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Marketers Are Unsure of ROI Measurements
An industry study shows marketers also lack confidence in understanding the sales impact of a marketing campaign.
Posted Jul 21, 2005
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Marketers are not confident of their ability to measure ROI, nor of the impact of marketing on sales--and there is a disconnect from what marketers rate as important and what they are actually doing when it comes to measuring success. These insights were gleaned from survey results from a marketing accountability study conducted by Marketing Management Analytics (MMA), the Association of National Advertisers (ANA), and Forrester Research. The results of the study were revealed at the Marketing Accountability Forum in New York on Wednesday. While 79.7 percent of senior-level marketers said measuring and taking action on ROI is important or somewhat important, only 23 percent reported confidence in their ability to do so. The majority (73 percent) reported a lack of confidence in understanding the sales impact of a marketing campaign, and 63 percent said that if marketing spending were cut by 10 percent, they would not be able to forecast the impact on sales. "The survey acknowledges that the industry recognizes it has a problem,'' said John Nardone, executive vice president and chief client officer at MMA. Marketers lack accountability, said Ed See, executive vice president and chief operating officer at MMA "We're not ready to be at the C-level table yet. How do we get there? We need to measure everything. When looking to transform an organization we want to make sure we can measure where we are, what we can learn from other parts of the corporate world, get ourselves in order and move ourselves forward. Focus on delivery." Nardone and See presented a five-step marketing analytics maturity model that they say can lead to increased accountability, effectiveness, and ROI. "The goal is, how do I get from one spot to another and how much do I have to spend to get there," See said. "You have to think about what level you want to be at. Not everyone wants to be--or can afford to be--a level 5."
  • Level 1 is agency hostage, where measurements are confused with analytics and management, and companies rely on agencies to tell them what good measurements are.
  • Level 2 is brand builders. Brand equity is up, which is a good measure, Nardone said, but companies still don't know how it is linked to shareholder values. More than half of marketers are stuck at the first two levels, primarily because they fail at brand building. The average brand manager's term of office is only about 14 to 16 months, Nardone said. "They move on and a lot of what works and what doesn't work is lost and what remains is tribal lore handed down by oral tradition. It's hard to differentiate fact from fiction."
  • Level 3 is efficiency experts, where companies start to drive by the numbers. Organizations must be careful not to lose innovation or creativity at this point. "Never say 'We're doing this because the model said so,'" Nardone said. About 25 percent of companies are at level 3.
  • Level 4 is customer converts. Only about 12 percent of companies have reached this level in which they have in-depth knowledge of their customers.
  • The final level is profitability pros. The marketing process is defined, data decision-making is ongoing, and analytics are current and real time. Only 2 percent are at this level, and those are mostly financial institutions.
    "The study finds across the spectrum companies are collecting lots of data, but as you move up levels, the ability to derive meaningful metrics are the key differentiators," Nardone said. "If you do manage to more up maturity model levels, [it] frees resources for innovation and creativity, [and] gets past a rock star culture that's focused on the individual. A rock star culture breeds one-hit wonders. Become a learning organization with a solid knowledge base where the processes outlast the individual." Related articles: Aligning Marketing and Sales Correcting tactics that don't meet expectations. Marketers Must Temper Their Behavior CRM Initiatives Through Mobile Marketing
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