Walking Naked Through Times Square

I was sitting in a 2010 planning meeting recently listening to the marketing team describe their objectives, strategies, and thoughts on tactics they were planning to deploy. Their question to me was “how should we measure the payback on this strategy”?

My response was: “compared to what? Walking naked through Times Square?” I was being asked to evaluate a proposed strategy without any sense of what the alternatives were.

Sure, I can come up with a means of estimating and tracking the ROI on almost anything. But if that ROI comes to 142%, so what? Is there a plan that might get us to 1000% (without just cutting cost and manipulating the formula)?

As I thought back on the hundreds of planning meetings I’ve been in over the last 10 years, it occurred to me that we marketers are not so good at identifying alternative ways of achieving objectives and systematically weighing the options to ensure we’re selecting the paths that best meet the organization’s needs strategically, financially, and otherwise.

On a relative basis, we spend far too much of our time measuring the tactical/executional performance of the things we have decided to do, and far too little measuring the comparative value of things we might decide to do. Scenario planning; options analysis; decision frameworks. You get the idea.

The importance of this up-front effort isn’t just in getting to better strategies, but in building further credibility throughout the organization. Finance, sales, and operations all see marketing investments as inherently risky due to A) the size of the expenditures; and B) the uncertain nature of the returns as compared to many of the things those other functions tend to spend money on. Impressing them with our thorough exploration of the landscape of options goes a long way to demonstrating that we’re considered risk (albeit implicitly) in our recommendations, and have done all the necessary homework to arrive at a reasonable conclusion. NOT necessarily producing a 50 page deck, but rather simply stating which alternatives were considered, what the decision framework was, and how the ultimate selection was made. (This also builds trust through transparency).

From a measurement perspective, we can then consider the relative potential value of doing A versus B versus C, and in the process raise the level of confidence that we are spending the company’s money wisely. We can then turn our attention to measuring the quality of the execution of the chosen path with confidence that we’re not just randomly measuring the trees while wandering in the forest.

I’m not sure how many businesses might get a high ROI on walking naked through Times Square, but imagining that option certainly helps fuel creativity and underscores the importance of measuring strategic relevance, not just tactical performance.
Got any good stories about wandering naked?

10 New Resolutions for the 2010 Planning Process

As we approach the 2010 planning season, I always like to take a few moments and reflect on the horrors of last year's planning cycle, making some commitments on how I can do it better this year:

1. I will lead this process and not get dragged behind it.

2. I recognize that many of our business fundamentals may have recently changed, so I commit to anticipating the key questions likely to define our strategy and, using research, analytics, and experiments, gather as much insight into them as I can in advance of making recommendations.

3. I will approach my budget proposal from the ground up, with every element having a business case that estimates the payback and makes my assumptions clear for all to see.

4. I will not be goaded into squabbling over petty issues by pin-headed, myopic, fraidy-pants types in other departments, regardless of how ignorant or personally offensive I find them to be.

5. The person who wrote number 4 above has just been sacked.

6. I will proactively seek input from others in finance, sales, and business units as I assemble my plan, to ensure I understand their questions and concerns and incorporate the appropriate adjustments.

7. I will clearly and specifically define what "success" looks like before I propose spending money, and plan to implement the necessary measurement process with all attendant pre/post, test/control, and with/without analytics required to isolate (within reason) the expected relative contribution of each element of my plan.

8. I will analyze the alternatives to my recommendations, so I am prepared to answer the inevitable CEO question: "Compared to what?"

9. I will be more conscious of my inherent biases relative to the power of marketing, and try not to let my passion get in the way of my judgment when constructing my plan.

10. If all else above fails, I promise to be at least 10% more foresighted and open-minded than I was last year, as measured by my boss, my peers in finance, and my administrative assistant. My spouse, however, will not be asked for an opinion.

How are you preparing for planning season? I'd like to hear what your resolutions are.

The Elasticity of Sales Enablement

Trendy consulting advice suggests that, since marketing ROI improvement is ultimately limited by the effectiveness of the marketing/sales handoff, “sales enablement” is crucial to success. Consequently, in the present results-NOW environment, marketers (particularly B2B and high-tech) are re-examining their processes and dedication to provide sales with the right materials, tools, and training to unleash the power of the imbedded marketing ideas.

I think I agree with this. If there’s any hesitation to offer full-throated support it’s just that it seems to me to be a bit of a penetrating glance into the obvious. OF COURSE marketing programs cannot succeed without reliably strong sales execution. But let’s not put too many eggs in that basket just yet.

The hard reality is that, in the short term, there is only so much sales enablement one can achieve. Magic sell sheets do not turn mediocre sales reps into revenue superheroes. Online demo tools don’t revolutionize categories or spark unprecedented demand. Those sorts of changes come about through:

1. Sound sales management process.
2. Comp structures aligned to incent the “right” behaviors.
3. Methodical, continuous training based on observed effective practices.
4. Regular “pruning” of the bottom 25% of performers (and a few nearer the top who neglect the means for the end).

Those in marketing measurement who are familiar with the concept of “elasticity” understand that there are limits to just how much improvement we can achieve with sales enablement in any 3, 6, or even possibly 12 month horizon. So pressed for better results NOW, sales enablement may be more of a feel-good response than an effective one.

Don’t mistake the message here. Sales enablement is always important. But unless the foundational elements above are being properly managed, marketers efforts to “enable” sales may result in some great meetings and a few positive anecdotes, but may fail to achieve improvement on any scale or sustainable basis. So allocating more resources to “sales enablement” may not provide the expected returns.

If you want to get a better handle on the “elasticity” of your sales force, try performing a deeper analysis of recent buyers versus non-buyers, being sure to sample prospect leads from both high-performing and average-performing sales reps. Get a clearer understanding of why rejecters are not buying (or stalling longer) and analyze the data until you can clearly determine the factors which make the higher-performers more effective. If you conclude that those factors are mostly innate skill, personality or motivation characteristics, then the elasticity of your sales force is likely very low. This suggests that sales management has work to do in the fundamentals arena before marketing can help much.

If however you observe that better needs discovery, stronger communications capabilities, or enhanced preparation explain most of the difference, then your sales elasticity is likely higher and you should focus more on sales enablement in the near term.

When times are tough and horizons are shorter, we all want to help as much as we can. But let’s not mistake hope for judgment when reallocating resources from marketing programs to sales enablement.

It's All Relative

Brilliant strategy? Check.

Sophisticated analytics? Check.

Compelling business case? Check.

Closing that one big hole that could torpedo your career? Uhhhhhhh....... Most new marketing initiatives fail to achieve anything close to their business-case potential. Why? Unilateral analysis, or looking at the world only through your own company's eyes, as if there was no competition.

It sounds stupid, I know, yet most of us perform our analysis of the expected payback on marketing investments without even imagining how competitors might respond and what that response would likely do to our forecast results. Obviously, if we do something that gets traction in the market, they will respond to prevent a loss of share in volume or margin. But how do you factor that into a business case?

Scenario planning helps. Always "flex" your business case under at least three possible scenarios: A) competitors don't react; B) competitors react, but not immediately; C) competitors react immediately. Then work with a group of informed people from your sales, marketing, and finance groups to assess the probability of each of the three possibilities, and weight your business case outcomes accordingly.

If you want to be even more thorough, try adding other dimensions of "magnitude" of competitive response (low/proportionate/high) and "effectiveness" of the response (low/parity/high) relative to your own efforts. You then evaluate eight to 12 possible scenarios and see more clearly the exact circumstances under which your proposed program or initiative has the best and worst probable paybacks. Then if you decide to proceed, you can set in place listening posts to get early warnings of your competitor's reactions and hopefully stay one step ahead.

In the meantime, your CFO will be highly impressed with your comprehensive business case acumen. Check

How do You Know if it's Time to Spend MORE?

In times like these, budgeting and resource allocation decisions tend to get made fast and furious, with little time for clear thinking. Unfortunately, it’s exactly these times when some real discipline is required to both make smart decisions and build credibility with the rest of the senior management team. So if you’re thinking about recommending that your firm should be spending MORE on marketing right now, STOP.

If you’re thinking “let’s spend more now to gain share”…

Good luck. Headline-grabbing stories of marketing heroes who have taken this approach tend to emphasize the few who have succeeded and gloss over the vast majority who have simply squandered more by throwing money into an economic hurricane. The fact is that there’s not much empirical data to prove the merits of this strategy beyond a reasonable doubt. Many “studies” have been done, but none have derived their conclusions from projectable samples which account for the primary risk factors, nor have any led to any high-probability “formula” for succeeding with this strategy. The margin of error between success and failure tends to be very narrow. It’s a roll of the dice against pretty long odds.

If you’re thinking “we’ve got to keep up our spend to maintain our share of voice”…

Be careful. Matching competitive levels of spend (or making decisions on the basis of “share of voice”) is most often seen by CEOs and CFOs as foolish logic. How do you know the competitor isn’t making an irrational decision? What do you know about the effectiveness of your spending versus theirs? How much ground would you lose if they outspent you by a substantial amount? If you don’t have specific answers to these questions, relying on anecdotal evidence won’t help. It may get you the spend levels you’re requesting in the near term, but if it doesn’t work out, the memory of your recommendations will undermine your credibility for years to come.

When times get tough, buyers re-evaluate the value propositions of what they buy. They make tradeoffs on the basis of what is or isn’t “necessary” any more. Shouting louder (or in more places) is unlikely to break through newly-erected austerity walls.

To make a sound case for spending more, tune into what the CEO is looking for… leverage. They want to find places to squeeze more profitability out of the business. To help, focus your thinking around:

• the relative strength of your value proposition, channel power, and response efficiencies versus your competitors.
• your assumptions about customer profitability and prospect switchability as buyers cut back.
• your price elasticity to find out where the traditional patterns may collapse or where opportunities may emerge.
• the relevance, clarity, and distinctiveness of your message strategy, and your ability to defend it from copycat claims.

And make sure to check with finance to see if the company’s balance sheet is strong enough to handle higher levels of risk exposure during revenue-stressed periods. If it’s not, the whole question of spending more is moot.

If your comparative strengths seem to offer an opportunity, then increasing spend may just be a smart idea. But even so you have to anticipate that competitors aren’t just going to let you walk away with their customers or their revenues. And that may just leave you both with higher costs in times of lower sales. In technical parlance, this is known as a “career-limiting outcome”.

Better Ways To Do More With Less

Crawling around inside a few dozen large marketing and finance organizations these past months I’ve seen some evidence of five patterns of “do more with less” which seem to work best.

First, the “best” clearly define what “doing more with less” really means. The most common metric appears to be “marketing contribution efficiency” – an increase in the ratio of net marketing contribution per marketing dollar spent. That’s seems appropriate when budgets are falling (recognizing the need to monitor it over time as it can be manipulated in the near term).

Second, when they cut, they do it strategically. Face it, most of us didn’t take Budget Cutting 101 in B-school. After eliminating travel and consultants and other easy stuff, bad decisions creep in under mounting political pressure. More about this in last week’s post.

Third, they watch the risk factors. CFOs want to cut marketing spend to increase the likelihood of (aka decrease risks against) making short-term profit goals. Yet when marketers try to do more with less, risk exposure rises in ways never imagined – especially if it wasn’t clear which elements of the marketing mix were working before the cuts. It’s the “risk paradox”. If you want to make sure your “less” really has a chance of doing “more”, manage the new risks that have silently crept into the plans.

Fourth, they avoid the ostrich effect. Just because there’s enormous pressure on today, the best don’t ignore the fact that tomorrow is right around the corner in the form of 2010 plan. And when looking ahead, the only thing certain is that historical norms are no longer a reasonable guide. So the best are anticipating the key questions for 2010 plan, and working on getting some answers now. They’re committed to leading the process, not getting dragged behind it.

Finally, the best push their marketing business case competency further, faster. The marketing skeptics and cynics have more political clout now. Un-tested assumptions, like ostriches, will not fly. Better business case discipline is the new currency of credibility.

We all have basically the same tools at our disposal to do more with less. The “best” seem to be able to apply their imagination most effectively in the use of those tools. I’m the world’s biggest proponent of the importance of creative inspiration and instinct, but the lesson here I think is to start the conversation these days with “what do we mean by ‘effective’?”

Think ahead while cutting back

Setting aside for the moment that no company can succeed by cutting expenses alone, let’s dwell on the practical necessity of today’s world: cut, cut, and cut some more.

Yes, we all should have been smart enough to build sufficiently robust measurement capabilities BEFORE the dramatic assault on our budgets began. Yes, we should have put some water in that bucket BEFORE the fire consumed so much of the house that marketing built.

But we didn’t. So what do we do now that we’re caught in the downward cutting spiral? Where do we turn once all the “fat” has long since been excised and all that’s left is muscle and bone?

First, get your head out of the emotional sand. You’ve lost the battle over the power of marketing to drive the business in the near term. But don’t let your fog of disappointment cost you the war. Suck it up and look ahead. And don’t take it so personally.

Second, define the objectives for making smart cuts.

1. Achieve the target reductions the CEO is asking for (most people stop right here).

2. Clarify the mid- to long-term strategy for competing successfully.

3. Conduct a thorough and unbiased analysis of the options.

4. Provide a comprehensive assessment of the near- and long-term implications of the cutting alternatives.

5. Preserve your credibility. Live to fight again another day.

If you’re not thinking about all 5, you’re likely suffering a very slow death by 1000 cuts yourself.

Third, frame your cutting analysis on the basis of strategic dimensions of competitiveness, NOT on the basis of what’s easiest to cut (e.g. travel and outside contractors), and for heaven’s sake do NOT cut proportionately across the board (which strengthens the hidden weaknesses in your plan while weakening the strengths). Think about the relative value/importance of customer segments; product groups; channels; or even geographic regions. Consider the marginal returns of a dollar spent in each one. Cut ruthlessly from the bottom of the importance rankings.

Fourth, engage people in finance, sales, or SBUs in your thought process. You have nothing to gain by being an island now.

Fifth, get comfortable with making educated guesses on expected impacts. You’re beyond the point where data-driven analysis is likely to help. Think about using monte carlo simulation and other probabilistic assessment methods to make intelligent guesses now (and loop back to “fourth” above).

Finally, present your findings with passion, but not bias. The time for “I believe…” is past. The mantra of the moment is “having run many options by the good people in finance and sales, we all feel that the smartest course of action is…”

And by the way, NOW is exactly the time to begin building that measurement capability you really wish you had over the past few months.If you need more help, start here.

This Economy Brought to You by the Wrong Metrics

How did we get in the global economic shape we’re in?

You and I bought stocks and mutual funds (and you might have bought hedge funds). We expected above-average returns from those investment managers.

The investment managers make money by selling more shares in their funds. To do that, they needed to show higher-than-average returns. They had only a secondary interest in the long-term health of the companies they were buying (despite statements to the contrary in their prospectus). The really just needed to show strong returns NOW to compete with other funds. That made their focus short-term even if they wouldn’t admit it.

Since CEOs need demand for their company stock to keep the price high (and keep the board happy), they obliged these fund investors by pushing to meet short-term earnings growth to increase the rationale for a higher P/E multiple. As a result, their decision process became somewhat perverted towards hitting every quarterly target they promised to Wall St. and the fund managers.

This perversion drove managers working for the CEOs onto a slippery slope of buying and selling things that had substantially higher risk profiles than they were used to, and many hidden risks that have only recently come to light. Altruistically in most cases, but not all.

The CEO was OK with this as A) it was driving earnings growth; and B) they were “trusting” their expert managers and consultants (who were also paid handsomely for making recommendations to participate in such behaviors).

The fund managers were OK keeping a blind eye to this, as long as the returns for their fund were above average.

You and I were happy as long as our investment portfolios were rising in value.

In short, we all got too focused on the WRONG metric of short-term growth in stock prices. It’s the same thing that happened in the dot-bomb era, only with a different rationale. Only this time, we managed to ensnare millions of homeowners in the process, destabilizing their confidence in spending. This, in turn, destabilized the climate for corporate investments, and increased layoffs. Thus the viscous cycle we’re in now.

I raise this as an example of how seriously wrong things can go if we’re not focused on the right metrics.

The answer isn’t higher levels of government oversight and regulation. It’s higher levels of transparency in companies reporting what they’re doing to hit earnings targets, combined with a closer monitoring of their productivity in generating organic growth. And it’s paying more attention to the leading indicator metrics of consumer behavior – security, liquidity, and confidence.

Just like many of our businesses, it often takes a knock upside the head for us to realize that we slowly lost focus on the right metrics.

Taking Full Credit When Harvesting Brands

I’ve spent the past few days at the AMA’s MPlanet conference, listening to every speaker make some form of the following statement:

Now more than ever before, we need to build and nurture our brand assets.

Presumably this is intended to mean that in these times of great economic challenge, we cannot afford to let our brand standards slip, our brand equities become cloudy, or our brand experience decay.

Fair enough. But does that mean that we should be spending money to build these brand assets, even in the face of substantial cutbacks elsewhere? Or just be cautious not to cut things that would cause an undue decline in brand strength?

This had me wondering … under what conditions would we expect to be able to “harvest” some of the investment we’ve been making? How bad would things have to get before we expected the brand to “pay us back”? At what point would a CMO stand up and advocate “harvesting brand value”?

Sure, I understand that you should always be working on building your brand, and that done right, it is always paying you back. The flow is bi-directional and fluid. But it’s also transparent, and that’s the problem.

Assets, in a financial context, are a way of storing cash value for later use. You invest in stocks as assets, with the expectation that they will appreciate and return more cash to you later. Likewise, you invest in assets like manufacturing equipment, software, or other “tools” required to produce goods or services to sell. Brands could be said to play a similar role. Yet property, plant, and equipment are depreciated over time to reflect the decline of their useful life. Stocks and bonds are liquid assets for which there are markets to quickly buy and sell them, thus establishing their value.

Brands, on the other hand, aren’t depreciated. They can become “impaired” (accounting term meaning they are worth less than you paid for them, thereby triggering a write-down), but only if you purchased them from someone else. So if we marketers are going to rationalize some of our cash spending in good times by talking about “investing” in brand “assets”, at some point we are expected by the financial types to demonstrate how that asset value is being realized back into cash. I call it, “harvesting”.

So under what circumstances would you consider harvesting some of that brand equity?

Well, for starters, if you need to raise prices without adding any incremental costs associated with new features, benefits, or other value visible to the customer. In that case, you are relying on your brand asset to carry you past the danger of customer defection. To the degree that you averted attrition related to unilateral price increases (not matched by competitors immediately), you can legitimately claim that your brand “saved” you money. This is measurable.

Likewise, when a competitor announces a new product/feature/benefit that you cannot match, thereby taking an advantage in perceived value, you rely on your customers’ relationship with your brand to carry you through until you can once again restore your value proposition to its rightful state. This too is measurable.

And finally, when some aspect of your customer experience is deficient – a poor interaction with a call center agent, an inaccurate statement, or maybe a data privacy mishap – you rely on the strength of the overall brand relationship to carry you through. The value of this too is measurable.

So in this economy, while your budget is getting cut again and again, be sure to take the necessary steps to earn credit for how you’re now “spending” some of that “asset” value you built up over time. Done correctly, it will underscore what a good steward of company resources you are, and how far-sighted you’ve been all these years.

Just be careful not to overspend that brand asset account along the way (also measurable).

Fools Rush In - Searching for Magic ROI

If the current economy is encouraging you to think about shifting resources from traditional media to digital alternatives in search of cost effectiveness and overall efficiency, beware: nearly EVERYONE ELSE HAS THE SAME IDEA.

Implication: you will be moving into an increasingly cluttered marketplace, where broad reach options will continue to lose effectiveness and highly-targeted delivery will come at a higher price as demand outstrips the supply of good inventory and good people to execute. Consumers too will become increasingly savvy with respect to their digital media usage patterns, and harder to “impress” with incrementally new ideas or executions.

I know I’ll get lots of letters about this post “educating” me on the infinite scalability of the digital media, and reminding me that true creativity is likewise boundless. I’m sure many of you have research that shows how the returns to digital marketing programs just keep growing as the audience of users grows across more and more platforms. Fair enough. But the laws of marketing physics suggest that more marketers and marketing dollars will rush in to the arena than proven executional avenues can accommodate in the short term. And most of them will NOT bring breakthrough new creativity with them. That will create lots of failure and un-delivered expectations, which in turn may slow adoption of otherwise valuable marketing options.

Here’s a simple suggestion as you contemplate the great digital shift towards the promise of better ROI… set your expectations based on poorer results than you may have experienced in the past, and/or ratchet-down vendor claims of look-alike results presented in “case studies”. Before committing to the “me too” plan of going digital, ask yourself if your planned online campaigns would be a good investment if they were 10% less effective than originally anticipated? Would your new social networking programs still provide good payback if they had a 20% less impact on potential customers? These may very well be the new reality when everyone rushes in.

In stark contrast, a friend who’s CMO of a packaged goods company tells me that while he is continuing to shift the balance of his total spend towards digital media, he’s doing so in a measured way built on careful experimentation. He’s working on a cycle of plan>execute>learn>expand>plan again. So he’s spending 20% more on digital media in 2009 than in 2008, but not moving huge chunks of his total budget all in one big push for magic returns. Nope. His philosophy is “hit ‘em where they ‘aint.” He’s buying more radio and magazines – media he’s developed clear success cases with in the past and places he can more accurately predict the impact on his business. He may find himself all alone there. But I suspect that’s part of the appeal.

Trading GRPs for Clicks?

Television networks are making their prime-time programming available in full-form via their websites. And not just the latest episodes of “Desperate Housewives”. CBS and ABC have both announced that they are now streaming from deep inside their programming vaults, bring back favorites like “The Love Boat” and “Twin Peaks”.

Hulu (joint venture between NBC and Fox) attracts more than 2.5 million unique viewers (distinct cookies) monthly, who stream content an average of more than 20 times each! That’s a bigger, more engaged audience than many cable stations draw in a month’s time. And anyone who knows their way around a Bass diffusion curve will tell you that adoption of online viewing is on a trajectory to achieve substantial penetration very rapidly.

All this is causing pre-revolution heartburn in the media departments of major ad agencies today. They’re trying to figure out which metrics best equate clicks (or streams) to GRiPs (gross rating points), so they can compare the costs of advertising online to advertising on TV. Apples-to-apples.

Wrong mission.

Online content streaming is, by its very nature, an active participation medium, while television is passive. As such, the metrics should reflect the degree to which advertisers actively engage the consumer: streams launched; ads clicked; games played; surveys completed; dialogue offered; etc. Selecting passive metrics encourages the content owners to use the computer to stream like they broadcast, thereby replacing one screen with another. In time, that will teach consumers to use it as a passive medium like TV.

If we (the marketers) want to capture the true potential of an active medium, we have to demand performance against active metrics. We have to design ads that give the multi-tasking consumer of today something else to do while they’re watching the show – enter contests on what will happen next; decide who’s telling the truth; test their show knowledge against other fans; shop for that cute skirt – you get the idea.

Effectiveness in this new realm is a function of the actual (active) behavior generated versus the expected amount. And the expected amount is that degree of behavior shift necessary to make the business case for spending the money show a clear and attractive return. Efficiency is then how much more positive behavior we’re generating per dollar spent than we did last month/quarter/year.

Sure, we need to have some sense of which content is attracting people who “look” like customers or prospects, but that’s just the basis upon which we decide where to test and experiment. The real decisions on where to place our big bets will come once we learn what execution tactics are most impactful.

Until then, be careful what you measure, or you will surely achieve it..

Use It or Lose It

Do you have any leftover 2007 budget dollars that are burning a hole in your pocket that you have to spend by the end of the year or lose? Here’s an idea: Consider investing in the future.

By that, I mean consider investing in ways to identify some of your key knowledge gaps and prioritize some strategies to fill them. Or investing in development of a road map toward better marketing measurement: What would the key steps look like? In what order would you want to progress? What would the road map require in terms of new skills, tools or processes?

It seems kind of odd, but while the pain of the 2008 planning process is still fresh in your mind, start thinking about what you can do better for 2009. By orienting some of those leftover available 2007 dollars toward future improvements, you might make next year’s planning process just a bit less painful.

Knowing Is Believing

Now that 2008 budget season is upon us, it’s time to identify knowledge gaps in the assumptions underlying your marketing plan – and to lay out (and fund) a strategy for filling them.

We recently published a piece in MarketingNPV Journal which tackles this issue. In “Searching for Better Planning Assumptions? Start with the Unknowns” we suggested:

A marketing team’s ability to plan effectively is a function of the knowns and the unknowns of the expected impact of each element of the marketing mix. Too often, unfortunately, the unknowns outweigh the hard facts. Codified knowledge is frequently limited to how much money lies in the budget and how marketing has allocated those dollars in the past. Far less is known (or shared) about the return received for every dollar invested. As a result, marketers are left to fill the gaps with a mix of assumptions, conventional wisdom, and the occasional wild guess – not exactly a combination that fills a CMO with confidence when asked to recommend and defend next year’s proposed budget to the executive team.

Based on our experience and that of some of our CMO clients, we offer a framework to help CMOs get their arms around what they know, what they think they know, and what they need to know about their marketing investments. The three steps are:

1. Audit your knowledge. The starting point for a budget plan comes in the form of a question: What do we need to know? The key is to identify the knowledge gaps that, once filled, can lessen the uncertainty around the unknown elements, which will give you more confidence to make game-changing decisions.

2. Prioritize the gaps. For each gap or unanswered question, it’s important to ask how a particular piece of information would change the decision process. It might cause you, for example, to completely rethink the scope of a new program, which could have a material impact on marketing performance.

3. Get creative with your testing methods. Marketers have many methods for filling the gaps at their disposal; some are commonly used, others are underutilized. The key is determining the most cost-effective methods – from secondary research to experimental design techniques – to gather the most relevant information.

Don’t let the unknowns persist another year. Find ways to identify them, prioritize them, and fund some exploratory work so you’re legitimately smarter when the next planning season rolls around.