This Blog Has Been Discontinued
Thanks for finding this site... but it's no longer being maintained. Please check out Marketing ROI: Whims From Ron Shevlin.
Ideas to help marketers improve the return on marketing's investments.
Thanks for finding this site... but it's no longer being maintained. Please check out Marketing ROI: Whims From Ron Shevlin.
The marketing department at a large firm (with a strong sales-driven culture) was trying to get sales' support to launch a customer segmentation effort. In one meeting, the consultant hired to do market research presented her psychographic analysis of consumers, outlining seven segments -- and recommended, based on the company's "brand positioning", that the firm disregard three of the segments and focus their advertising efforts on the other four.
In the October 2004 issue of the Journal of Marketing, Roland Rust and colleagues wrote that:
"Marketers are under pressure to show how marketing investments add to shareholder value...[and] must identify the assets in which they invest and how those assets contribute to profits."Marketing executives know this all too well. But, in practice, few marketing departments actually define, track, and measure the assets they produce. Often, marketers simply take business value measures like sales and divide it by the sum of all marketing expenditures.
In an article on MarketingProfs.com, Jeff Mucci writes:
"More and more companies are attempting to become "marketing focused/led" rather than sales or financially driven....A bona fide, world-class marketing-led organization has a clear long-term focus on core items such as retention, customer satisfaction, customer experience management, and lifetime value of a customer. Conversely, a sales- or financially driven organization is primarily focused on acquisition, revenue, market share, and price/costs."I beg to differ. CMOs that think that they can change the prevailing culture of their organization may be suffering from delusions of marketing grandeur. World-class marketing organizations: 1) maximize their contribution within their firms' culture, and 2) focus on retention, satisfaction, etc. and acquisition, revenue, share, and price/costs.
Many CMOs are in search of best practices for measuring the ROI of their marketing investments. They're not easy to find -- in a 2006 survey of nearly 800 firms conducted by the Lenskold Group and MarketingProfs, just 4% of respondents said that their firm's ability to measure marketing ROI was a "source of real leadership." More than 40% said that their firm was a "long way from where it should be." Over the next few days, I'll post some ideas for how CMOs can improve how they measure -- and importantly, communicate -- marketing ROI. Part 1 is about categorizing investments by the type of return they're supposed to generate.