Measuring Sales and Marketing based on Customer Outcomes

Have you ever used Uber X, the freelance taxi service? Half the cost of a cab and twice the level of service. The cars are immaculate. The drivers are almost overwhelmingly nice. They care deeply about your experience. Not because they want a tip. They want your 5-star feedback. That’s so important to their success that they will do almost anything to make sure you are happy. It is a customer first model that works because customers have the ability to give feedback that has direct business impact. It’s the eBay model applied to real world human interaction.
Think of your salespeople as Uber drivers, they interact with customers every day. Your marketing is like the car – is it in the right place at the right time and taking the customer where they want to go? These things matter tremendously to customers and yet we have no means to empower them to drive the behavior of marketing and sales at the moment of engagement. We have customer satisfaction surveys. They are important but lack immediacy and context for sales and marketing.
I recently came across two articles that may be the proverbial starting gun for measuring customer focus. The first from the HBR blog, “Bonuses Should be Based on Customer Value not Sales Targets,” profiles how GlaxoSmithKline no longer calculates sales bonuses based on prescription drug sales but on a basket of metrics related to patient outcomes. The second on the Forbes blog, “The 5-Star Employee, Why we need a Yelp for Business” presents a provocative picture of why employee ratings should be standard practice.
Clearly there are cultural and generational issues at stake and a lot of education needed to make these transformations acceptable and actionable in a way that improves outcomes for everyone. As customer facing technology coalesces around the CX Cloud model, marketers should think about how to get customer feedback more frequently. It will require innovation born of experimentation. Of course, no one wants to rate every piece of collateral. But maybe every third touch or at specific points in the nurturing process. Companies that figure it out will have the great advantage of being able to monitor customer experience and course correct in flight as opposed to relying on satisfaction surveys that are too little too late. Best of all, customers will feel the power of the relationship, something they won’t get from traditional models. Uber X is not better just because it costs less, it delivers more at the same time.

CMO’s report universal lack of preparedness for key challenges

IBM released the findings of their Global CMO study yesterday and one of the primary conclusions is that CMOs feel unprepared to address key challenges. The most surprising thing is how consistent the feeling is across regions and vertical industries. CMOs generally face the same issues and report very similar levels of “unpreparedness” in the face of them. Top challenges include: data explosion, social media, growth of channel and device choices, and shifting consumer demographics, among others.
The findings are based on 1,734 structured in-person interviews with CMOs in large organizations conducted between February and June of 2011.Regional and vertical representation was reasonably well balanced. The sheer scale of the effort and the willingness of so many CMOs to participate indicate a role under siege.
In our research, IDC has learned that marketing is undergoing fundamental and painful transformations on several levels: new and expanding datasets, new channels and forms of communication, new tools and infrastructure requirements, new dynamic in customer acquisition, new pressure to prove business impact, new skills required for success. It is a multi-dimensional change that has many marketing leaders struggling to keep up.
The IBM study provides a strong basis for CMOs to educate their C-level peers on the challenges they face. However, by design, it does not offer practical models for addressing the issues. IDC has strong evidence that the customer data record is the fundamental design principle around which all customer facing activities and systems should be (re-)built. The customer record is increasingly the source for strategic insight, tactical planning, and performance metrics. Any marketer working in an organization without an enterprise customer creation process (with the requisite standards for customer records, data governance, and the infrastructure to support it) is set up for failure.
Unfortunately hardly any companies today manage customer creation as an enterprise process. We believe that this is the root of the universal “unpreparedness” revealed in the IBM Global CMO study. Having a practical model for implementing an enterprise customer creation process is the first step toward mastering all the key challenges CMOs and their marketing organizations are facing today.
ENTERPRISE customer creation is not something that only happens in marketing and/or sales. It encompasses every customer touch point over the lifetime of the relationship. It goes beyond the jurisdiction of any departmental leader and therefore must have C-level (CEO) endorsement and active support. It is the demand side equivalent of supply chain automation and we all know how WalMart conquered the world by mastering that side of the economic coin. On the demand side, the challenge is finding and forming relationships with prospective customers much earlier using channels and resources not traditionally thought of as marketing (or sales.) In addition the relationship needs to be tracked consistently from marketing to sales to finance, provisioning/fulfillment, support, etc – i.e. the customer data record must be uniformly defined and managed across departments. All the information associated with a customer record must be available to everyone involved in the process. It is a massive undertaking on par with the supply chain automation effort, but the reward is being months ahead of your competitors in terms of customer contact and relationship building – a key competitive advantage that will be very hard to displace.

Channel Marketing Automation – When CRM is not Enough

Whether you pursue a lead through direct sales or a partner it doesn’t really matter how you get the lead. But what happens next? With your direct sales, you track the nurturing process as the lead develops into an opportunity. You measure your sales reps by the number of meetings they get, the deals they close. You may even have a closed loop reporting process that shows the efficiency of your marketing and sales funnel.

With your partners, your lead gets passed off and … then what? Does the partner accept the lead? Do they follow up? Do their marketing outreach programs conform to your policies and expectations? How much time and how many touches does it take them to close? How do you decide which partner is qualified for which leads? How do you efficiently identify the productive partners, those that need encouragement and those that should be dropped?

Multi-Billion Dollar Channel Management Questions
These are critical questions that have a tremendous impact on businesses with significant indirect revenue. A recent IDC study of large IT companies found that on average channel revenue was $2.4B. It was generated by 34 channel marketing staff managing 8,500 active partners. That equates to $45 million of revenue per channel marketing staff member but only $1.2 million per partner. The dirty little secret – there are also on average approximately 19,000 inactive partners!

Source: IDC’s 2010 Best Practices Study in Channel Marketing (n=13)

A Better Way

Your CRM and SFA are not going to answer any of the critical channel management questions – although many companies think their CRM system is where they should be “managing partners”. In fact, a partner management system fulfills a role more like an SFA – it tracks all the activity that occurs after the lead is generated. It should also facilitate the process of lead distribution – managing all the partner credentials and accreditations need to qualify for a particular lead. Then there’s deal registration where the partners accept the lead so that it is not poached by another partner or … ahem … the direct sales force. And when you consider some of the other requirements of partner management, the CRM fallacy becomes clear:

  • Recruitment and on-boarding
  • Training and development
  • Business Planning and Reporting
  • Compensation and Incentive program management
  • Marketing and Sales support

Are these capabilities that your CRM can provide? Your SFA? Would you even want them to? The answers should be no, no, and no. Don’t be thrown off by that last bullet – the marketing and sales outreach your partners require is very different than the corporate outreach that marketing operations is doing. They rebrand, reschedule, embed, and otherwise repurpose marketing content, making a direct translation from corporate marketing to partner marketing wholly inappropriate.

If you have (or want to have) a significant amount of revenue going through the channel, you need a dedicated partner relationship management (PRM) system to automate more than just marketing and sales activities. Don’t look to your CRM, SFA, or even the newer marketing automation vendors to provide you with the full set of capabilities necessary to effectively manage channels. Those solutions are focused on a very different set of requirements. They may have slideware and inch deep functionality, but that’s typically it. Do ask about integrating a PRM with these systems as reporting should roll up easily across direct and indirect sales.

A number of key capabilities to consider when implementing a platform channel marketing automation:

  • Manage partner profiles and contacts
  • Deliver and track training, certifications, etc.
  • Set business rules for lead distribution
  • Handle deal registration
  • Provide a single system of record for partner and channel management
  • Provide detailed performance reporting (12-month rolling review)
  • Track partner outreach campaigns
  • Manage market development funds (MDF) and co-op spend

With these issues on the table, it should be clear that automating channel marketing requires a dedicated, purpose-built solution. It will be costly and painful and meet substantially lower expectations otherwise.

Many Ways to be Agile

We all greatly enjoyed our time together at the CMO Advisory meeting in Santa Clara last month. The level of participation and feedback was all very positive and we would like to thank everyone who attended for bringing their “A” game with them.

One of the topics we talked about was Agile marketing. We keep coming back the Agile project management concept as we triangulate the issues of career path development, sales and marketing integration, and automating sales and marketing processes. Agile has something to offer on all three fronts, and may prove to be an essential catalyst for success.

First, a Word About Agile

Very briefly, Agile is a method for managing projects that is based on small teams delivering discretely defined outputs in very short time frames. It is characterized by frequent fifteen-minute status meetings (called “scrums”) in which 3 to 7 team members answer three questions: What did I do yesterday? What am I doing today? What is in my way? The project manager (called a “scrum master”) is in charge of managing all the obstacles so the rest of the team can proceed on schedule. The schedule is based on 2 to 4 week workloads (called “sprints”). Progress is tracked in a “burn down chart” that shows how many hours the team has put in and how many it has left to do.

Agile is ideal for managing high frequency activities such as digital marketing, as well as portions of larger projects such as a trade show that can be broken into smaller steps. Elements of the Agile method can also be borrowed and combined with more traditional waterfall approaches to manage the fire drills that inevitably happen in just about every other kind of marketing activity.

  • We recommend that managers of organizations new to Agile use careful judgment when introducing it. Activities that are good candidates include: email campaigns, collateral development, building microsites, and creating social media assets. You can then move on to more complex issues like product launch planning, events, field marketing, etc. The extent to which Agile is adopted should be determined by marketing staff themselves, if the culture does not embrace it, don’t force it.

Career Development
Agile can be an effective way to offer new skills and leadership opportunities to marketing staff. With its quick cycle times, small teams, and discrete deliverables, Agile offers marketing staff the ability to play different roles on different teams, including leadership, at almost no incremental cost.

  • We recommend that the career dev aspect of Agile be emphasized only after your organization is successful with Agile, it should not be an explicit objective when getting started.

Sales and Marketing Integration
Agile offers a very interesting way to get marketing and sales personnel together to quickly address issues of common interest such as: defining lead qualification criteria, setting up processes for lead transfers and clawbacks, coordinating last touch in marketing and first touch in sales, facilitating sales enablement, etc.

  • We recommend that marketing and sales managers work together to get their teams to cycle in and out of Agile based projects so that each side can better understand the other – particularly In terms of providing a seamless customer experience at the point of lead transfer.

Process Automation
Automating large scale marketing departments Is going to be an enormous undertaking, and for many companies one of the key issues will be cultural. Marketing is notoriously not process oriented, nor are marketing personnel typically comfortable with the billable resource model. But this is the world they are going to be thrust into post-automation. Processes will be formalized, optimized and measured. Individuals will be expected to track their time against specific activities – and/or it will be automatically tracked within the system.

  • Managers should not underestimate the magnitude of this transition and the fact that it will impact everyone in marketing personally. Some, hopefully most, high potential employees will embrace the change, others will find it threatening and disruptive.
  • Agile marketing is an effective way to get marketing teams comfortable with – and to see the benefit of – working in structured, measured work conditions. Agile requires everyone to not only estimate the time they expect to spend completing specific activities, but to track and measure the actual time in “burn down” charts. This is a safe and democratic way to get your marketing staff prepared for the world of the “marketing ERP” that is just around the corner – and this cultural priming may be the best way to ensure the adoption and sustainable success of future automation efforts.

So we feel that Agile marketing is worthy of careful consideration. We hope you give it a try and let us know what your experience was like.
Gerry Murray

My Next Marketing Career

The future belongs to marketing specialists, not generalists.

If I were starting my B2B marketing career today I would think about becoming a specialist in one of two areas. These are areas of marketing execution and measurement that may seem narrow, but will be deep enough to be the foundation for a specialized career. Narrow and deep is the key to success. Be the one person at your company that really knows how to provide:

1) “Forensics”. Be the specialist in how to data-mine the activity inside a B2B sales force automation system. Become your company’s expert in turning those data into analysis, and then turn the analysis into actions on how to change the marketing activity that impacts all phases of that sales pipleine.

OR (not AND !)

2) “Measurement Agility”. The traditional execution of a marketing program or campaign follows a long arc of time from concept to content to production to media execution to response and to results. Digital and social media are dramatically shortening that arc and this brings a world of opportunity for more agile measurement and response. Become your company’s specialist on rapid-time, real-time measurement and adaptation.

Are you Ready for Marketing’s 2010 Annual Planning Process?

Have you started planning for your 2010 fiscal year yet? Our best practices study in planning – people, process and technology indicates that the average marketing planning cycle begins about 6 months before the fiscal year end. (for CMO Advisory Service clients, refer to “Marketing’s Planning – People, Process and Technology, IDC Doc. #216134) If you’re one of the more mature organizations, planning will be part of the fabric of your weekly, monthly and quarterly team meetings.

Regardless, a significant part of this annual process is assessment of your current “operational” metrics and development of next year’s projected investment strategy. I define “operational” metrics as those metrics that track your marketing investment strategy, including:

1. Key Performance Indicators (KPIs) – such as Marketing Budget Ratio (marketing spend as a % of revenue), Program to People KPI, Revenue per Staff, Staff Throughput (program spend per marketing staff), Centralization KPI (% of marketing investment that is centralized vs. decentralized), Awareness-Demand KPI, etc.
2. Staff Mix (fixed spend) – such as advertising, product marketing, marketing operations, etc.
3. Program Mix (discretionary spend) – such as advertising (print, broadcast, corporate sponsorship), digital marketing, event marketing, etc.

IDC has published a complete taxonomy of these KPIs and staff and program mix areas to help marketing operations and marketing finance executives best manage their investment. (for CMO Advisory Service clients, refer to IDC’s Worldwide Sales and Marketing Taxonomy, 2008: A Blueprint for Cost Control, IDC Doc. #211900)

Tracking and evaluating these KPIs, program and staff mix levels across the organization, over time and versus other companies will best prepare you for your upcoming planning sessions; for management of your resources as well as for increasing marketing’s credibility with other parts of the organization.
IDC’s CMO Advisory Practice is in its 7th year of its Tech Marketing Benchmarks study. If you would like to participate in this research, including receiving a copy of the above Taxonomy, an overview of the results of the study and an invite to our annual marketing benchmarks telebriefing in August, please contact Seth Fishbein at You will be joining the 100+ global companies that work with us year after year as part of this industry study.

The Fruits of our MRM Investment

Five or six years ago I was frequently asked the question “What is the one key metric to track the impact of our marketing investment?” Without even breaching the open-ended topic of what is ROI, I typically responded with my own question of “Do you even know how much you’re spending on marketing, let alone what the return is?” In most cases the response would be a simple “no”. After working with 100s of companies on analyzing their investment as well as seeing the progress that marketing operations and marketing finance people have made, I can comfortably say that as an industry we have matured significantly in our ability to track marketing investment . . . at least at a high level. (e.g., Marketing Budget Ratio (mktg. spend/revenue), Program-to-People KPI, etc.) I consider these to be operational metrics as opposed to execution metrics. (refer to past posts for more details re: execution metrics)

Greater sophistication in investment management, which is enabled by better processes and greater availability of MRM applications, may include tracking marketing investment along one or more of the following criteria: (to name a few)

  • Customer size (e.g., named accounts, enterprise, large, medium, small, consumer);
  • Product and/or solution;
  • Campaign;
  • Existing, more mature business areas or product lines vs. newer, higher growth business areas or product lines; and/or
  • Low growth vs. high growth regions and/or countries.

About 60% to 70% of technology companies manage their marketing investment along one or more of these areas. [IDC CMO Advisory Practice Tech Mktg. Benchmarks Database] For example:

  • tech companies invest on average 60% of their marketing budget on existing, more mature business areas or product lines with the remaining budget allocated to newer, higher growth business areas or product lines; and
  • tech companies invest on average 52% of their marketing budget to low growth regions and/or countries with the remainder to high growth areas.

Yes, we’ve made some progress in tracking our marketing investment. This has certainly put us in a better position to manage our investment and improve our credibility with the CEO, CFO and sales peers. But we still have quite a distance to go; especially in making the connection between this investment and the subsequent return. (e.g., increased awareness, greater engagement, increased number of leads, high velocity through the pipeline)

Is Database Marketing on Your Marketing Operations Radar?

How many times have we heard in the B-to-B marketing press the past several months about the importance of increasing content relevance to our prospects and customers, better engaging them through digital marketing vehicles and improving our ability to generate and qualify marketing leads? Yes, all extremely important priorities for us as marketers, however, if you’re a $100M+ company none of this can be accomplished in an efficient and effective manner without the back-office infrastructure to support it. And we all know how difficult an infrastructure conversation is in this economic downturn. For the purposes of this conversation, let’s focus on the area of database marketing.

Even the best marketing organizations struggle with consistency in database marketing processes; consolidation of prospect and customer data across the multitude of databases in use across the world; cleansing of data to prevent a “bad data in = bad data out” scenario; and overcoming the complexity of data analysis and list pulls, especially with the increased data flow from digital marketing activities. In a recent best practices study, we spoke with (12) multi-billion $, complex organizations representing in total over $250B in revenue. When asked to indicate their marketing organization’s satisfaction with the components of database marketing, some of the most fundamental elements of this area were identified as being the weakest. . . . including data cleansing, digital data integration and contact management.

So enough about the problems out there: that’s the easy part to identify. What are a couple concrete things that you can do to help improve marketing’s “back-office”, especially in these difficult economic times when “throwing money” at the problem is not even a possibility?. . .

  1. Establish a global database marketing council or team to set standards and govern processes and technology. (yes, virtual if need be and it will take more time out of your day . . . but this will pay off in the long-term)
  2. Leverage third party partnerships for external expertise and best practices (e.g., data cleansing). Establish an approved vendor supply list to achieve economies of scale and better govern data standards.
  3. Develop a process to enable the average marketer to obtain a highly targeted list for their activities or campaigns. A 100% self-service model will lead to supplier proliferation, poor leverage of scare marketing resources and an inability to leverage the power of your data. Ideas include: establish a relationship marketing team, deploy a shared services model to get dbse. marketing experts closer to the field (more on shared services to come in future blogs), create an expert analytics team that can do some of the “heavy lifting” for your team’s larger projects (e.g., predictive modeling).
  4. Reduce and consolidate disparate data sources. If you’re lucky enough to have or pursue a universal data mart or EDW then great. For the rest of us, another option may be deploying an application that serves as the front-end for multiple databases. This option is available through several marketing automation vendors.
  5. Ensure your database marketing and lead management teams are working together if not part of the same group. This is particularly important for establishing a closed-loop lead management process.
  6. And last but certainly not least, establish metrics and targets to measure the performance of your database marketing capabilities. (e.g., data quality indicators, lead generation data to track the success of list pull activities, response times and internal customer satisfaction if you’re leveraging a shared services model)

If you’re fortunate enough to have a marketing operations individual or team, then turn to these folks for help in deploying the process rigor needed to initiate these actions.