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Marketing being caught in the “lack-of-evidence trap”

Marketing between high expectations and severe pressure

Marketing is being confronted with various challenges today. On one side, the demand for a professional marketing is steadily increasing – recent studies from the CMO Council in Palo Alto clearly indicate that the CMO more and more has to serve as the “voice-of-the customer” internally as well as some sort of a sparring-partner for the CEO for establishing a real customer and market-focused organization. Saying this, these studies also clearly indicate that increasingly higher demands are being placed on the CMO’s professionalism, versatility, and personality.

On the other side the pressure on marketing is increasing in a similar way: required to submit reports to management about the budget spendings, judged by the sales department based on whether it helps sales, scrutinized by financial controlling regarding how efficiently it uses budgets, and last but not least, under constant review by customers, markets and the public. Increasing individualization in the delivery and communication of services, as well as new Internet-based applications (such as consumer-generated content within Web 2.0), mean that uncertainty around these issues is increasing rather than decreasing. If I look as well at my own experiences as CMO for SAP in Central Europe for 5 years, as well as the feedback I gathered from various colleagues, the stretch between the different expectations could not be much higher. Is this new …? Not really .. the critique of the functionality of marketing and the arguments mentioned here are not new at all. Such criticism was made as early as 1980 – but a sustainable solution has not been found until now. And as early as 2000, some studies similarly referred already to the “marginalization of marketing professionals”.


The root-cause: an insufficient marketing planning

If you ask heads of marketing -known as Chief Marketing Officers (CMOs) – about deficits in marketing today, the conclusion drawn is usually this one: the main reason for the prevailing uncertainty about the effectiveness and efficiency of marketing strategies and tactics is inadequate marketing planning or a lack of marketing planning altogether. This means that marketing planning is pretty often:

  • Inadequately synchronized with business planning as a whole;
  • Too limited to the planning of strategies and measures, while neglecting content-based planning at a topic level and program level;
  • Nothing more than an adaptation of planning from the previous year, with minor modifications in terms of content and scheduling (known as the “binder-off-the-shelf syndrome”);
  • Lacking in accurate KPIs agreed between marketing and other affected company areas (such as sales and distribution, international branches, etc.).

Insufficient and non-systematic planning lands marketing in the “lack-of-evidence trap”. One consequence is that it is nearly impossible to calculate the return on marketing investment (ROMI) and quantify the value added by marketing expenditures and efforts. Qualitative and quantitative studies show that around 75% of all marketing activities barely meet the expectations set for them. The reasons for this are numerous and complex, but again can be ultimately attributed to insufficient marketing planning. The 10 problem areas of marketing planning comprise the following:

  • Content: An inadequate grounding in terms of the content of the advertising messages and activities to be communicated – having more focus on tactics and assets;
  • Relevance: Marketing planning that is not sufficiently up-to-date or detailed. As a result, marketing planning is strictly aligned with the annual planning cycles, while tactical measures – with no significant basis in the marketing strategy – are constantly adapted to meet business needs;
  • Alignment: Inadequate alignment with other functional areas such as sales and distribution or partner management, which inevitably leads to the duplication of planning and activities – often coupled with highly centralized coordination (approval) for all measures, which leads to bottlenecks in internal processes;
  • Customer perspective: Too little integration of the customer perspective. Planning and the marketing activities derived from it are motivated by a definite inside-out approach;
  • KPIs: Inadequate operationalisation of marketing planning and subsequent activities in the form of key performance indicators (KPIs);
  • Planning transparency: Little transparency in terms of the status and progression of marketing planning;
  • Project management: Either too few planning activities (with a tendency to be carried out incidentally) or uncontained planning activities without milestones or precise start/end dates;
  • Acceptance: Minimal acceptance from the employees affected, because revision of existing plans by top management tends to be seen as arbitrary and barely serious;
  • Use: Insufficient use of planning as the specification for subsequently drawing up programs and campaigns, as well as updating and adapting existing plans during the year;
  • Tools: Different bases for planning, templates, and tools used (for example, CRM system, Microsoft Excel, PowerPoint, or similar).

As a result, inadequately aligned (systematic and strategic) marketing planning causes a poor understanding within the company of marketing’s value contribution to corporate goals, and can result in a negative internal image with direct consequence of positioning marketing well below the top management level. With high-quality marketing planning as a starting point, many operational processes and functional areas will need realignment. From my perspective the answer to these challenges is quite obvious: a systematic project management, using a stepwise procedure for marketing planning as well as an alignment on tools and templates being used during the planning exercise – directly linked to the operational CRM systems.


MRM – making marketing planning visible and trackable across all areas

A new generation of software applications (MRM, marketing resource management or in Consumer Product industries the notion is “Brand Management”) attempts to address the weakness on supporting marketing planning with adequate tools. MRM stands for an integrated approach in marketing for using marketing resources as effectively and efficiently as possible (this includes people, IT applications, multimedia assets, budgets and data, plus vendors as well as agencies). Planning, budgeting and controlling, for instance, use MRM applications during quantitative and qualitative planning and budgeting for marketing tasks.

Multimedia asset management functions and digital asset management (DAM) functions support the central, media-neutral storage, management and output of multimedia components (words, images, charts, audio and video components, as well as finished means of communication like ads, brochures, mailings, etc.). Employees can use the Internet to access those functions, change content (like changing the text of a mailing themselves without having to go back to an agency copywriter again and again), and convert formats in real time. They can also exchange ideas and concrete drafts with internal and external partners. Cooperating with external agencies normally involves a great deal of coordination, numerous manual interfaces, and integration gaps, but this can speed that up considerably. Marketing portals for individual companies support the cooperative effort and provide a place to perform all marketing tasks in an integrated manner. Integrated process support automatically informs all employees involved when, for example, a project charter is changed or adjusted, when the project status changes, or when a creative draft arrives from an agency. This has a positive effect when used in combination with predefined sequences of subtasks, clearly assigned responsibilities, and templates that can be accessed during various marketing processes (briefing templates, guidelines, etc.). In fact, using standardized templates is usually enough to ensure that knowledge can be saved and copied.

Project examples show that using these types of MRM applications can reduce:

  • Campaign creation efforts by more than 70%;
  • the time needed to create means of communication by more than 60%;
  • agency costs by more than 25%; costs through the reuse of existing templates by more than 50%;
  • Total advertising costs by 5 to 10% thanks to consolidation;
  • costs for guideline creation and distribution by more than 50% per brand.

Therefore, the effort of implementing a content-driven, elaborated marketing planning process as well as the effort for accompanying this process with IT applications provides a significant pay-back.

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  • Thanks for bringing up this topic. It is often underestimated what it takes to do effective marketing apart from “creativity”. Nowadays, systems are a major part of the success.
    • Thanks! After the focus over the last years in CRM has been pretty much on Sales and Service (e.g. Sales Force Automation), it might be expected that (with declining marketing budgets) the focus will shift stepwise onto marketing. Here comes the question even more into play e.g. if target groups are addressed properly, if all processes are aligned and integrated/supported by modern IT applications.
      • I am very interested in understanding SAP’s positioning on MRM.

        In CRM marketing, for example – budgeting is done via BPS, where BPS itself is on  death path. When the netweaver guys went for IP and then outlooksoft etc – why is it that CRM continues to embrace BPS?

        also, since true integration needs budgets to tie across an enterprise – is SAP planning to provide a service(eSOA) based approach to MRM?

        • The value proposition of MRM remains in integration between marketing and other business applications. Due to increasing accountability questions about the usage of marketing budgets and resources, the combination in MRM of strategic marketing planning, budgeting, predictive analytics and key figure planning becomes more and more important. Beyond planning, the seamless handshake towards campaign execution and marketing performance in an end-to-end process comes into focus. The reasons behind: only within an integrated process from planning, execution to analytics all programs, campaigns and tactics can be planned, executed and measured accordingly. Here, SAP offers a broad set of MRM capabilities as part of its Integrated Enterprise Marketing Platform. New capabilities include the streamlining of processes between Marketing with Purchasing to track the cost of purchased goods and services with assignment to specific campaign or promotion, provide an overview of the cost of purchased goods by campaign or promotion, and to reduce double keying and entry of data. In the SAP CRM 2007 release, available to customers since December 2007, SAP has significantly improved the UI, making it more flexible, configurable and intuitive – which is particularly important to marketing departments in terms of the ease of use. These general MRM capabilities are expanded with industry-specific capabilities e.g. for consumer goods (trade promotion management) and high tech (market development funds, co-marketing with channel partners).
          Currently we offer various planning tools, stemming from the wish of customers for differentiated, specific planning instruments. BPS in this vein has proven to be a very flexible and powerful planning engine, is in maintenance (but still supported by IMS) as part of NW2004s and will be supported at least until 2013. Within CRM we are currently evaluating new SAP planning technologies to align with SAP future planning roadmap. In marketing we currently offer top-down budget planning leveraging BPS based applications.
  • Congratulatios, for the blog. Tthis kind of business approach it´s important to us, consultants.
    I had oppportunity, to work as being a technical seller (using a selling methodology), for a while, and made some contact with the marketing people. At that time, can tell you, many roadshows, and events from the marketing people to leverage the sellings. Helped sometimes.

    Now, I´m very interested about the part of KPI´s, from marketing. Can you give some example about some KPI, useful for marketing?

    Luiz David Szilagyi

    • You can group marketing goals (and their respective KPIs) according to each of their purposes and effects as to whether they are e.g.:
      a) Informative: For example, in the introduction phase of a new product, the goal would be to increase the awareness of the specific characteristics of the new product.
      b) Perception change/attitude altering: Fosters demand for a certain product. This may involve reducing preconceptions regarding a product or provider (lowering evaluation barriers) or directly generating qualified leads (engagement or conversion stage) along the brand funnel.
      c) Retention: Keeping a product and brand in the mind of the customer in the maturity phase of a product or customer relationship.
      For this, it is decisive to formulate KPIs from the multitude of possible KPIs that not only conform to the overall company strategy, but also support as best as possible a differentiated market address in compliance with the prioritization matrix as part of the marketing strategy. Therefore: all KPIs have to be extremely company focused, taking into consideration the specific situation of the company, market, target group segments, marketing objectives etc. In practice, a lean balanced scorecard methodology has proven to be a profound methodology for setting up the right KPIs for each company.
      • Ok, based in the last sentende you said, I guess, it´s necessary to have a SAP BW, on the back end to support the analytical view. I´m not a BW specialist, but I guess there´s a some kind of module in BW, making BSC, in a way, it can help. Could you please advise me about some book, to dive in these concepts (as you said above, itens A, B and C)?

        thanks in advance,
        Luiz David

        • 2 books which I found pretty helpful and inspirational are:
          1. The Balanced Scorecard: Translating Strategy Into Action von Robert S. Kaplan und David P. Norton, Mcgraw-Hill Professional
          2. Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results by Paul R. Niven.
          I will also publish my German book “Marketing Planning with a Plan” in English with Wiley publishers until the end of the year. There I will also provide some thought on a comprehensive KPI planning.