Driving superior return on marketing investment

1. Driving superior return on marketing investment

2. CMOs have been under the gun to prove the value of their marketing programs Top CMO Challenges Advertising Age Survey of CMOs 2007 • Quantify and measure the value of marketing programs and investments • Improve the efficiency and effectiveness of the marketing organization • Grow customer knowledge, insight and conversations • Improve the allocation and ROI of marketing spend • Extract greater value and profitability from customer relationships • Increase credibility, influence and perceived value with senior management Chief executive officers are "growing impatient with marketing…They feel that they get accountability for their investments in finance, production, information technology, even purchasing, but don't know what their marketing spending is achieving.“ Professor Philip Kotler Kellogg School Of Management

3. Many avenues being explored to boost marketing ROI Current Activities to Improve Marketing ROI Conference Board Survey: CMOs 12/08

4. How to drive superior marketing ROI  Superior understanding of customer value AND business economics! Business strategy choices: - Offering design - Brand strategy - Channel strategy - Organizational strategy • Value of product experience • - Utility of experience • - Acquisition cost • - Ongoing cost to use Marketing ROI:Maximization of value delivered to customer (revenue) per dollar of cost invested • Ability to effectively execute strategy • - Information • - Implementation choices • - Capabilities • Perceived value of brand or company relationship • - Distinction of offering • - Value of past investment What actually drives customer demand What it costs to address customer demand under different strategies

5. Next generation program design and testing Superior value proposition engineering Alignment of organization – lean sales and marketing processes Marketing Financial Measurement Systems Building the Marketing ROI Grid Marketing ROI • Orchestrating state of the art marketing principles and techniques • Introducing well proven concepts from other disciplines • Establishing/Enhancing cross departmental thinking • Implementing a standardized controlling loop • Mastering the change process

6. Marketing ROI levers Marketing ROI increase Superior value proposition engineering Next generation program design and testing Marketing Financial Measurement Systems Alignment of organization – lean sales and marketing processes Designing profitable offerings that deliver the highest value to customers per dollar of cost Identifying program strategies that activate desired customer behavior or perceptions and measuring their performance Optimizing and aligning marketing & sales processes to deliver more value at less cost Accurately tracking sales and marketing investments and linking them to metrics of intended and actual results. • Customer information that provides insight into existing needs and likely future behaviors • Program test & learn processes • Integration of channel partners into the marketing process • Identification of opportunities to capture market value • - Escape from the commodity box • New value propositions • Optimization of existing offering design • New delivery approaches • Sales and service processes that actually deliver customer value • Customer behavior tracking systems • Low cost, and responsive sales and marketing processes • Organizational structures and incentives that support customer strategy • Cost accounting systems that serve sales and marketing versus finance needs • Clear performance t targets and measurement methods • Marketing mix models that link programs to target customer behaviors and corporate performance (P/L)