Taking Measure: Ask the Right Questions

by John Nardone, Apr 17, 2006, 3:24 PM

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Choosing the right marketing effectiveness partner can be a challenge for many organizations. While the use of econometric modeling to evaluate return on marketing investment (ROMI) is becoming more common, few companies have defined or codified a comprehensive approach using models to plan and manage their marketing to continually improve performance. As a result, even in packaged goods, where modeling has been in use for years, companies are challenged to choose a partner who can lead them beyond backward-looking evaluation to proactive management of marketing performance.

Most companies begin their process by developing a request for proposal (RFP) that questions prospective partners on modeling approach, tools, service model, and pricing. While the answers to these questions are undoubtedly important, the questions providers ask of the client are often more telling of true experience and capabilities. Clients should be wary of providers who simply respond to their RFP questions. A broadly capable and experienced marketing effectiveness expert will insist on a dialogue, and will challenge the client by asking some version of the following six questions:

>>What is the scope of the decisions you intend to impact as part of this effort? What questions are most critical to address immediately? With these questions, the provider is trying to determine the most appropriate analytic framework to guide modeling decisions and trade-offs. Remember, not all models are the same: They are tools designed with specific purposes in mind. Beyond their statistical methodology, models have different calibrations that make them more or less appropriate for different uses.

>>What is your planning calendar? Business decisions have a timetable, and their clock does not stop to wait for information to arrive. As a result, analytics are often left to justify decisions after they've been made. To move beyond backward-looking evaluation, marketers and their partners must identify the critical decisions in the planning process, and plan to deliver the required information to stakeholders in time to drive the decisions.

>>How will the analyses be shared with the organization? Different stakeholders come to the table with different experience, perspective, and expectations. So the quality provider will evaluate and recommend the type of education, interpretation, and support that will be needed to enable the stakeholders to collaborate effectively.

>>Does the organization have a balanced scorecard? Marketers overly focused on ROMI as a single measure of marketing effectiveness risk unintended consequences, since there are many ways to boost ROMI in the short term that are counterproductive longer-term. Used correctly, ROMI should be one among several metrics that account for a long-term view of return on investment (ROI), brand health, competitive inoculation, and brand innovation.

>>What research and data is already in-house? Providers whose core competency is modeling will focus on collecting the data required to build models. Providers who focus on marketing effectiveness management will want all the data available about the client's business, including brand health trackers, customer panels, segmentation studies, copy test scores, CRM databases, and custom surveys. These data sources may or may not be included in modeling, but they can certainly be used to provide context and explanation for model results, and support for recommendations.

>>How flexible or "change ready" is the organization? To ensure that recommendations are actionable, marketing effectiveness providers must account for organizational and cultural barriers to adoption. If barriers are substantial, they should be able to provide phased approaches that enable short-term wins while working toward longer-term opportunities.

It's easy for clients to underestimate the opportunity and challenge of implementing a successful marketing effectiveness program. They can mitigate this risk by carefully defining their goals, and then encouraging a dialogue with prospective providers. When they do, they should listen carefully for the right questions, not just for the right answers.

John Nardone is chief client officer for Marketing Management Analysis. (john.nardone@mma.com)

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