Winning The Game: How To Become A Moneyball Marketer
In his book, "Moneyball: The Art of Winning an Unfair Game," Michael Lewis describes how a handful of Major League Baseball general managers have succeeded in creating championship-caliber franchises despite substantially smaller budgets and supposedly inferior players. My view is that the approach these managers are taking is directly relevant to what marketing managers need to do. In my assessment, there are three skills that companies need to develop in order to win consistently: 1) Start with quantifiable outcomes; 2) use new metrics based on new data; and 3) execute agile game plans. Companies that combine these three skills -- ING Direct and Hyundai come to mind -- can outpace rivals continually, despite relatively smaller budgets and a punishing marketing environment.
Start with quantifiable outcomes. I continue to be amazed by how many agency personnel think that achieving a large number of impressions is the primary measure of a campaign's success (a fact I have been exposed to when judging industry awards). In my view impressions, as well as reach and frequency, are a simple input into the marketing equation. Outcomes matter more, and if you can't quantify them, then they don't count. What are some good examples of outcomes? How about "grow 10% each quarter" or "increase customer retention five percentage points by the end of the year?" Defining great outcome statements upfront is the critical first step in marketing planning -- and when they are quantifiable, they establish clear success criteria for your agency and media partners. Point: Don't invest resources in a marketing program until the desired outcome is identified and you can connect the dots from program execution through to success.
Use new metrics based on new data. Data can be a blessing and a curse; in the end, the determining factor is knowing what to measure. In baseball, sabermetrics has emerged as the new math, complete with new data and metrics. "Run production" is the number one performance measure, and old school metrics like batting average don't predict run production as well as innovative new metrics like on-base percentage and range factor. Similarly, conventional marketing metrics like purchase intent (collected via surveys) are no longer adequate when we can use consumers' actual online shopping behavior to better calculate the brand and sales impact of a particular campaign.
Like sabermetrics, clickstream-based marketing measurement has proven to be a better measure of consumer purchase behavior than the conventional techniques it is now replacing. The best example of this may be in the auto industry, where consumers' online shopping activities have been translated into a whole new class of demand, conversion and shopper quality metrics like cost per shopper, shopper conversion rate, and reverse cross shop. As a result of these new metrics, auto makers now have a better understanding of how their marketing is performing, and precisely what they need to adjust in order to hit their monthly and annual sales goals. Point: Discard old-school data and metrics in favor of rich, new clickstream-based analytics.
Execute an agile game plan. Even with quantifiable outcomes and statistics-driven measurement in place, consistently winning the game depends on deft marketing execution. Optimizing marketing programs is certainly a scientific process, but it also involves a major dose of human interpretation. And the key to agile marketing is scenario planning, where managers have pre-defined what marketing levers they will pull, based on what their marketing dashboards tell them. In the automotive example, overcoming a shortfall in sales before the end of the month could mean one of two things: increasing advertising to create more shoppers, or increasing incentives to convert existing shoppers. Being able to pull the right lever with enough time to achieve the desired sales outcome is the difference between a smart investment (and millions of dollars) and lost sales. Point: Maintain agility in your marketing plans so that you can take the right action on the steady stream of data that comes in.
It's spring training for baseball and team managers are busy deconstructing their schedules, running numbers and selecting player rosters. As marketers, we have a similar opportunity to move beyond conventional thinking, developing our own Moneyball strategies to win more games. So what, then, do we make of the new Arby's campaign to give away a free Roastburger as part of March Madness? Is it a terrifically innovative campaign, supported by clear outcomes, new metrics and agility? Or, like Denny's, is it taking a page from the old Powerball playbook? (Hint: Clickstream-based metrics have already answered the question.)