Marketing Dashboards Drive Better Decisions

October 1, 2005

BY MICHAEL KRAUSS

This is the month of the World Series. My mind is on baseball. It’s a simple game really. You win or lose by scoring more runs than the other side. It’s not unlike marketing.

Of course baseball is a game of complicated metrics: batting averages, on-base percentages, earned run averages, runs batted in, pitch counts. There are all kinds of metrics that guide the game. They help managers make better decisions. Some managers rely on gut intuition, but the best managers these days base their decision-making on a set of metrics or statistics.

That was the point of Michael Lewis’ book Moneyball, The Art of Winning an Unfair Game. In it, Lewis chronicled how Oakland A’s general manager, Billy Beane, relied on the right metrics to create success with limited resources.

When I broke into the big leagues of marketing, marketers were like old-fashioned baseball managers. They relied on gut intuition. My mentors in packaged goods used to sound like old-time baseball managers. They’d say, “Kid, I feel this TV commercial will be a home run.” “Krauss, I can smell this new product will be a winner. I can taste it.”

Today, the marketers who are the heroes are the ones who deliver the numbers. Increasingly, the tool they rely on to succeed is the marketing scorecard or dashboard. And the person who’s pointing the way to popularizing the marketing dashboard is Michael Gerard, research director at Framingham, Mass.-based International Data Corp.

The days of spending millions on marketing without knowing the value of the investment are drawing to a close. CEOs are no longer satisfied thinking half their marketing investment is wasted. They want all their marketing dollars delivering value. They want proof of performance. The marketing executives who build programs that deliver on the metrics will be tomorrow’s CEOs. Those that don’t will be out looking for a new job.

“It all ties into marketing performance measurement,” says Gerard, who is one of the leading advisers on the application of marketing dashboards. “During the Internet bubble there was significant investment in marketing but not a lot of accountability. Now marketing is being held accountable more than ever.”

To succeed in today’s performance-driven environment, marketing executives need a dashboard--a tool that tracks the key indicators of performance. According to Gerard, the best dashboards work on two levels. They report operations metrics that are internally focused and they reflect execution metrics that mirror marketplace performance.

Operations metrics can include a host of ratios. There’s a marketing budget ratio, which tracks marketing investment as a percent of total revenue. There’s a program-to-people ratio that determines the percent of a marketing dollar spent on programs vs. staff. There’s the awareness-to-demand ratio that evaluates the percent of marketing investment focused on awareness building vs. demand generation. There’s also a centralization ratio that reports the percentage of marketing investment managed centrally vs. regionally in the business.

“The whole idea of these key performance indicators is to help marketing executives manage their resources,” Gerard says.
The other side of the coin is execution metrics. These measures determine how effectively the marketing strategy is being executed. Here the measures include efficiency and effectiveness around implementation. Is awareness building? Are we developing preference? Is the company gaining consideration? Are leads being generated, opportunities identified and qualified? Are deals being closed? Is it being done quickly?

According to Gerard, many organizations, especially tech companies, are looking at marketing dashboards. Gerard and IDC conduct an annual quantitative research study of the 100 top technology companies examining best marketing practices.

“A key part of putting a measurement performance system in place is to have a new role called marketing operations,” Gerard says. “We see about half to three-quarters of the companies have this role.”

If you’re thinking about playing the game better, my advice is to get a marketing dashboard. If you do, Gerard has five recommendations:

  • Focus on business needs first, not the enabling technology. Expensive software isn’t the key. You can do a lot with an Excel spreadsheet.
  • Make sure a CMO or top marketing executive exists who can act on the results of the dashboard.
  • Develop a culture of measurement and accountability. You may need to change the culture of your marketing unit.
  • Install a marketing operations executive who can drive dashboard development.
  • Know what you have to measure; be user-focused. Develop the dashboard with senior management in mind.

Talking with Gerard reminded me that not all my early marketing mentors relied on gut instinct. Scott Wallace, then the young division president at Chicago-based Swift & Co.--where I worked on new products--would demand his product managers have ready access to key metrics. Wallace would see you in the hall and demand numbers. You had to be ready at all times.

My marketing dashboard was a 5-inch x 7-inch cheat sheet. I’d keep it neatly folded in my top shirt pocket. Not knowing when Wallace might question me, I would carefully type out monthly shipment data, results from awareness tracking research and other key statistics using an IBM typewriter. This was long before the PC, and I’d spend hours collecting data and preparing my dashboard.

One day in the men’s room, Wallace saw me and said, “How are shipments, Krauss?”

While the facts were in my top pocket, I decided decorum took precedence. I winged it and said, “Sales are strong, Scott.”
Compared to the old days, Wallace would be impressed with today’s marketing dashboards.

Michael Krauss is a partner with Marion Consulting Partners based in Highland Park, Ill., and can be reached at Michael.Krauss@Marionpartners.com or news@ama.org.

 

 ©2005 Marion Consulting Partners