Measuring the Wow

A man on the street with a microphone posed the following question to a young woman on Adobe TV last year: “Is marketing bullshit?”

“I wouldn’t say bullshit,” she replied, “but it’s a bunch of fluffy…crappy stuff.”

“OK, wait,” the interviewer interjected, “what do you do?”

“I’m a marketing strategist.”

The campaign, which Adobe insists was a genuine interaction and which heralded the introduction of its Marketing Cloud product, was inspired by a study the company had conducted on consumer attitudes about marketers. Consumers rated marketers lower than politicians for value and likeability. “[Marketers] haven’t been able to deliver the goods on effectiveness,” said Adobe SVP and CMO Ann Lewnes at the time.

Senior managers—including CMOs—at companies large and small are done with all the b.s. They’re waking up to the fact that marketing efforts cannot be assessed only for their awareness and affinity, but can be measured in real time and tweaked to improve results on the fly. The brand-building marketing of the Mad Men era still has relevance, but when it comes to the payoff, awareness has given way to engagement. Marketers are being evaluated on metrics once in force only in the sales department—money-coming-through-the-door kinds of metrics. Even hard-to-identify fruits of digital channels such as brand advocacy and lifetime customer value are being added to the equation. Marketers are still expected to be creative, yes, but they’re now required to be effective, as well.

The majority of the 550 chief marketers surveyed for the CMO Council‘s “State of Marketing 2012 Report” agreed that marketing is being positioned as a growth engine in the executive suite and that their compensation is increasingly tied to performance. Asked to name their top accomplishments of the past year, the top three responses homed in on results: marketing organization accountability, marketing performance measurement systems, and better support of the sales effort.

“At some point marketing and sales have to get on the same page,” says Liz Miller, VP of the CMO Council. “We heard from one company that sat down the C-suite and said, ‘Here’s how we’re all going to get compensated going forward: reviewed quarterly, paid yearly.’ That way you don’t have sales looking at marketing and grumbling, ‘Those guys have a five-year plan; I have a five-week plan.’”

Lior Arussy, president of customer experience consultancy Strativity Group Inc., gets downright disgusted with marketers who refuse to accept accountability for their actions. “We experienced an interesting [situation] at a credit card company whose existing customers stopped using the card when exposed to its advertising,” he recalls. “When we told the branding team that they needed to stop the ads, they refused. They said they were meeting their numbers for brand recollections. But they were bad recollections!”

Arussy advises clients to adopt a new Four P’s of marketing accountability: Do you command a premium price, a sufficient portion of the market, permanence of relationships with customers, and promotions that foster the first three P’s instead of serving as a way to empty the warehouse? “Marketers,” he says, “have to be in the business of creating business.”

Rescued from the deep end of the pool

For some small or medium-size businesses, marketing accountability is the only way to stay afloat. Take Marcus Sheridan, who went from pool installer to measurement-mad inbound marketer to stay in business. Sheridan and his three business partners in River Pools & Spas had a good thing going in the early 2000s, averaging close to $4 million a year installing pools in Richmond, VA. Then came September 29, 2008. The Dow Jones fell a record 777 points and two days later River Pools had lost nearly a quarter of a million dollars in deposits withdrawn by frightened customers. Sheridan and his co-owners seriously considered pulling the plug on River Pools.

Five years later the company has gone from treading water to building pools at its capacity. Its website, Sheridan claims, is the most trafficked pool website in the world. (The first two nonpaid results of a Google search on “fiberglass pool cost” are blogs on the subject by Sheridan and partner Jason Hughes.) Last year River Pools had revenues of $4.5 million on an advertising expenditure of $20,000, Sheridan says, versus $4 million in sales on $200,000 of paid ads in 2007. The difference?

“I started looking online for an answer to our problems and learned the term inbound marketing. It was telling me to blog, which sounded like online journal writing, which made no sense to me,” Sheridan says. But he did it anyway, in the wee hours after long workdays. He set down the questions most often asked of him by customers over the years and answered them individually in a series of blogs. Little did he know he’d become the best-read swimming pool author on the planet, as well as an expert in relating page views to pools sold.

“Big companies have big resources to do a lot of things,” Sheridan says, “but if you ask them, ‘How much money did you make from Google AdWords last year?’ they say, ‘Well, I’m not sure.’ And I say, ‘Whaaaat?’” Sheridan knows how much River Pools made from AdWords. He also knows that, on average, if a blog on the River Pools website draws 500 visitors, five of those turn into qualified leads, and two of those turn into sales. He says he knows that, since he first posted his “How Much Does a Fiberglass Pool Cost?” blog in 2009, it has sold $1.7 million worth of backyard splishing and splashing. Early on, he invested in a HubSpot platform to analyze all of his marketing activities.

Sheridan is adamant that, if he can do this, anybody can, even big companies with hordes of people and stacks of silos. “I personally don’t care about likes or tweets or any of that stuff. I care about traffic, leads, and sales,” he says. “And if you have the proper analytics, you can’t count it all.”

Gartner Research Director Chris Fletcher, who tests and researches CRM programs, agrees. “Small businesses may adapt to these programs quicker because they’re starting from nothing,” he says, “but if you move up a notch to an integrated platform meant for a larger application, it still has the same process and the same result.”

Lenovo’s romance with LISA

Larger companies have different problems. The bureaucratic nature of many enterprises often means that marketers work toward misaligned goals—recall Arussy’s anecdote about the credit card company. But electronics manufacturer Lenovo has discovered that introducing accountability and hard metrics to determine marketing success can unify disparate departments, as everyone finds themselves obliged to work toward the same goal.

Lenovo, which acquired IBM’s personal computer unit in 2005 and edged out Hewlett-Packard (HP) as the leading seller of PCs last year, wants to be known as a provider of high-end electronics. It’s about more than achieving market share; Lenovo aims to be competitive with top dogs like Samsung and Apple.

Perhaps that explains why Lenovo embarked on a hunt for data and new processes to bring greater accountability to its marketing functions and move it ahead of HP for good. “Marketing is about purchase consideration, sales is about driving the sale. The one wants to send out catalogs, the other wants to turn the website into a daily fire sale,” says Ashish Braganza, senior manager of global business intelligence at Lenovo. “Between those two we put an analytics team that can monitor the entire ecosystem.”


But first, Braganza and his team surveyed all sales and marketing staffers for their definitions of purchase consideration. They got 21 different answers. Upon further analysis, they narrowed the list down to 14 proven purchase indicators, such as website visit frequency, time dimensionality, and visit duration. For instance, visitors who conduct searches on the Lenovo website have a much higher propensity to buy than those who don’t. Thus was born LISA: Lenovo’s Index for Scoring Audiences.

All visitors to Lenovo’s website receive LISA scores from 1 to 100 based on the 14 considerations that indicate likelihood of a purchase. The analytics team uncovered five distinct customer segments that the sales and marketing teams could use to trigger patterned reactions and offers that maximize sales. “Take customers with high LISA scores, meaning a high probability to convert,” Braganza says. “Salespeople shouldn’t give them coupons, because that kills profitability and they receive bonuses based on gross profit. So sales loves it. Marketing people can track how many more [prospects] they’re moving through the top of the funnel, so they love it because they have a measure of how they’re performing against one of their KPIs. This is the true power of analytics. It can build bridges between the silos in any large company.”

Braganza notes that Lenovo’s metrics makeover is in its early stages, admitting that some visitors to its website may have unpleasant experiences as the kinks are worked out. The analytics team is applying Adobe Test&Target to dynamically change what individual visitors see on the Lenovo website, but it takes a few visits to achieve optimal customization. Lenovo is working to speed up the process by introducing third-party data to the equation. It’s begun a test of real-time analytics provider Neustar‘s N172 program, which can inform Lenovo about a first-time visitor’s store preferences, income, age, and favorite TV content, among other information.

“This is the Holy Grail—combining first-, second-, and third-party data,” Braganza says. “We showed the Neustar segments different content based on what we knew about them, and tested them against people who got the business-as-usual content. Without engaging paid search, we saw a huge, huge difference in numbers.”

KPIs based on solid quantitative methodologies are something marketers are going to have to learn to accept and master, Braganza warns. Marketers will still be relied on for creative branding, but they’d better be sure that one thing their branding creates is transactions. “My boss’s boss is all about the big picture. He talks about driving the ‘wow,’ he says. “Today, we can measure the ‘wow.’”

The measure of a lifetime

Measures that marketers can act on immediately are not as accessible to companies whose products are mostly purchased in store. Take IKEA for example. Its encyclopedic catalog, long the backbone of its customer outreach, is designed to reside in a corner of one’s den or workshop, ready to be consulted when purchase intent is roused. People can order online, but sizing up and taking delivery of a sofa does not easily transfer to e-commerce. For IKEA marketers, the top of the funnel is still the parking lot.

“Our objectives haven’t really changed,” says IKEA CMO Leontyne Green Sykes. “Driving traffic to stores is still number one.”

But the tactics the retailer uses in drawing customers to its big blue and yellow home furnishings stadiums have changed. Green Sykes added customer insights specialists to IKEA’s marketing team, as well as a media manager, who was charged with maintaining a strategic balance of paid, owned, and earned assets, with a special focus on social media. The catalogs are expensive, so IKEA is testing sending direct mail order forms for receiving the tomes, which serves the dual purpose of spending postage only on dedicated customers and gathering updated personal information on them in so doing. Additionally, the retailer launched a loyalty program, IKEA Family, and learned that members not only spend more in store, but make at least one more store visit a year than nonmembers.

“Our strategic insights team created a three-year plan to evaluate our performance and we’re beginning to assess that. IKEA Family has had a year and a half, and we’re drawing insights from that experience,” Green Sykes says. “We look long term. For us it’s about the lifetime value of a customer.”

The new mind-set has colored short-term campaign evaluations, as well. On March 9, IKEA ran its second annual BYOF (Bring Your Own Friends) promotion, an in-store event with free food and seminars born of a marketing team insight that women prefer shared shopping experiences. IKEA calculated that it drew an incremental 50,000 store visits on that one day, but the buildup to the event had been live on Facebook for a month. “If we did an ROI calculation on the 50,000 visits, it would not be that high, but if you measure the social media impact, it changes the ROI immeasurably,” says Green Sykes.

For now, however, such measures are difficult to link directly to sales—or to performance-based compensation for marketers. At IKEA, marketers’ bonuses are still tied to driving store visits. “But I give them credit for how they’re doing it,” Green Sykes says. “Are they bringing in innovative methods, are they contributing to overall awareness, driving likes? What are the things they’re doing to contribute to longer-term objectives. It’s a little subjective, but I see it paying off in the kind of work they’re doing.”

The payoff for marketers of the future, it’s clear, will be in the payoff they deliver themselves. And that’s no b.s.

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