To Correlate

cor·re·late:  (verb) to have a mutual relationship or connection, in which one thing affects or depends on another.

We live in a time when the relationship between cause and effect in sales and marketing is known more than ever.  We measure the actions, we count the reactions, and we try to do more of the things that get us the biggest reaction.  In sales and marketing, the reaction we want is revenue.  It sounds easy, but the fact is, even with all of this progress, we still waste half of all spending on sales and marketing and we still do not know which half is wasted.

This is the kind of thing I write about from time to time, and in looking back I found this piece about measuring that shares some ideas about targeting, landing, and measuring effectiveness in marketing campaigns.  Many other people write about measuring the effectiveness of sales and marketing so if you are intrigued by this kind of thing, you will have no shortage of material to read.  The balanced scorecard has been around since the 90s and is likely one of the best methodologies for making measurements central to performance management.  With all of these measures, why has the relationship between sales and marketing spending and revenue growth not changed?  

Some would say that the recession has reduced revenues.  I think it is that our capacity to measure has for some time exceeded our interest in measuring.  Finding the truth is hard when one is not looking for it. 

Here are some reasons this may be happening:

• The Rise of Integrated Marketing: There are many ways to reach customers and marketers are employing them in overlapping ways.  The overlap fogs the cause and effect.
• Carrot and the Stick:  An increased emphasis on pay for performance compensation structures, and an increased focus on cutting headcount has made the very people measuring effectiveness unwilling participants.  Everyone wants to be part of the good story, and everyone runs from the bad story.
• Grab and Go Mentality:  Large company marketing departments move people around often, so people grab onto the best metrics, claim responsibility, get promoted and repeatability is never tracked.

Small companies that don’t know how to sell die – so evolution is alive and well in small companies. In large enterprises however, these behaviors are deeply ingrained and not likely to change.  

Arrange Your Performance Measures in a Stack

Just as all sales teams have top performers, all channel partner programs have top performing partners.  Every sales manager and channel chief strives to figure out what the top performers are doing and how those practices can be shared with others.  The top 20 are already producing 80 percent of the results – so helping the next 10 perform like the top 20 will move the revenue needle – and helping the bottom 10?  Wow!  Transferring best practices is tricky business however, so I propose that first the marketing performance measures should be arranged in a three layer stack.  This methodology borrows some terminology from the OSI Model in computer science and delivers many of the benefits of the divide and conquer mindset of engineers. By breaking down the most effective marketing initiatives into these three layers, the learning can be more easily packaged and transferred.  With a little effort we could probably expand this to seven layers, but we would not want to threaten the CS types!

In addition, this methodology can also be applied to figure out underperforming campaigns.  All three of the layers must function properly in order for the campaign to work.  It is important to remember that a failing campaign can have properly functioning lower levels, and may not need to be discarded entirely.  This approach can also be used to refine cost optimizations.  Changes to reduce budget can sometimes dramatically impact performance and cause an entire marketing effort’s value to be challenged.  By evaluating the performance on each layer of the stack the impact of such adjustments can be truly understood. 

Like the OSI Model, our stack is oriented hierarchically with the most fundamental layer at the bottom. 

Application Layer: Message Effectiveness

Understanding the impact of the message or the campaign can only be accomplished after knowing that the first two layers have been satisfied.  The effectiveness should be measured against landed messages, not the overall population or even the targeted and prioritized population.  Once we are confident that the first two layers are functioning properly, we can swap out messages to test for better performance.

Transport Layer: Landing the Message

Delivering the message is difficult and time consuming.  Sometimes good targeting can raise the level of difficulty.  Being able to measure how many times the message landed is essential and must be separated from measuring the impact of the message.  This can be meetings, conversations, or even click throughs.  The investment in each message is critical and by properly targeting, the investment – which should also mean quality -- can be increased.  Higher quality delivery should increase performance.

Physical Layer: Picking the Targets

Since we spend our time managing channel partner relationships for our clients, we see the value of heavy investment in proper targeting first hand every day.  Time spent managing the wrong relationships is time (and money) not spent on the right ones, so we advocate for taking the time to target properly before launching a partner marketing effort.  Even after rigorous work narrowing the target population, prioritization should be applied so the highest value targets are pursued first.

Some would argue that proven marketing programs do not require this layered approach to measurement and they do have a point.  There are many demands on a channel partner marketing team and spending time fixing things that are not broken may not be the best investment of resources.  However, a great deal can be learned when dissecting effective campaigns and that learning can be applied to fix other campaigns, or to make it easier to bring new campaigns to life.  And having a clearer understanding the underperforming campaigns has obvious benefits.  We all spend a good deal of energy thinking about how well our partner marketing efforts are performing.  By deploying a layered measurement strategy we can capture best practices in a repeatable context and dig into the root causes for underperforming campaigns.

Follow the Money (budget) to the Money (revenue)

An interesting pattern is emerging in Tech Marketing.  The gap between the haves and the have nots is growing.  I don't mean the rich and poor citizens of our country, even though that gap is growing too, but the gap between the marketing ideas that get budget and the marketing ideas that do not.

The industry has been quantifying results for long enough now that senior decision makers are gaining confidence and cutting the budgets of marketing activities that cannot prove their value.  At the same time, new revenue is scarce and getting more valuable by the day, so those same budget cutters are increasing their spending on activities that work.

The days of doing the same thing as last year -- just because it was done last year (and the year before) -- are coming to a close.  The rotation is happening inside many large companies where one area is being starved of budget while another area is getting expanded resources.  I am sure there are examples of companies that are starving their entire marketing budget -- clearly not a strategy for survival.

All of this is about marketing ROI.  I don't mind bragging that my getting to the fourth paragraph of this post without actually invoking ROI, the most overused business term in the universe, is quite an achievement.  Want an eye roll in your meeting today -- start in about marketing ROI!  Anyone interested in restoring ROI to a position of usefulness in business dialog needs to campaign to tie ROI to the desired end result.  Discussion of ROI to intermediate results is a waste.  The desired result in marketing should be revenue, not impressions, page views, inquiries, leads, downloads or anything else that currently gets measured (because it is easier to measure).

If your idea can prove ROI to Revenue -- you will be in the big budget bucket.  ROI to intermediate metrics or no ROI at all -- the shrinking bucket. 

Making Marketing More Measureable: Three Dos and Three Don’ts

Every year CMOs are surveyed and every year one of the top goals is to Make Marketing More Measureable.  You can read all of the surveys by searching for “making marketing more measureable” and see for yourself how the studies all say this very thing.  Sales and Marketing are like brothers that are too close together in age and skill – always competing and not really wishing for the other to succeed.  Sales has a built in advantage because of its very concrete measurements.  When revenues are up, the sales department gets all the glory (and that inflames the relationship with marketing), and when revenues are down the sales department blames marketing – and that sure does not mend fences!

We have been both participants in and observers of this conflict because the services we deliver at CSG place us right at the intersection of sales and marketing.  In some of the most interesting cases, our services are used by sales and paid for by marketing!  You can only imagine those meetings.  Along the way we have learned a great deal and have done our best to boil it down to some easy to remember dos and don’ts.  If you run a marketing department please understand that we believe you are in control of your own destiny and we don’t buy into the belief that these are intractable problems.  In fact, we believe that a great deal of the pain endured by marketing departments is self inflicted.  If you run a sales department please understand that this list is not intended as a weapon to use against your marketing department.  We believe that sales cannot be successful without marketing and the sooner everyone recognizes it the better.

Three Things to Do to Make Marketing More Measureable

Do: Measure Opportunities Delivered

The job of the marketing department is to deliver opportunities to sales.  All activities in a marketing department serve this job.  Everyone can think of exceptions to this but I would argue that the exceptions only get marketing people into trouble.  Sure there are a bunch of things to think about but the sales department only gets measured on one thing – sales.  The sooner the marketing department faces the fact that it exists to deliver opportunities to the sales department – the better.  Yes but…..and we have heard them all…measuring opportunities is a much less exact science than measuring sales.  Sales are measured according to GAAP accounting standards and there is no accounting standard for measuring opportunities.

Do: Deliver Great Tools

Indeed it is true that measuring opportunities is quite subjective and the chance that sales is going to value the contribution of the opportunities delivered the same way that marketing does is practically zero.  Sales is the customer of marketing and the only way to measure customer satisfaction is through the eyes of the customer.  Therefore, hurling the opportunities over the wall is just not going to work.  The opportunities must be delivered through a mechanism that collects granular feedback at the time of delivery.  This must be a great tool that members of the sales department actually use.  The tools must be so good that the people using them actually like to use them!  The only meaningful measure of the value of the opportunities delivered is the value the customer (sales) assigns to them.

Do: Collaborate on Process

The process of delivering opportunities and collecting feedback cannot be developed by marketing alone.  Sure the marketing department can get the thing started, but on the second day sales must be brought into the project and engaged to work towards a delivery and feedback system that works for everyone.  There is an easy way and a hard way to do this.  The easy way is to show the sales department that the marketing department understands it exists to deliver opportunities to sales and that the only accurate way to value the opportunities delivered is to accept the value assigned to them by sales. 

Three Things that Don't help Make Marketing More Measureable

The inherent complexity of measuring the value of opportunities delivered is enough to send anyone looking for other things to measure.  The marketing industry is awash with new measurements from web traffic to white paper downloads to booth badge swipes to partner referrals to Twitter followers social network mentions to event attendance and on and on.  All of these are important and require significant attention by competent people in the marketing department.  Don’t expect that anyone other than the marketing department cares about any of this.  Remember that every time you celebrate an increase in web traffic the sales department thinks you are doing so to avoid talking about the value of the opportunities delivered. 

Don’t: Mix Up Your Goals

When building a marketing budget anyone can fall into the trap of confusing things that contribute to the opportunities delivered with the actual opportunities delivered.  Great brand building is necessary, important, and does contribute to opportunities delivered.  Great brand building is not an end in itself and should not be measured as such.  If you sponsored the Indianapolis 500 last year and are going to do it again this year – don’t justify the sponsorship deal this year by declaring that it is cheaper than last year or the reach is greater this year.  Brands are built to contribute to opportunities delivered to sales. 

Don’t: Lose Your Resolve

If sales agrees to give you feedback on each opportunity delivered so you can clearly understand how and when you are delivering the most value to them  (your customer) – don’t back down until you get it.  Clearly you have to win the agreement first and get the feedback second, and clearly it is not going to happen overnight, but unless you maintain your resolve in the pursuit of the feedback, you will never get it.  So stick to your end of the deal and expect your customers in the sales department to stick to theirs. 

Despite the inherent conflict between the squabbling brothers of Sales and Marketing, we have also been fortunate to witness companies where these departments have balanced and symbiotic relationships.  In these companies the clear customer orientation and the simplicity of the measurements between departments is evident.  When done right it is an absolute pleasure to watch and the value to the organization increases by orders of magnitude.