competitive, marketplace), how effective are you at converting marketing investment into revenue and profit growth?
- Which are appropriate targets for improving revenue leverage (defined as dollars of profit over dollars of marketing spend) over the next few years? Which initiatives will get you there?
- What questions do you still need to answer with regard to your knowledge of the return on marketing investments? What are you going to do to answer them?
While many marketers may recoil at the idea of answering these questions, the exercise will not only foster a deeper understanding of your business, but provide a roadmap to the selection of software and platforms along with the identification of internal capabilities versus outsourced assets. This is the difference between marketing measurement and marketing management. It is the difference between data, intelligence, and knowledge – stop measuring “what is” and start measuring “what if.”
Have questions about how to maximize MROI using marketing analytics? We’re here to help.