Do we still need books?

Jun 22, 2016 | Marketing, Personal Rant, Strategy

In a world of abundance, we are desperately in need of depth.

Skating across the surface of the ice is fine for a while, but at some point you need to be able to recognise the weak spots, and figure out how to avoid them before you drop through and drown, just after you freeze.

A book does that for me in a way that an e-book does not, neither does a blog post, or a tweet, they are not physical, they have no intellectual or physical weight somehow. A ‘real’ book still does it.

The other thing is that when you find a book that ‘speaks’ to you, it is easy to walk into someone’s home or office, and plonk it on the desk, and say, ‘read this, it will change your life’ or even be just interesting.

A mate of mine who makes his living researching and writing complicated tenders for large projects, also writes a blog on words, their use and misuse, origins, and various meanings. One day he will assemble it all into a book, as he has done with an collection of illustrated verse he wrote for his kids, personal stuff that he has shared with them, now in a tattered book they have all loved.

It is hard to love an e-book in the same way.

I love books, perhaps scarcity is just making me realise how much.

 

How to calculate a Return on Marketing Investment

How to calculate a Return on Marketing Investment

Jun 20, 2016 | Governance, Management, Marketing, Strategy

 

Marketers being belted around the ears to produce a marketing budget before  June 30 is disturbingly common.

It is a clear sign that the marketing group is acting as a co-ordinator of ad hoc activities, rather than being a disciplined, repeatable, and continuously improving process of revenue generation over the longer term.

Nevertheless, it is happening everywhere as you read this, as June 30, and a new financial year is looming.

A common approach to alleviate the belting is last year + 1.5%.

Not much use if last year was a bummer, especially if you are not sure why.

The other way is  that the ‘boss’ starts at the bottom right hand corner of the P&L and works backwards

Revenue  = X, Market share = Y, Therefore marketing budget = z.

Alternatively, some arbitrary percentage can be applied to projected sales as a marketing budget.

What a load of crap!!

The reality for a marketing budget is that to be productive, marketing needs to be way ahead of the tactical implementation that generates immediate revenue.

Marketing needs to be considering and implementing the strategies to generate revenue tomorrow and the next day, determining where that revenue is going to come from, which products, customers, geographies, and channels, and giving customers reasons to be committing their scarce dollars to whatever it is  that  you are selling.

Constructing a budget without all that strategic information clear and agreed is like taking off on a journey without deciding the destination: any road will get you there, and most of the time and money spent will be wasted.

As an alternative, start to see marketing as an investment.

That discipline of seeing marketing expenditure as an investment requires a longer term view. It also requires an acknowledgement that not everything works as expected, a capacity to learn from experience, and driving the processes is a cultural recognition that the organisation requires a return in its investments in marketing activity.

Calculating a return on marketing investment is not easy, and has rarely been attempted until recently, as the numbers were simply so rubbery (a technical accounting term for crappy and just plain unreliable). However, that is changing rapidly, so the best time to start developing a regime and capability of measuring and optimising the return on marketing investment is now, the beginning of the year, while in ‘budget mode’

It is a six step process driven by the four stages of strategy development:

  1. Have in place a ‘planning rhythm’ strategic cascadethat starts with the long term strategic and cultural challenges and progressively becomes more detailed and tactical.
  2. Recognise the connection between marketing and the long term financial returns from the enterprise.
  3. Collect data on a routine basis that delivers the insights necessary to measure both efficiency and productivity of the investments, and the cause and effect chains that link an activity to an outcome.
  4. Develop the analytical means to generate the insights.
  5. Make the enterprise sufficiently agile to adjust in the light of the insights generated.
  6. Report marketing ROI as the operational people report the ROI on the investments made in equipment, so that the activities have the credibility and weight in the boardroom that the expenditure deserves.

 

Calculating the return on investment is essentially a simple equation.

Cost divided by value derived.

The challenge has always been to attach a value to the various outcomes of marketing expenditure, including the organisational costs and overheads. That task is becoming progressively easier with the digital and data analysis tools now available, and there is no longer any excuse not to at least start the process, and with time and effort improve it so that it is a reliable indicator and tool to determine the value of future investments.

As with any calculation, the result is determined by the input assumptions, parameters and values, so there is considerable opportunity for judgement and change.

Following are a few of the obvious ones;

  • Time frame over which the return will be measured. Budgets are annual, while marketing investments tend to be cumulative over a long period, sometimes decades.
  • The means by which you judge the revenue to be a result of marketing activity. The demarcation between marketing and sales is often an entertaining debate, which I tend to finish by removing all direct sales costs, particularly price discounting activity which is generally brand destructive, and counting everything else,  but allocating a weighting.
  • The components of the cost equation, such as product development costs, customer service, and logistics that are included, and their weighting, which is also a challenging debate. Standard accounting packages are poor at collecting and consolidating this information, it usually takes a tailored process to gather and record the data in an easily reportable format.

Reporting requires metrics that build a picture of the processes to which the activities all contribute.  Every business will be different, but a few of the metrics that have served well for my clients are:

  • Sales of new products across timeframes, 1,2 & 3 years, with some calculation of the losses from cannibalisation, although it is absolutely wrong to use this as an argument to not take an action. Better you cannibalise your sales than a competitor eat them for you.
  • Value and number of prospects at each stage of the sales pipeline
  • Velocity through the sales pipeline
  • Conversion measures at each point in the sales pipeline
  • Share of wallet, for individual customers, and various groups of customers
  • Customer longevity and churn
  • Market share
  • Geographic measures
  • Gross margin and GM ratios
  • Sensitivity to competitive price promotion
  • Customer satisfaction scores
  • Net promoter scores
  • Various social media measures (not likes)

It is also a mistake to measure everything, you will just drown in reports and minutiae. Report on the items that can be demonstrated to move the performance needle, where there is a demonstrable cause and effect chain in place that is connected to strategy as well as revenue.

Finally, make ROMI a core performance measure of the enterprise, everyone in an organisation has some influence on the outcomes that can be connected to marketing success. Expose those connections at every level and make people responsible and accountable.

Need some help with all this, find someone with the experience and wisdom to deliver.

 

 

 

 

The 2 faces of a brand

The 2 faces of a brand

Jun 15, 2016 | Branding, Marketing, Strategy

Marketing and management generally, regularly find themselves actively promoting their branding credentials.

Often they would appear to have no idea beyond the mouthing of clichés why they are bothering.

The costs of building, maintaining and updating a brand is often a major item on the  P&L, and there is much written about the techniques and strategies that deliver a return. However, the core question of ‘Why bother” rarely gets a mention.

Until now.

A brand has two faces:

  1. For the brand owner, a successful brand delivers to its owner a stream of revenue and margin. There is no other reason for the investment necessary for building and maintaining a brand to be made.
  2.  To the customer, a brand offers some level of assurance about the performance, integrity, longevity,  and many other characteristics which to them are important. In other words, the value delivered by the brand, weather that be one defined by the physical performance and characteristics, or the emotional  dimensions of the brand.

“Branding” seems pretty simple, and in principal it is, but the optimisation of the investments made over the long term is the tricky part. This requires expertise and experence pretty hard to find in these days of instant digital gratification.

 

How to make a workshop work for you.

How to make a workshop work for you.

Jun 13, 2016 | Collaboration, Leadership, Marketing, Strategy

Last week I ran a workshop that was designed to wrinkle out the options facing a community organisation. It has been successful for many years, but now faces the challenge of significantly changed competitive and social environments since its formation,  and the loss of a key person whose mission in life had become intimately tied up with the organisations success.

How was that volunteer passion to be replaced?

What did the future hold for this organisation?

How are they going to continue to win?

There was limited time available, certainly no time for chasing rabbits,  so the structure had to be pretty simple and lead to useful outcomes.  In reality is was bog standard ‘workshopping’

  • What is the current situation?
  • Assuming success for the next five years, what would the organisation look like? (I call this hindsight planning)
  • What had been the strategies, both  successful and unsuccessful that had been tried over the 5 years, leading to the success?
  • What resources and capabilities were now evidently required for the ‘success’ to be replicated in real time?

In starting to write up the workshop over the weekend, and necessarily reviewing my own performance as the exercise leader, I thought about the factors that in the past have made for a successful  workshop beyond the necessary structural elements.

Domain knowledge.

Workshops and so called ‘brainstorm’ efforts commonly fail because there is insufficient  domain knowledge and  expertise available that addresses the key questions central to the purpose of the workshop. Success in any activity requires the presence of some sort of plan, with objectives and metrics, combined with a factual assessment of the circumstances that led to the discussion. Without this level of immersion, the workshop will just be a conversation. ‘Think outside the box’ is often the instruction, but if that leads to random thoughts outside the relevant postcode, it will not add any value, and will be enormously distracting. Domain knowledge, and knowledge related to the domain in some relevant manner is essential.

Roadmap.

As the Mad hatter said to Alice ‘If you don’t know where you are going, any road will get you there’  you need a map of some sort that includes your starting point and an end point. Without these, you  will go around in aimless, unconnected circles. No workshop of any kind ever works without some sort of map or guidelines understood by everybody involved.

Inspiration.

Inspiration and ideas come from the friction created by differing and often opposing views presented by intelligent and informed people. Rarely is an idea complete at first blush, rarely can an idea not be improved by some level of refinement, and rarely does informed and creative debate not lead to creative solutions and ideas. It takes people prepared to accept that their idea is merely a contributor to a more complete picture, that it is a point in the road that contributes to a better outcome that leads to true inspiration.

Action plan

As with a workshop roadmap, any plan that evolves out of the workshop needs to have a plan, no different to the one that drove the workshop in its structure. As George Patton said on his drive towards berlin in 1945, ‘without a plan you are just a tourist‘.

Implementation.

An imperfect plan today, well implemented is better than a perfect plan tomorrow. Anther of the wise sayings of my old dad, ‘you get 1/10 for a plan, the other 9/10 are kept for the implementation’.

I have seen many workshops that come up with very useful stuff that is just lost or put aside once the participants get back to what they see as their ‘real jobs’ facing the urgency if the daily grind. It takes a good dose of leadership, and often outside  coaching to make the implementation part of a workshop actually part of the daily business of the enterprise.

Another run for a hobby horse

Another run for a hobby horse

Jun 3, 2016 | Change, Marketing, Sales

‘Account Based Marketing’ or ABM is rapidly becoming the latest three letter acronym to which all and sundry seem to be hooking their horses.

All sorts of learned crap is being published,  assuring me that ABM is the way forward, so I just googled it, 39.5 million responses.

I always thought that serving key and strategically important customers, the core of ABM, was what successful marketing and sales had always been about.

Must be deluded?

20 years ago as a newly minted consultant hanging out my shingle after a successful corporate career, one of my first products was what I called ‘SKAM’.

While it always got a laugh when I put it up, the acronym stood for “Strategic Key Account Management”.

Having now had a look at some of the ABM stuff coming out, they have done little beyond update the technology and call something that is core to sales and marketing success by another name. Then because they are calling it something new, try and flog it to unsuspecting and perhaps intellectually compromised people with too much money and perhaps not enough experience to understand what marketing really is all about.

Too snarky?

Perhaps, but it is this sort of nonsense that gives those of us who are thinking about this stuff, and have been for a long time, a bad name.

Those who read my musings regularly will know I have a corral full of hobby horses which I let out for a run occasionally. This is one of those occasions, so forgive my rant, but it is fun, and it is my blog!

The greatest failure of marketing management.

The greatest failure of marketing management.

Jun 2, 2016 | Change, Leadership, Lean, Marketing

 

The headline is a big call, competing as it does with some real doozies.

Remember “New Coke” or the Ford ‘Edsel‘ or perhaps Thomas Watsons declaration that there was a world market of no more than 5 for computers?

This one is a general observation on the nature of marketing people generally and their project management skills, at least in my experience.

They tend to spend too little time really defining a problem, but then jump effortlessly to a conclusion, leaving a pile of crap in their wake for others to clean up, and sub optimal outcomes from projects.

The explosion of marketing technology is not just making the shortcomings more obvious, it is delivering the means to measure it.

Holy cow Batman: Accountability!

The smoke and mirrors are being removed, leaving many self declared marketing gurus naked.

Leaving aside the question of individual capability, the root cause of this can usually be pinned down to a failure of project planning.

Specifically the failure to recognise the nature of critical activities that are sequential, building on the one before. For example, only a fool would lock into a creative approach and copy before the persona of the target market was absolutely crystal clear.

This notion is entirely different to the usual ‘critical path’ which can be a moveable feast as timetables move around.

Critical activities are just that, and they do not move around, at all. Project planning should always acknowledge the time necessary to complete each critical activity, and the specific sequence that is necessary.

Marketing project planning is no different to planning any other context, although the questions to be answered are usually less black and white, which simply means that the planning process needs to be rigorous and scientific if it is to be any good.

Marketers have a lot to learn from the manufacturing end of the lean movement.