Marketing spend has an impact on sales. New product development impacts marketing. Operations (labor, hours, management, training, etc.) have an impact on customer satisfaction.  Customer satisfaction impacts sales, as does promotion, pricing, incentives, seasonality, weather, interest rates, gas price. Sales force effectiveness impacts upon marketing… and so on – in an endless mixture of synergies.

How can you measure marketing, something that is so impacted by so many things, in a silo?

To understand the true impact of marketing, it is imperative that you understand how it impacts and is impacted upon by the other critical and synergistic investments you’re making. Otherwise you will misattribute the short and long-term value of your marketing and therefore be misguided into making bad short and long term investments for your brands.

“Marketing mix performance is just a part of overall commercial effectiveness – the analysis of which seeks to identify and attribute the proper ROIs and synergies across the holistic set of investments a company is making – so as to ensure companies are making the right investments at the right time in the right places.”
–  Fortune 500 CEO

Executives need to understand the true incremental value of each of their commercial investments and optimize them in order to maximize their ROI. This includes existing as well as new spending – in a holistic manner. The focus needs to be on maximizing the effectiveness of current investments while optimizing the impact and return on the ‘next dollar spent’ across ALL the commercial functions of the organization.

Leading companies are leveraging the data they have today to better understand how to achieve the combination of ‘next best actions’ not exclusively through marketing but via an omni-channel approach that creates a better overall experience for the consumer.  By combining marketing, salesforce, distribution, operations and products taking into account key economic variables and seasonality, they are able to reach and better cater to exactly what the customer is looking for.

Commercial Effectiveness analysis integrates ALL relevant investment related data sources into the evaluation in order to provide companies with a complete picture of how to optimally invest to grow their brands. Some of these elements include:

  • Operational factors: Labor hours, manager tenure, store formats and locations, proximity to competition, etc.
  • Sales force: Training, composition, alignment, incentives, etc.
  • Distribution channels: Local promotions, incentives, distribution, pricing, etc.
  • Products: Life cycle impact, new product launches, inventory, etc.
  • External factors: Seasonality, weather, consumer confidence, gas prices, etc.

These rich, big and smart data sources are aligned to a company’s customer engagement model, objectives and business dimensions to provide specific, targetable, ‘next best actions’ and their associated ROIs.

It is extremely important for marketing driven companies to understand that a significant number of their investments operate in a material and synergistic manner with marketing.  For example, a major retailer was experiencing significant declines in sales and traffic and couldn’t figure out why.  Their new media channel mix and content was testing at exceptional levels and their assortment was new and exciting as a result of a recent influx of new products that were doing well in the broader marketplace. After analysis, it turned out their declines had nothing to do with marketing and everything to do with recent changes they had made in the headcount reduction of experienced managers coupled with poor onboarding training of new sales associates.  Once the impact of these changes was identified and understood, the retailer was able to address them. As a result of the changes customer satisfaction improved, sales and traffic increased and the media that had tested at such high levels indeed was able to drive the traffic it was projected it would.  Without incorporating the effects of operations into the mix the retailer would never have identified the real problem and might have misattributed the declines to something that they had nothing to do with.

Traditional Silo based, point-in-time analytics often lead marketers to making suboptimal decisions resulting in millions in wasted spend. It is vital that marketing performance is viewed as a component of overall Commercial Effectiveness – investment decisions in omni-channel marketing need to be in the context of the operational and macro drivers of the business. Enormous opportunity exists for those who implement a truly integrated and on-demand Commercial Effectiveness program.