Marketing Planning Improves Performance

As global business increases competitive pressures, marketing departments face new challenges. They must anticipate and respond to frequently changing customer preferences and produce effective programs and campaigns to attract them. In the online world where customers can jump instantly from one company to another, Marketing must develop new ways to catch and hold their attention. Doing this well requires systematic, flexible planning that begins with the CMO and engages the entire department to utilize the full portfolio of resources and act as one to serve their mission.

In this fast-changing environment, Marketing itself must modernize with the times, adjusting its efforts to shifts in markets and keeping up with the accelerating pace of change. Aligning the department’s activities with strategic corporate goals is more than ever an essential activity for Marketing, and to do that requires planning. And marketing planning is a required part of what every CMO should have established in what is called marketing performance management that I have recently discussed. However, our research finds that many marketers aren’t satisfied with their department’s ability to do effective planning. Fewer than half (48%) of marketing organizations participating in our recently completed benchmark research on next-generation business planning said they are satisfied with their organization’s current process of creating marketing plans. More than 40 percent said the marketing planning process is too slow, has too few skilled resources and lacks readily available data; more than one in three (36%) said their technology is inadequate. In addition the frequency vr_NGBP_12_performing_marketing_planning_updatedin how often organizations create, review and revise their marketing plans is in half of organizations done annually or quarterly. Clearly not as frequently as they should be reviewed and revised to adapt to changing requirements. Overall only 15 percent of research participants said they manage their marketing planning process very well.

Executive management expects Marketing’s allocations of budget and people to align with the organization’s strategic goals and correlate directly to sales and revenue results, but it can be a challenge to connect marketing spend to planning, execution and outcomes. A major reason is that marketing business planning requires data to enable comparisons between actual spending and the budget and results. Many organizations lack complete information about their marketing and sales environments and activities; without it, developing plans and setting objectives is difficult. For example, most marketing plans can’t compare actual spend information to the budget without time-consuming manual effort.

A further complication is what is goes into plans. One-third of our research participants reported that the accuracy of their plans depends on having accurate and timely data from other parts of the organization. Thus effective marketing organizations must integrate data about sales, customers, operations, suppliers and accounting to develop a complete picture of activities. Only with such a picture can the organization improve the accuracy of the marketing plan. In addition, having data on marketing activities is essential to determine how fully goals have been achieved.

To achieve this level of integration, organizations should build a single repository for all marketing-related information. Doing so will enable them to use analytics to measure the results of marketing efforts and track alignment between spending and execution. Such an information repository can help marketers accelerate the review process, which most departments need to do. According to our benchmark research, more than one-third (36%) of marketing organizations currently take 10 days or longer to review marketing spend vs. budgeted amounts, and nearly three-fourths (73%) take at least seven days. To manage strategy in today’s business environment, this is too long.

Furthermore, rather than being done once and remaining untouched thereafter, planning should be a continuous process designed to manage marketing performance to achieve objectives. More than half (53%) of organizations in our research create a marketing plan annually or semiannually. Fewer than that review it quarterly (28%)  or revise it quarterly (34%). In our view, greater frequency improves effectiveness in management. Organizations that perform these activities less often are likely to struggle in aligning marketing spend to the budget.

Marketing should be able to update plans when changes necessitate it, but the research finds that organizations have difficulty in developing such flexibility. When major changes take place from the original plan, the largest percentage (34%) do a shorter revised plan while only one in five (22%) do a complete revision. In large measure that’s because most organizations use inadequate technology tools, primarily spreadsheets, for planning. For example, in linking their plan to the budget, 38 percent consolidate individual spreadsheets manually, and one-fourth (24%) each link them on the server or paste information from systems and spreadsheets into other systems and spreadsheets. Two in five (39%) use a spreadsheet by itself for marketing planning, and one-fourth (25%) use spreadsheets in conjunction with another application. Yet among those that use spreadsheets almost half (42%) admitted that those tools make it difficult to manage the marketing planning process. To determine the impact of the budget on marketing and business, most organizations copy and paste data into spreadsheets and manually update it. Very few (5%) use a dedicated business planning application.

To develop flexible, accurate marketing plans is a complex challenge that requires focusing on all aspects of planning: people, process, information and technology. It is a challenge well worth taking on. Toward that end we offer the following five suggestions for practices that if instituted can provide an advantage over competitors.

First, Marketing should align plans to business objectives – and keep them aligned. Marketing should have the ability to usevr_NGBP_10_trade_off_in_marketing_planning_updated what-if scenarios to determine investment priorities and be able to conduct collaboration to establish and maintain Marketing’s alignment with other functions. To perform what-if requires ability to conduct trade-off analysis and scenario planning are key tools for discovering the best opportunities and deciding where to shift invest­ment priorities if necessary. Yet when trying to assess potential trade-offs, fewer than one-third (30%) of organizations said they have all or most of the numbers needed to measure their impacts on the plan’s alignment to strategy. This will require the adoption of purpose-built technology that supports marketing planning processes and users and can measure how well current marketing investments optimize spending.

Second, in today’s fierce competition for customers and market share, marketing groups must be able to judge immediately the effectiveness of their spending and its impact on sales and business results. In our research just 10 percent of organizations said they can vr_NGBP_11_impact_of_marketing_plan_updatedaccurately measure their marketing plan’s effect on the rest of the company; the largest percentage (45%) have only a general idea of the impact.

Third, Marketing should plan routinely. Groups that do this are more able to track alignment to goals than those plan sporadically. Frequent planning can ensure that necessary changes are made promptly. However, doing this requires appropriate processes and tools that most organizations don’t have. Marketing leaders must take responsibility for the accuracy of their plans, but our research shows that many cannot assure this. Only 37 percent said their marketing plans are accurate or very accurate; most (48%) are only somewhat accurate. In addition only a slight majority (56%) measure the accuracy of their plans. Even fewer (10%) can accurately measure their plan’s impact on the rest of the company.

Fourth, managing marketing planning effectively requires applications that support these efforts. It’s never too soon to modernize marketing practices and improve the department’s contribution to the company’s competitiveness. Implementing a dedicated tool for marketing planning can alleviate a number of issues, such as those mentioned above, that hinder productivity and diminish the department’s importance to the business. An effective tool can enable the organization to move beyond sporadic, partial reviews and manual tasks that waste time, and use that time for core functions that add value to the business.

Finally, we urge marketing leaders to take steps to achieve excellence in their organizations. They should assess current marketing performance and its alignment to corporate objectives; review the portfolio of assets and resources that are managed by the CMO or head of marketing. Identify areas where small improvement can have a large impact, and select systems that can help realize the improvements. Use the new systems to track progress toward objectives. Focus on efforts that can optimize spending to reach revenue goals. Review planning to adjust marketing activities to reach performance goals.

If marketing planning is taken seriously as a process and has a dedicated application to support, the CMO and marketing department can improve outcomes from its budget and resources and add value to the enterprise and do what I have written and master the marketing mayhem in a meaningful manner.

Regards,

Mark Smith

CEO & Chief Research Officer

Follow Me on Twitter and Connect with me on LinkedIn

The Mastery of Marketing Performance Management

Managing marketing performance is anything but simple. It requires establishing a unified approach to assess the outcomes of initiatives and projects and compare results with investments in marketing people and campaigns. In general, while performance management has been conducted effectively at the corporate levels, it has been a challenge for most lines of business, marketing departments included.

Almost 15 years ago, our firm introduced PerformanceCycle, a framework that enables businesses not only to measure performance but to manage it across the organization and within departments. This approach continues to help organizations think through what it means to manage performance and how to do it. PerformanceCycle is a three-step process of understanding, optimizing and aligning performance to specific goals and objectives. We find that many organizations do well at understanding performance, usually through use of analytics represented in dashboards and reports, but struggle with the two steps that follow. It is possible to utilize planning processes to optimize performance to specific goals and objectives, but doing it effectively requires capable software rather than desktop spreadsheets and presentations that are not integrated into the enterprise.

For marketing organizations, the focus has been on managing budgets and people through projects and in many cases campaigns to achieve specific goals that are aligned to basic expectations of particular groups, such as demand generation based on the number of leads or in social media based on the number of impressions. These steps are necessary but not sufficient. Managing marketing resources is only part of what is needed for effective performance management. As well as tracking people and tasks, managers should monitor activities, their results and the progress they represent toward goals, not the least of which is revenue augmentation. Viewed this way, marketing performance management is both a commitment and a process that goes well beyond reaching goals that are not intrinsically linked to the outcomes expected of marketing by management. It also supports an initiative for continuous process improvement by using software that facilitates managing goals, plans and metrics.

In beginning a marketing performance management initiative that should inevitably be a continuous process, we recommend setting goals that clearly identify in functional terms what marketing must achieve, establishing context by comparing the goals to the existing situation. As part of this planning process, take time to understand the roles and activities that will be involved, establish for each of them ways to measure their efforts, and provide flexible software that is accessible to everyone in marketing. Educate yourself about executives’ view of marketing performance, which typically is framed in terms of its cost and thus its cost effectiveness as applied to achieving targeted outcomes.

Be sure to examine whether to include aspects such as the relation of marketing performance to corporate objectives, sales efforts and new product introductions. Also be aware of the impacts of marketing activities and outcomes on other departments. Ensure that the process being developed to manage marketing performance is visible to all stakeholders in marketing and in upper management. With their buy-in, develop a centralized common budget and plan for the entire marketing organization. Before launching the program, develop or acquire a methodology to manage spend vs. results and adjust iteratively.

Also plan to standardize and integrate activities and results data supplied by marketing systems and team members. Identify relevant data from sales systems to integrate with marketing data; for example, use data on closed deals to track results of lead-generation efforts. Understand that you will need to have analytics software to analyze and interpret data for decision-makers. Our benchmark research finds that up to 10 information sources can be important for building marketing analytics. These begin with data from internal marketing operations such as budgets, goals and objectives and external online marketing activities, but they also include enterprise sources such as finance, sales, HR, ERP and billing and perhaps data from partners who might be involved in marketing activities.

The next step is to select software designed to manage marketing performance. It should be able to automate and centralize management of initiatives, goals, projects, budgets, resources, plans and analytics. Be sure that it provides analytics that will yield performance management metrics and enable you to derive key performance indicators. Both historical and current plan metrics are critical for comparing actuals to budget. Key process and people-related indicators are essential to determine if marketing activities are on track to achieve performance goals.

The software also should have a common dashboard for marketing operations and management. Use it to devise a consistent approach for presenting metrics that represent spend used and value generated. Analytics also can generate metrics and indicators to help determine the value of investments and the contribution of marketing to enterprise revenue. Such a data-driven approach can improve decisions by providing facts and removing biases from the process. Note, however, that analytics must be useful to nonspecialists. In our marketing analytics research more than two-thirds (68%) of Untitledorganizations said it is very important to simplify marketing analytics and metrics. But for more advanced marketing departments applying predictive analytics has helped provide insight to potential future outcomes.

As I’ve said, measuring performance alone will not enable you to manage marketing performance. Having defined goals that cascade across marketing and metrics linked to them is critical to determine whether the organization is on path to reach the goals and whether resources and budgets are allocated effectively. Visualization capabilities in the software enable planners to see the allocation over future time periods and to compare actuals vs. budget in the marketing plan. This can’t be done using spreadsheets and presentations, which are not centralized or readily available and are not designed to manage marketing performance.

A managed approach to marketing performance management can save time and resources, both of which may be in short supply, according to our research. Lack of resources is both the most common process barrier (for 44%) and the most common technology barrier (for 55%) to making changes in marketing analytics. This approach also can provide the ongoing visibility into marketing performance that the organization needs. Almost one-fourth (23%) of organizations want to compare actuals vs. budget during meetings, and nearly as many (18%) want to do so within an hour or two after meetings, according to our research on next-generation business planning. However, organizations that rely on spreadsheets often find themselves stuck in a perpetual cycle of chasing data and performing mashups to develop the metrics required to manage marketing performance.

The ability to quantify results using ROI and vr_marketing_analytics_03_assessing_impacts_of_marketing_spendbenefits metrics enables marketing leaders to demonstrate the department’s value to the business. It is very important to more than half (54%) of organizations to assess impacts of marketing spend on their goals and objectives, and important to an additional two in five (39%). Almost two-thirds (64%) of research participants said that marketing’s contribution to the sales pipeline is a very important way to determine that impact.

Our research delineates the challenges for marketing departments in justifying their expenditures and demonstrating the business value of their activities. Adopting software that analyzes and tracks the relations between spending and revenue can help them make processes more transparent and prove their worth to executives. It also can help marketing teams focus on revenue generation as the goal of all their projects. Thus, in assessing applications with which to manage marketing performance, don’t settle for those that only help you execute demand and lead generation or track social media; search for dedicated software that can help you understand, optimize and align expenditures and activities to desired outcomes.

In all, marketing performance management enables organizations to make better-informed decisions on plans for future initiatives and campaigns. It can enable marketing to increase productivity, improve performance and take a more central role in the enterprise. It establishes a foundation to understand and plan for a positive impact from marketing and quantify the value it delivers to an organization. Excellence in marketing requires managing to expected outcomes. Proper use of data and analytics can enable you to reach the goals outlined in plans and provide visibility into the use of budgets and resources. Analytics can provide metrics and key indicators that help you manage performance daily, weekly and monthly. If you take these steps, your marketing department will be more agile and adaptive in achieving the outcomes expected from its efforts.

Regards,

Mark Smith

CEO and Chief Research Officer

Follow Me on Twitter www.twitter.com/marksmithvr and Connect with me on LinkedIn  https://www.linkedin.com/in/markallensmith