Frost & Sullivan Keynote II: Martyn Etherington, Tektronix

Martyn presented on “Maximizing & Measuring Your Return on Consumer and Marketing Investment: How to avoid Marketing’s Growing Relevancy Crisis.”

A recent Journal of Marketing study of 167 companies found that “CMOs don’t have any measurable effect on a company’s financial performance.”

Why do marketers spend such a large percentage of their time justifying their position and their budgets? They lack relevancy in three constituencies: The customer, the channel, the business.

Martyn told his personal story with Tektronix, a 60-year old company from Portland, Ore. and how he’s been transforming the marketing function.

What problems were they trying to solve? When he came in, Marketing was spread across the organization, with over 100 “strategic objectives” and 4,000 activities that weren’t well linked. Couldn’t measure anything except dollars spent. No success criteria and no accountability. Marketers had no idea of the business situation, order targets. Little or no discussion about the customer, and a wall between Sales & Marketing.

Martyn’s Get Well Plan

  • Strategy Alignment – distilling 100+ objectives to 20, and defined success criteria
  • Organization Alignment – Centralized organization and responsibility – “One throat to choke”
  • Operational Alignment – Measurement & accountability became a mantra

Changing Philosophy to think like a customer. Begin with an understanding of how people buy, and their decision stages. When does it switch from a Marketing conversation to a Sales conversation?

Changed from Activity Based to Outcome Based marketing, based on four questions:

  1. What outcome are you trying to achieve?
  2. What strategic objective does it support?
  3. How will you know when you’ve achieved it?
  4. How can you make it better?

Sales Alignment Challenge: “What will it take for us to get an A on our year-end report card?”

How many leads should marketing provide? Assumed business source ration of sales:marketing is 80:20, which implies about 5 leads per account manager per month

How much should a marketing lead cost? Set a target of $400 cost per lead. Changed marketing mix to reach that target.

Results:

  • Marketing costs have declined both in absolute and relative terms
  • Productivity has increased
    • 50 percent more efficient and effective
    • Now responsible for repositioning/segmentation
    • Now started to track customer SOW (share of wallet) and NPS (net promoter score) – growth metrics
  • Measure their business contribution

Lessons learned:

  • Building an accountable marketing function frequires a philosphical change, not jsut a tool set
  • Change is hard and will take time. Two-thirds of the employees who were there at the outset have been replaced.
  • What you measure gets better; don’t measure it if it isn’t actionable
  • Fact-based decision makeing empowers people
  • Always focus on wher eyou are going, you can never go back
  • Review and adjust

Audience Q&A

Q: Did they measure lead quality as well as lead volume?

A: 80 percent of all leads go untouched by sales. That’s a national figure, and it was roughly the same for Tektronix. He had to work with sales leadership to get sales follow-up.

Q: Why did you have to replace 85 percent of team? Skill set mismatch or attitudes?

A: Both. Some “cancers” needed to be removed, and Marketing had been a “dumping ground” for people who didn’t measure up in other parts of the business. Others voluntarily left because they didn’t like the new accountability culture.

Observation: Not having worked in the for-profit sector, it’s interesting that there seems to be a hierarchy in many companies:

  • Operations
  • Sales
  • Marketing
  • PR

I’m sure that’s not a revelation to many, but it just struck me anew listening to Martyn. PR typically doesn’t get respect from Marketing, Sales blames Marketing for poor-quality leads, Operations blames Sales for not making targets. It’s much healthier if the groups are working together as a team to meet organizational goals. It seems it really does come down to numbers, and if you can prove contribution you get more respect. Thus, Katie Paine’s work on measurement for social media as well as PR is important.

I still think the social media ROI won’t be hard to show, particularly because the “I” is so ridiculously low. It also will provide valuable customer insights, hearing exactly what they are thinking about your company. This whole presentation and discussion does emphasize for me, though, that we need to look at ways to track social media benefits. If you can document that the benefit is at least x, and that x is significantly greater than the investment, then you can make a good argument that the real value is much higher.

For example, one idea I got from a fellow attendee yesterday was on how to measure podcast listenership. When you subscribe to a podcast, those episodes are automatically pushed out to the subscribers. But you don’t know whether the segments actually got played on the iPods or computers. Did the subscribers really listen?

The suggestion from Douglas White of MindComet is to have a “highlights” list as a PDF that accompanies each segment. When people go to the sited to download that take-away, that tells you a rock-bottom minimum number of people who actually listened, because they took that next step. And if you have links within that PDF to the ordering function on your site, you can prove contribution to sales or lead generation.

Doug asked me last night to serve on his panel on user-generated content, which will be later this morning. I’m also on a panel about blogging this afternoon. Should be a busy and fun day. I’ll be blogging about both sessions.

Update: Kevin’s notes on Martyn’s keynote are here.

Author: Lee Aase

Husband of one, father of six, grandfather of 12. Chancellor Emeritus, SMUG. By day I'm the Director of the Mayo Clinic Social Media Network. Whatever I say here is my personal opinion, and doesn't reflect the positions of my employer.

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