Saturday, July 23, 2005

Measuring the Right Things and
Doing the Right Things with the Metrics

First a short story: Forty-five years ago, an elderly couple was flying together on a jet from Cincinnati to LA. As they walked to board the plane, the husband noticed his wife was getting nervous. “What’s the problem,” he inquired. Very simply, she responded, “No propellers.” She did not want to get on a plane that had no propellers. Letting go of the past is like that, and it makes us fearful.

But imagine today trying to fly with propeller-driven planes. With the passenger loads needed to get everyone where they need to be, a propeller-driven plane would have to be so huge it couldn’t get off the ground.

As marketers, we must always be going forward, even when the new technology makes us fearful.

We need to help our CEOs see that we are ahead of the field, that we are visionaries that see what others don’t see and that we have a strategy to help our companies change from propellers to jets to space shuttles, and beyond. Measuring marketing performance is one thing, sort of old hat like the Boeing 707 is now ... but using metrics to understand the customer -- now that's the space shuttle we all need to be on.

As marketing shifts to a data-driven world, we need to get smart about what we measure and what we do with the metrics. MarketingNPV interviewed eight Chief Marketing Officers and their insights should help us all to do a better job of contextual marketing:

Scott Deaver, EVP/Marketing for Avis Car Rental, has it right when it comes to marketing metrics. Yes, we need to provide our CEOs and CFOs with credible evidence that what we are doing is returning on the investment. But Scott's interview should caution us that we will always be flying in propeller planes if we become slaves to ROI. He focuses his measurement efforts on creating advanced methodologies for serving customers.

1. What is the character of the marketplace?
2. How do customers transact?
3. How do they think about their transactions?
4. What value do we bring to market?
5. How do we make money?
6. How can we make more money than any of our competitors?

Scott says:

What we really do in marketing is write a narrative around these questions, a story about customers in a marketplace and goods to be sold and how they're going to be purchased. Before measurements become important, plausibility of the story and of the proposed marketing approach are critical. In the Avis world, measurement is about customer loyalty and frequency of rentals. Loyalty is what matters to marketing. Frequency brings in the money. It's what matters to finance.”

“Once we know what's going to be measured and have the buy-in of finance, we decide on the marketing tactics. They should come last. It's much easier to build tactics out of metrics than vice versa. Loyalty, for instance, is built entirely out of branded experience. Brand advertising doesn't attach a price point, but it drives rental frequency. There are very few promotions with Avis, and the few are never price-based.

Scott Fuson, CMO at Dow Corning, was another of the CMOs interviewed by MarketingNPV:

“In Six Sigma, we found a more structured way to let the voice of the customer drive the marketing, as well as other internal processes like supply chain. We translated those VOC needs into critical customer requirements. These become the measures, the tangible things that we have to deliver on. We continuously take those CCRs back out to the marketplace and validate them, then we rigorously measure our performance against those.”

“Culturally, we are a company mostly of engineers who love data. The secret to measuring marketing success for us was in learning to structure and communicate all the great customer feedback we were getting into a language that made sense to everyone, not just the best sales professionals.”

For the rest of MarketingNPV's interviews, see their story.


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