Wednesday, October 20, 2010

Metrics for Your "Special Purpose"

Question: What do Steve Martin (actor) and the ANA’s Masters of Marketing have in common? Read on for the answer.

I’m just back from the ANA Masters of Marketing conference this past week in Orlando.

Celebrating their 100th anniversary, the ANA once again did a superb job of bringing together 1600 members of the marketing community to hear 20 or so CMOs share their stories of success. Most were entertaining. Some were very informative – particularly when ANA CEO Bob Liodice would ask them questions about how they were measuring their success. On the whole it was clear that we (the metrics-loving community at large) have made some substantial progress in this regard as most of the CMOs were able to answer intelligently about what they were measuring and how it related back to business decisions.

But not since Steve Martin starred in “The Jerk” have I heard as much talk about “finding a special purpose”. The unofficial theme of the event seems to have been marketers talking about re-discovering their company’s true purpose in serving customers and enhancing their lives. Some have done elaborate research on their brands to find their “special purpose”. Others went back to the founders or the archives to refresh their institutional memories.

While I applaud the drive for more meaningful connections with customers and prospects, I think this trend poses a risk to lead us astray unless we apply a few carefully chosen metrics in pursuit of purpose.

First, we need to ensure that our purpose is RELEVANT. Those we seek to attract must find our purpose to be consistent with their view of how they want to live their lives, and see the link as to how we can help them do so.

Second, it needs to be MATERIAL. Even if relevant, our purpose may fail to inspire any change in behavior unless it eliminates a significant pain or provides a measurable gain. Most people will live with some degree of pain or inconvenience (tangible or otherwise) until the effort involved in resolving it is clearly less than the expected gain.

Third, our purpose needs to be DISTINCTIVE. It must be seen as somehow uniquely ours to fill. If the needs we are targeting at the core of our purpose can be filled interchangeably by any of our competitors (or other companies even in other industries), then we don’t have a true purpose, we have a slogan. An ad campaign. Some t-shirts. Pursuing a shallow-built purpose has historically been a terrific way to spend lots of money (and executive credibility) without actually achieving any value for shareholders. Hard, tangible value in the form of revenue, profitability, share, customer loyalty, referral networks, channel power, etc.

I wonder just how many companies could find a clear “purpose” that meets all those criteria?

More likely, companies have some ingredients of value proposition to offer that would rise to those standards IF they could better execute against them consistently enough to be recognized in the marketplace.

Chances are that you won’t FIND your purpose by looking through reams of research data. However, if you think you have some clues as to what it MIGHT be, you should be thinking about using various modified conjoint/choice-options types of work to validate it on the dimensions above, and in direct comparisons to WHAT ELSE you might do instead. At least then you would have some more specific sense of the value of achieving your purpose.

Once found, there may be a big role for broad-based advertising to help spark recognition of the match between the needs of the market and the abilities of the firm, as well as to inspire thousands of employees around the world towards a common goal. But as we contemplate using paid, owned, and earned media to get the message of our purpose out, let’s first ensure that we have more than a clever advertising idea to base our hopes (and those of our customers) on.

Pat LaPointe is Managing Partner at MarketingNPV – specialty advisors on measuring and improving the payback on marketing investments, and publishers of MarketingNPV Journal available online free at

Tuesday, October 05, 2010

Overcoming the Short-Term Bias in Marketing Measurement

At best, marketing measurement tends to slant towards short-term payback at the expense of longer-term brand and customer development. But when you add heavy doses of highly measurable online tactics to more quantitatively-elusive offline approaches, the slant can become an outright bias. Unchecked, this can seriously impair the marketer’s ability to make smart decisions beyond the next quarter or two. This is particularly acute with respect to fully integrated programs designed not just for lead generation, but for brand and customer development.

This pressure for short-term payback exists in part because finance cannot afford to “trust” the marketer more than one or two periods into the future, and in part because the marketer cannot “prove” that the immediate impact understates the true value derived. Rising above the stalemate requires some new thinking in how marketers plan, execute, and measure their programs, not to mention the way they communicate their expectations and findings to finance.

So how do we stimulate that new thinking? One way is to employ a Brand Value Chain.

The Brand Value Chain (adapted from Kevin Keller of Dartmouth and Don Lehmann of Columbia) helps clarify and document, for all to see, the anticipated relationship between elements of an integrated marketing program and financial value created through stronger brand equity.

In the simplest version of the Value Chain, an integrated campaign leads to some evolution in brand image, which in turn leads to some change in “equity”, which then translates into financial value.

The best way to understand the Brand Value Chain is to begin with the end in mind. Specifically, what sort of financial value is the integrated campaign supposed to lead to? Is it intended to increase the incidence of purchase? To decrease price sensitivity? To open new distribution channels through superior category leverage? To project more powerful negotiating position to vendors and suppliers? Or some combination of the above?

The Brand Value Chain tests your ability to clarify your expectations logically and to define the specific dimensions upon which brand “equity” must evolve to achieve them. How are you expecting the thoughts, beliefs, attitudes, associations, and permissions people ascribe to the brand to change or grow? What do you believe precedes seeing the desired economic behavior?

Finally, the “image” results are the early indicators (e.g. salient awareness, attribute- or characteristic-specific awareness, or more accurate awareness of the brand’s points-of-parity and/or points-of-difference) of progress. While important, they are a necessary but insufficient condition for a profitable outcome. Acknowledging this works to establish the necessity of time to translate imagery into equity into financial gain.

Once you have the Brand Value Chain constructed in a way that reflects your hypotheses about the way things work, you can identify which links in the chain you are able to test/read/validate and which you cannot. This brings focus to the information gaps and raises the question of tradeoffs between the cost and value of further insight for all to assess. If finance is so keen to have precise insight into the financial outcomes of brand advertising, they should be willing to invest in the research, testing, and experiments that would have to go into properly tracking the flow of results through the value chain. Otherwise, they will have to accept informed assumptions and estimating processes which find the balance between cost and benefit.

The Brand Value Chain has one significant flaw as it appears here. It follows the now widely discredited “hierarchy of effects” theory, which prescribed that awareness leads to conscious consideration which in turn precedes behavior. This linear model has been found to have only limited validity in the real world. However, the Value Chain does provide a great starting point for you to map out how you
think your category dynamics operate so you can construct one in a format that is most relevant to your business.

Measuring the impact of integrated marketing over the long run is possible with the application of the right tools and processes. Research, experimental design, factor analysis, and continuous feedback mechanisms all play a role in reducing the unknowns down to comfortable risk levels. It just takes some clarity and precision in defining expectations for marketing’s payback by building financial bridges from short- to long-term value creation.

Pat LaPointe is Managing Partner at MarketingNPV – specialty advisors on measuring and improving the payback on marketing investments, and publishers of
MarketingNPV Journal available online free at