Decker Marketing

Marketing Bullseye 4: Scalable Programs

A couple posts ago I talked about the P&L aspects of marketing cost scaling. A key factor to marketing costs scaling is for marketing programs to scale. In effect, any marketing initiative or process  created should be sustained and optimized for less resources over time.

The best marketing programs are those that get set up, perform, and don't require my attention. This is and was my philosophy as a marketer and online retailer, and I've heard this from many of our online retailing clients now. Some may require attention, but for the same effort, grow in impact over time.

Examples of Scaling marketing programs:

• Online affiliates programs, where others sell your products for commission
• Automated RSS Feeds
• Blogging -- for same weekly effort, as time goes on more people link to you increasing your search impact
• Search engine marketing (except for the costs going up) you can set it up once and it can run and optimize with limited bandwidth.
• Web site functionality -- features that live on the site with one time cost which drive conversion or attract new customers (could drive word of mouth).
• Email newsletters -- same effort each email can drive more results as email list grows and we test/measure as part of the process to make them more effective.

Marketing programs that don't scale include:

• Custom marcom, letters, or mockups for every prospect that calls.
• Advertising campaign that requires new creative often, rather than using creative templates or getting more out of one creative.
• Custom direct mail that requires a lot of versioning and effort each time, but delivers limited incremental lift each mailing.

It costs signifant time and effort to set up a new program or process -- much like it costs a lot more to attract a new customer than to keep one.

Whenever considering any marketing program, consider the maintenance, support, and optimization requires to get the same results or more out of that program over time. All effort into the sustainment of that program is effort you forego to create a new one. As a colleague once said, "Is the juice worth the squeeze?"

Another consideration is to people-proof the program. Any program that requires specific expertise or specific person to run or optimize that program can be orphaned or sub-optimized when that talent leaves. Programs with good process around them and can be managed by multiple people have a good chance of sustained impact.

As part of your bullseye marketing prioritization process, consider the factor of resources to sustain and upside opportunity to optimize. Consider your time as working capital, and you want the best return on capital as possible.

-----------------------------------------------------------------------------
[How do you hit the Marketing Bullseye? Email blog @ deckermarketing.com]
[Permalink to the Marketing Bullseye series]

Marketing Bullseye 3: Hit Goals with Workback Waterfall

I once gave a presentation to an industry group called "Rivers of Revenue: How to Build a Marketing Machine".  In that presentation, I showed an approach to 'processize' your way to achieve a quantifiable goal.

I call it a Workback Waterfall. It's nothing revolutionary...but many things that hit the marketing bullseye are not spine-tingling.

Essentially it requires you determine what you want to accomplish, then define the steps to get there and then work backwards and determine the 'waterfall' of variables that measure the success of each step.

More specifically:

1. Start with the goal in mind, and work back the steps necessary to achieve the goal.
2. Then play with the variables that are necessary to achieve each step towards the goal.
3. Track progress and success of those steps so you can measure actual results of those variables.
4. Adjust variables to forecast future progress.
5. Optimize each step and the process to reduce effort to achieve each step...and reach the goal.

As an example, here's how it works for achieving a sales goal:

By starting with the goal in mind and working back the steps and measures along each way you can identify the activities and behaviors to hit the goal. And, most importantly, you measure the true effectiveness of each step and identify ways to improve productivity for each one. You could double or quadruple impact.

For a sales process, you might measure the impact of optimizing how you execute the sales call process, improving each step of the process:

• Making a sales call
• …with a referred introduction
• …and a relevant, benefits-oriented approach
• …spoken with energy and smile
• …with an introductory offer
• …ending with asking for the sale or an in-peron presentation
• ...followed by an email outlining next steps and next meeting

What about Direct Mail?

• Send a brochure
• …in a ‘teaser’ envelope
• …sent to best list
• …with a letter
• …and a reply card
• …as part of an integrated mail campaign
• …preceeded and/or followed by email or phone call

This is a simple way to achieve any goal, as it forces you to identify the process and compels you to optimize productivity. You could use this for direct mail, email, online conversion, tradeshow selling or other marketing processes.

Using an approach like this makes me a believer in the old addage: "If you can measure it, you can manage it!"

Marketing Bullseye 2: Think Six Sigma

Hitting the marketing bullseye is not just about launching the right marketing tactic. In fact, it's less about that than it is optimizing existing resources and processes. A methodology to improve processes, which can work in marketing or any function, is Six Sigma.

Six Sigma has migrated from manufacturing (to reduce COGS) to the front office (to reduce marketing opex). Also called Business Process Improvement (BPI), it’s the ‘new thing’ that promises to improve the bottom line in a business world where margins are going down yet marketing costs are going up. But BPI can also, and should, improve revenue and margin.

The concept behind Six Sigma/BPI marketing is not really new, especially if you’re a direct marketer who is used to measuring everything you do and improving your campaigns. Also, I don’t think it’s as complicated as some might think.

The back of your shampoo bottle suggests the process: Wash, Rinse, Repeat. How would you change that process if I asked you to wash in 1/2 the time and rinse with 1/2 the water, and get your head clean without repeating. I'd like to say I've figured out how to improve the process, but with so little hair now, I don't think I have to!

Six Sigma employs useful tools, such as brainstorming, fishbone, paretos, process maps (with swim lanes!). You were probably already using some of these. How about Design of Experiments with Full Factorials! Oooh, fun! This can actually be pretty cool tools, which I used in database marketing segmentation. But they are not critical for understanding or using Six Sigma principles to hit the marketing bullseye.

I think 80% of Six Sigma/BPI value in marketing is simply understanding the measures of your marketing process and executing continuous improvement projects on processes that effect these measures.

I got my Six Sigma "Green Belt" a few years ago -- which  means I improved a process using Six Sigma tools and measured significant cost savings / margin impact. In all my Six Sigma experience the two most important concepts changed my way of thinking:

DMAIC
Define, Measure, Analyze, Improve, Control.

This is the basic process for improving process...essentially the Six Sigma Methodology. The tools you use help you in these steps. Most of the marketing meetings I attend go straight to Improve, and even forget Control once something is improved. The problem when we skip Define, Measure and Analyze is we could implement the wrong strategy or process to improve. Looking through the lens of DMAIC changed the way you think about any marketing problem or improvement.

Y=f(x)

This is a simple formula that captures the idea behind process improvement, and the importance of measurement. Y equals the output (or impact, results of your marketing) and x are the inputs (measurements). The function on x are those processes that effect the inputs. Essentially, if you can measure the inputs, you can improve them...and therefore improve the output. Resulting in more efficient, highly effective marketing.

Here are four steps to applying Six Sigma, or business process improvement, to the marketing organization:

1. First, realize there are three sources of revenue for your company:

    a. Adding new customers
    b. Getting existing customers buying more
    c. Getting existing customers buying more frequently

2. Identify the processes you do within your company to effect each of the above sources of revenue. Keep an eye out... every day employees make a choice to start a new process vs. improve an existing one.

3. Break down these processes into steps.. Identify the variables that effect the quality (output) of each step. In marketing, sometime quality is a subjective thing…but if you’re measuring your marketing results for each step and the end result (ex: response rate), than quality can be quantified.

4. Now, choose a problem or process to improve and go at it using the DMAICR framework. “Define” and “Measure” the problem or process, “Analyze” why it’s performing poorly, “Improve” it based on your analysis, and “Control” the process to sustain results.

Here’s an example:

1. Why do emails drive low margin sales compared to average web site visitors? You may reduce the definition of problem around your product selection.
2. So you Define that process to improve (how you select products) and measure a baseline of results (margin per email).
3. Analyze opportunities for improvement…i.e. AB split testing or previous email results.
4. Improve your email process…perhaps a weighted model of margin x response rate to maximize margin.
5. And finally, put Controls in place to sustain tne process...create weekly dashboard and workflow tracking for email production and testing.
   

There…you’ve done DMAICR…Define, Measure Analyze, Improve, Control, & Report.

Now do it again for something else in marketing. And again. Simple as wash, rinse, repeat!

Marketing Bullseye 1: Scaling Marketing Expense

Here’s the first in the “hitting the marketing bullseye” series…and I’m going to start with the dreaded financial side of marketing! But this is foundational, because we’re all working with limited resources.

Marketers, CEOs, and Salespeople may look at marketing as an investment. As an investment you want to buy low and sell high. The CFO may look at marketing as an expense. He wants efficiency and lower costs. Either way, the business yearns for lower, more effective marketing.

Many marketers I’ve talked to get a fixed expense for marketing budget…say 10% of revenue. As revenue goes up, so does marketing investments at the same rate. So, if revenue grows 20% year over year, then the $1M marketing budget fom last year would become $1.2M this year. I’ve even heard marketing managers say they have to spend their budget allocated for that quarter or they lose their budget! Sounds more like government than a business.

The P&L problem with this approach is that the company needs to maintain or improve product margin if you want to maintain or improve operating profit margin…because you keep spending the same % marketing expense each year. What’s the likelihood that your margins are staying the same or going up?

The bullseye approach is for marketing costs to scale. The concept of scaling is simple, but amazingly is rarely managed in marketing departments. The idea of scaling is that if revenue grows 20%, marketing expense may only be allowed to grow 15%.

Marketers who like this approach think like shareholders (which might include themselves). Business performance is #1 priority.

Marketers who don’t like this approach don’t like math, or are thinking for their resume. Budget and program size (or resume bullets) are the priorities.
There are two primary benefits to the marketing scaling approach:

1. It forces marketers to think about how to optimize effectiveness and efficiency of their marketing spend. It forces ruthless prioritization of the most impactful activities (the bulls eye!).
2. Scaling contributes to the overall P&L so you don’t have to stop growth if margins get squeezed. You have more flexibility on price because marketing expenses (and all expenses) should scale.

Depending on your business situation, you may look at two options of what your marketing expense will scale to:

Scaling to total revenue

Scaling to revenue is simple and forces discipline to grow company volume and revenue more efficiently over time. It is best used in the following situation:

1. Your primary focus is on volume and revenue growth…but not at the sake for operating profit margin %
2. Margin % is pressured and decreasing
3. You lack measurement precision on product margin
4. You lack levers to effect margin % (affecting customer or product mix)

Scaling to operating income (or operating profit margin dollars)

Scaling to operating income is best in these situations:

1. Your focus is on total earnings (this is ultimately the focus of every business)
2. Product margins are steady so you can grow revenue at the same margin % (i.e. grow volume and you automatically scale to total margin dollars)
3. You have confidence that marketing can help you grow margin % on a lower growth rate (ex: sell to higher margin customers or invest in higher margin products at lower volume).

This is just scratching the surface, and even so can get overwhelming. To simplify, think of scaling this way. Your 10% marketing budget will be 9% next year and 8% the year after that…and at the same time you have to accelerate growth every year. That way of thinking forces you to hit the marketing bullseye!

A Reflective 3x3 on Dell's One2One Blog

A few readers have asked I comment on Dell's new One2One blog. My opinion reflects my personal journey on blogging...

I started a personal marketing blog in September 2003, inspired by John Porcaro from Microsoft (Note: I left Dell in January of this year). I didn't tell anyone at Dell because there was no reason to -- it wasn't about Dell. But I didn't expect it to take over two years for anyone inside of Dell to find it (and it was Developers who first found it, not Dell marketers). All the while I was getting good traffic, links and kudos other bloggers and marketers.

I didn't really know what I was doing in 2003, but over the years I learned a lot and connected with great people I never would've met otherwise. There are several reasons I launched a blog --  one of the most important reasons was that I sensed this 'something' was happening, and I wanted to learn by doing.

In fact, blogging contributed to my conclusion that marketing is changing. It gave me reason to lift my head up and see what was going on, and participate. I realized that today customers know more than the company, they believe marketing messages less, and are more in control in an economy with a lot of product and channel choices. So, great products and word of mouth rule. So what does the marketing profession look like 5 years from now!?

I think Blogs are one visible manifestation of this tipping poing. I left Dell in January to help launch Bazaarvoice to focus my journey to learn and master the changing role of marketing. Transparency, authenticity, credibility, relevancy are difficult concepts to put into operational practice, and this way of thinking is new to corporations (although shouldn't be new if more were acting on Cluetrain Manifesto in 1999).

How does this relate to Dell's blog? Because the outcome of my personal journey from starting a blog may be similar to outcome for a corporation. Can a corporate blog help a that corporation learn, internalize and evolve a culture to adapt to this new "paradigm"? Ask Scoble.

So, as for my feedback...

My father is an executive communication coach and I've learned his philosophy of giving balanced 3x3 feedback: three positives and three areas for improvement. I could always say more (as some already have)...but less is more, so here is my 3x3 on Dell's blog...

Positives

1. They launched it. It's a move in the right direction. (although they've had a Linux blog for years, I don't think it got much attention). Given the visibility of this, there's no turning back. It's a seed that may blossom -- and I mean internally. It will create a stir, and that's good. Just having critics comment on the blog is a great thing. Since Dell now has a blog, they have to respond and participate (or at least should).
2. Real managers and execs are writing. For example, Manish Mehta is the guy managing global Dell.com initiatives. He's not a spokesperson. Question is, how much time will they spend on this and will they converse, participate, react and evolve?
3. It has a simple design and key blog features. Except for the stoic header, the design and layout is simple and usable and attractive. Comments are open, RSS feeds present, blogroll, etc. More important than the design point here is that it shows people who are paying attention to how to do it right in phase 1. And mark my words, this is phase 1 -- anything Dell does has to either be optimized or orphaned/closed. Per my point above, they can't back away from this now. If they started with attention to the design and features, it's an indication they will get better (don't 'force' the blogroll though...is Dell Techcrunch friendly?).

Room for improvement

1. Don't dip the toe on this one. This blog would pass several years ago as a start. Unfortunately the late timing raises the bar for them. . So, being late, they could go 'bigger'. Dont' consolidate to one blog, and if you do, put a Dell personality behind it (not necessarily Michael). Then let a thousands flowers bloom via employees. Microsoft, Sun and others have hundreds of bloggers. Why can't Dell?
2. Open up more, listen more, converse more. So far the blog entries are on Dell's products, web site, etc. Except for the Laura Bosworth's latest post -- great!
3. The name for the blog is 'corporatish' and is a url they don't own (and wouldn't want to!)

I know there's a lot of 'constructive criticism' about this blog. But if you look at this from a longer term or higher level perspective, this is a move in the right direction. The alternative is they don't participate.

Corporate Culture and the 800 Pound Gorilla

My good friend Linda Ford just published a FREE eBook on Corporate Culture: You Can't Ignore the 800 Pound Gorilla (Making Corporate Culture a Strategic Ally).

This is an incredibly useful and easy to read book. It's ashame she didn't publish it to a full book, although I imagine it will morph there and I predict it will be a hit!

The bottom line:

• The 800 Pound Gorilla that is either helping or hurting your success is your Culture.
• This mysterious and most critical aspect of your organization can be changed
• For the Gorilla to change you must apply three principles:
  • Communication
  • Congruence
  • Consistency
• Like changing personality traits, it's all about habits!

Many people I know should read this, so I thought I'd share the link here...Plus it's FREE!

More on the Marketing Bullseye: What does it look like?

Have you ever been asked to launch a strategy, project or campaign that you knew wouldn't make a big impact to the business? I have, many times over. Why does this happen?

Do these scenarios sound familiar?

• The CEO saw an idea work in a previous company and wants you to do the same thing.
• The sales leader insists a certain strategy is required to close sales
• A meeting created momentum for an idea, which came out of nowhere.
• Consultants have come in and presented their strategy (enough said)
• There’s pressure to copy what competitors do

If you’ve been pulled off course from prioritizing the most impactful activities to drive business, you’ve shot an arrow and missed the bullseye. Hopefully your actions impacted something relevant to the P&L…otherwise you missed the target all together.

I’m not suggesting ideas and initiatives from these origins are doomed to failure, but in a world of limited resources, you have to separate truly impactful ideas from the rest. And usually the sources of many ideas don’t have the measurement, wisdom or rigor to determine if it’s a “bullseye” idea. And by “bullseye” I mean impact to the income statement – revenue and margin dollars. Not advertising awards, not making the CEO happy, not looking like the competition, or checking a marketing tactic box.

The bullseye is reserved for marketing strategies and tactics that make the biggest impact to the business, before all overs. And if also proven as such, you will make the CEO happy.

What does the marketing bullseye look like (or feel like)?

• Bullseye marketing has a logical and/or empirical basis
• Bulleye marketing plays to win – mediocre marketing is for the outer rings
• Bullseye marketing views all ideas and opinions through the lens of the customer, the business capabilities, and a Six-sigma like DMAIC approach (Define, Measure, Analyze…)
• Bullseye marketing understands and addresses the processes, policies and culture that have a large impact on the inputs and output of the marketing.
• Bullseye marketing communicates to customers in a way that inspires action.
• Bullseye tactics are measureable and optimizeable -- so you can get better and more efficient over time.
• Bullseye marketing feels frugal, pragmatic, and purposeful. It is not glamorous or fanciful.
• Bullseye marketing points creativity towards a objective, purpose and goal.
• Bullseye marketing is the art and science of balancing between the P&L and the customer – with a penchant for demonstrating results.

Recently AdAge reported (via MarketingProfs) the average CMO tenure is down from 23.6 months in 2004 to 23.2 months this year. And here’s the sobering statistic in a world of cause and effect:

Only 10 percent of respondents to the CMO Council survey said their marketing groups are "highly influential and strategic" within the company. Less than half said their teams are "well regarded and respected," even though two-thirds of CEOs polled in a separate survey by Chief Executive magazine said their marketing groups are "mission critical" for creating top-line growth.

Conceptually speaking, the Marketing Bulleye concept at 10,000 ft, 30,000 ft, and 100,000 ft should help the CMO tenure problem. After all, the CEO is the one ousting the CMO. Bullseye Marketing is focused on results, and this is the CEO’s #1 objective. So the CMO who hits the Bullseye with his marketing resources will stick around (stock should appreciate)…otherwise his tenure is also short because he’s heavily recruited!

Following this post, I will begin to share ideas, principles and tactics that can help a marketer hit the Marketing Bullseye.

New Series: How to Hit the Marketing Bullseye

I’ve felt guilty not posting for a while. But I have been thinking a lot about marketing topics as they relate to my past and current position in a new startup. These thoughts keep circling around the same theme for me…

How to Hit the Marketing Bullseye

You see, Marketing (and typically advertising) is an incredibly wasteful profession…

• Some marketers measure their effectiveness by the amount of money they spend.
• Some view success by the ‘names in light’ phenomenon – because they have a pretty ad somewhere visible, they’re doing a good job.
• Some do one marketing function well, and regardless of industry, company, product, or customer they deploy their marketing strategy they know best.
• Some marketers hire big agencies or big consultants, who’s business model revolves around hours spent and/or money spent.

Marketing has historically been one of the most wasteful professions available to young college graduates!

I can’t think this way. Maybe it’s because I’m on my fourth startup, and in each I’ve  had little marketing budget and huge growth goals. From these experiences I wrote a book on word of mouth marketing and guerilla marketing. I spent 7 years of operational, metrics-driven, Six-sigma optimized marketing at Dell, Inc. (B2B and B2C). While budgets are bigger at Dell, they are tiny compared to the revenue and growth goals. Try a marketing marketing budget of 1-2% of revenue (and declining) with 20% revenue growth goal!

So, I’ve decided to write a series of blog posts centered on principles of how I think about marketing. This way of thinking could also be called:

• Metrics-driven ROI Marketing
• Purpose-driven Marketing
• Prudent Marketing Strategy
• I’m the World’s Cheapest Marketer!

But I think Hitting the Marketing Bullseye captures all of these.

Here are the principles behind the Marketing Bullseye analogy:

1. The bullseye represents the highest effective marketing strategy or tactic you can execute to drive the business (revenue and margin contribution) forward.
2. Each outer ring is the next effective tactic.
3. The more time you spend on the outer rings, the less effective your marketing gets. And effectiveness is measured by ROI – how much output for every unit of input.

There is more to this of course, and I will start entries to describe this concept and principles behind the bullseye in more detail. I like this analogy because not only is it simple to understand, but also helpful in articulating priorities to sales and senior management. No one wants to suggest you work on an outer ring!

More importantly than the analogy, I will drop posts each week with principles, strategies, stories, and ideas that (in my experience) hit the Marketing Bullseye or help you figure out how to hit the Bullseye in a given situation.

To keep up to date, subscribe via email (on the right) or RSS, and you’ll get future postings on this topic. And if you’ve got an idea or story to share, email blog @ deckermarketing.com.