Organization Development
12 MARKETING INSIGHTSJANUARY/FEBRUARY 2014
I n order to be taken seriously as business savvy, marketers must develop capabilities around
performance evaluation. It may not be the most exciting topic (it doesn’t convey creativity or innovation) and may even be perceived as ominous (who’s doing the evaluation, and will it be fair?), but accountability of marketing requires being prepared to answer some crucial questions, including “How well is the business doing?” and “What needs to be improved?” Performance evaluation must systematically tie to the key goals and strategies of the business as they evolve over time. It has the potential to be at the center of strategy development, resource allocation and execution of the most important initiatives.
The Risks Much of performance evaluation falls un- der the category of tracking measurement, e.g. ad, brand, customer satisfaction and sales. This conjures up the vision of line charts spanning multiple years. In some cases they will be flat, i.e. no movement in the chosen metrics over long peri- ods, which is sometimes seen for brand
attributes. But why track these measures if there’s no new information?
Some measures will move rapidly, e.g. financial services firms’ brand attributes during a period of dramatic change at a macro level, like the 2008-2009 financial meltdown. This raises the question of how to interpret these marketing measures when there are much larger forces at work that may influence the overall market as well as individual brands. How do you design and analyze performance measure- ment data in the context of trends, cycles and competitive moves that have equal or larger impacts than your own brand?
The resources required to build and maintain the measurement infrastructure are often some of the largest (and annu- ally recurring) line items in a marketing department budget. As new media spawn new things to measure (e.g. related to brand buzz from online discussion and new behaviors from social media and mo- bile applications) it becomes highly likely that the structure itself must be adapted to stay relevant to the business. It is especial- ly difficult to draw accurate comparisons over time while the nature of the measures themselves may have changed. There’s a
need to assess the reliability and validity of new measures that come into the market and the extent to which they are related to established measures, e.g. brand equities and sales. There’s little value in tracking buzz unless it eventually has some linkage to business performance.
The Upside Given the challenges associated with per- formance measurement and evaluation, what can be done to justify the effort in building and managing it, and to make it more integral to business success?
1Choosing measures that matter. A first step is to systematically review a wide range of potential measures and focus on those that best meet the criteria for being part of the brand strategy development process. This includes business criteria. Do the measures have a demonstrated relationship to business performance outcomes, such as sales volume? Methodological criteria can also be considered: Are the chosen variables independent of each other and likely to be drivers of outcomes rather than only coincidentally related?
A global consumer packaged goods provider with nine diverse food product categories has built a frame- work for developing brand positioning strategy to apply across its whole port- folio. The goal was to provide brand teams across the globe a consistent set of drivers of brand performance to enable them to develop strategies that were broadly aligned on these same drivers, an efficient use of a marketing resource. This initiative was intended to avoid having each country’s man- ager develop a unique positioning, at additional cost to the organization, and with potential for global confusion. Some flexibility would allow regions to
Performance Evaluation Communicating key business metrics is an evolving task
THE BIG PICTURE
GORDON WYNER
gordon.wyner@gmail.com
B R A N D M A N AG E M E N T
13MARKETING INSIGHTSJANUARY/FEBRUARY 2014
accommodate local consumer prefer- ences and competitive sets.
Global research was undertaken to isolate the brand dimensions that mattered most to consumers by linking perceptions to usage. A suite of statistical analyses were employed to identify the most impactful variables, drawn from a very large set of candidates (about 100). This small set of dimensions then became the basis for global strategy development. It also sets up a framework for setting brand performance goals on a continuing basis (e.g. planned movement on key indicators, identifying underserved “white space” opportunities), and criteria for judging success (e.g. changes in metrics, closing gaps relative to competitors).
2Setting reasonable goals.Selecting the right measures focuses brand management’s attention on what variables should be highest on the priority list. A critical next step is to set specific levels for performance improvement that are realistic given the capabilities and resources of the organization. It would be unwise, for example, to expect perfor- mance to improve uniformly across the whole portfolio of brands and categories. And goals ought to be related to the current competitive environment and resourcing levels.
If the brand is operating below competi- tors’ levels, is it realistic to expect it to over- come the disadvantage in one time period (e.g. a quarter)? Or should it be mandated to close the gap over the next few time periods (e.g. four quarters)? What resourc- es, including advertising budget, will be needed to achieve the goal? The reduction or expansion of resources ought to impact the expectations for future performance.
Fortunately, historical data can provide some reference points for helping make the value judgments that are necessary to set goals.
A diversified financial services provider sets goals across each line of business (retail bank, deposit and credit products) in its portfolio by examining planned level of media investment and share of voice relative to primary competitors; efficiency and effectiveness of advertising in the most recent year; and planned messaging focus for the upcoming year.
The historical data revealed what magnitude of changes in performance had actually been observed in the past, for both the brand and its competitors. This provided a realistic range for what could be accomplished in the future. For example, if the historical range was between zero and 5%, it would take extraordinary circumstances to gener- ate 10% gains, e.g. substantial increase in media spending, increased media effectiveness due to a new campaign, or addition of powerful new media channels for expanding the market.
These considerations lead the company to adjust its performance goals based on past performance experience and future marketing plans and forecasts. For exam- ple, a brand that was well resourced would be assigned a higher goal than a brand that was resource-starved.
3Building the scorecard to track and communicate. Accountability requires that the well-laid plans to set goals be codified for all the relevant stakeholders to observe. Research can provide some guiding insights on this final phase of performance evaluation. For example, research can demonstrate which performance measures can be expected to show immediate impact in the market, e.g. creation of brand presence through awareness and familiarity building. Others take longer to exhibit change in the market, e.g. changes in brand equity measures may take six to 12 months to be visible. The structure of the evaluation
scorecard ought to reflect both long and short term measures.
The analytic design of the scorecard (or its more sophisticated version, the real-time electronic dashboard) requires research input. Will tests be run comparing current results to the budgeted marketing plan, alternative time periods, competitive brands, key segments, or all of the above? The visual nature of the scorecard presents an opportunity to focus attention where actions are to be taken. Many market- ers prefer that high level management scorecards contain no numbers but rely on directional indicators (up, down, flat) or coded interpretations (green means good result, no action needed; red means a prob- lem that requires immediate follow up).
A recurring challenge is to fit the min- imum amount of information necessary onto a single dashboard screen to sim- plify the results as much as possible. In a recent scorecard implementation, there were multiple audiences (i.e. customers, prospects, employees, business partners, and industry influentials) along with multiple metrics and time periods, and interpretation codes. Only by making trade-offs between all these dimensions was it possible to achieve a sufficiently streamlined view.
Some internal audiences may want to see detail on many more data elements, which they can access via detailed reports and spreadsheets. The primary audience for performance measurement is top management, a group that puts a premi- um on displaying the fewest measures needed to capture the essence of the busi- ness. To increase relevance and impact of performance evaluation calls for tight focus on key business metrics and the simplest way to communicate them. MI
✒ GORDON WYNER is vice president of client
solutions at Millward Brown and contributing editor of
the Marketing Management section of Marketing News.
To read more of Wyner’s work, go to MarketingPower.com/marketingnews and click on “featured contributors.”
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