Attention, all finance executives seeking to understand the ROI on marketing investments...
Over the years I've learned that if I come home to find something in the house broken or
missing, I'm much more likely to get the truth if I ask my kids "does anyone know anything about [fill in the blank]" than if I ask "Who broke this?" or "Who took my
[whatever]?" The latter approach immediately sends everyone into damage control mode, while the former gives them a bit more latitude to respond in a responsible way. They sense
somehow that I am more interested in addressing the problem than finding someone to blame for it. Even the kids who know they never touched the object of my immediate interest learn from my
approach and become more proactive in disclosing their borrowing or breaking events in the future.
There are similarities where finance and marketing interact. Finance is often perceived to
have parental-like authority in its control of the budget and its audit/oversight responsibility. So it is an unfortunate truth that too often the journey toward better insight into marketing payback
gets derailed right at the start, when finance asks what they believe to be a logical and simple question, but which marketing interprets in the form of a challenge - For example,
"Is our marketing generating any value for shareholders?" or
"How do we know that marketing is working?"
These questions have the
immediate and profound effect of putting marketing into "justification" mode and encouraging them to respond defensively. And since marketers are pretty creative and articulate people, they
usually answer with a long stream of ad-hoc evidence, anecdotes, and metaphors that individually may not be so convincing, but in the aggregate create enough uncertainty within the executive committee
to neutralize the question and deflect the discussion. The result is a stalemate, where the inherent subtleties of marketing are explained with superior powers of persuasion to cast doubt on the
wisdom of cutting marketing spend.
Of course this doesn't help the organization get any smarter. In fact, it actually has a significant "insight opportunity cost," since
all the resources that could have been directed towards the pursuit of true insight get diverted to "proving" that marketing works.
Successful marketing measurement, like
many other challenging tasks within the company, is a function of effectively deploying constrained resources on a few key focal points rather than fracturing the effort in a broad search for the
"preponderance of evidence". Imagine the payback insight you seek is trapped inside a large wooden log, and splitting the log open is the only way to extract it. You can split
the log with a sharpened axe striking the right point in a single blow (two at most), or you can endlessly pound it with a sledge hammer until it (or you) slowly turn to dust. Which approach would you
prefer?
The CFO is much more likely to get the answers they're seeking by approaching the dialogue on marketing payback from an angle that generates productive engagement rather than
defensive deflection. Doing so requires three specific attitudinal changes in how most CFOs would normally pursue the answers:
1. Acknowledge that good marketing
always creates shareholder value. If necessary, suspend your disbelief and be willing to concede that if we did things better, we would see a beneficial result. Use questions intended to
discover:
· "What can we achieve with good marketing?"
· "How well is our current marketing
performing?" and
· "How can we improve the payback we're getting?"
2. Embrace uncertainty -- especially in the early
stages of measurement when the unknowns will outnumber the knowns. Be patient with ambiguity and willing to accept "I don't know..." as an answer from marketing in the near term,
provided it is followed in short order by "...but here is what we can do to find out." Premature demands for precision will backfire in the form of higher weighting of the more measurable
marketing elements such as website traffic and direct response programs -- even if those aren't the real drivers of your success in the marketplace.
3. Exercise patience.
The questions you're asking will take some time to fully answer. Expect to see some progress made soon, and then more made in measured increments, but don't assume that applying time pressure
will speed the discovery. More likely, impatience will be met with passive-aggressive resistance, which will surface many more complex obstacles than you or the rest of the finance team have the
time or ability to conquer.
There are other, more targeted questions you can ask of marketing
to put the measurement effort on the right track. But if the spirit of your inquiry is interpreted as a quest for insight rather than an attack on the marketing organization, you'll get
much closer to the answers you're seeking, and get there much faster.