Return
on Marketing Investment
A
Planning Process for the Evaluation of Marketing Investment
Proposals and Achieving Marketing ROI
All
organisations need to plan. To be effective (not just
efficient), all marketing plans need to be developed in
support of the business' strategic goals.
Strong
returns can be achieved when marketing investments are
planned against objective criteria for determining whether
a proposed investment should be included in the plan.
However,
it can be wasteful (and laborious) for full business cases
to be developed for every proposal before it is reviewed
in outline.
The
effort that goes into preparing and reviewing proposals
for marketing investments can be used most efficiently
when marketing ideas are put through a structured ideas
development and screening process. This will help achieve any targeted marketing ROI goals and will introduce an added level of transparency into marketing investment decisions.
The process is particularly
advisable when an organisation is considering many alternatives.
A structured process provides an objective way of prioritising
marketing investment proposals. It gives visibility to the decision process,
reduces disagreements between stakeholders, ensures marketing
achieves business strategy goals, and maximises the ROI of marketing activities.
A Structured
Process for Controlling Marketing ROI
Few
organisations can afford to be in "stop-start"
mode - marketing planning usually needs to be continuous
throughout the year. Since all of this review and agreement-building
with stakeholders takes time, several "waves"
of marketing programs need to always be in progress (either
being implemented or under development and review). The
following diagram illustrates one process for developing
and screening operational marketing plans.
It
can be seen that the starting point is the business's
operating plan (revenue and profitability goals by segment,
etc). Go to market strategies will have been built which
represent much the company's strategy for achieving its
operating plan goals. Comparing the business's market
position with these goals and strategies allows goals
for marketing and other elements of the business to be
prioritised. This is the key first step to improving marketing ROI.
A
core operational marketing plan needs to be developed
which meets these goals. This will normally be done by
a group of stakeholders, perhaps with a small core team
taking the lead for drawing up initial proposals. Many
stakeholders (and others) will have their own proposals
to contribute, so a process for working through all these
is helpful.
In
the process outlined above, proposals are reviewed at
successive phases of their development (this approach
is sometimes called a "marketing phase review" or "gate
review" process). The level of detail behind each
proposal is increased as it progresses through each phase.
In this example, "go/no-go" gate reviews are
held after each of 4 stages of planning: initial concept,
feasibility review, prioritisation, and implementation
planning.
At
the end of each phase, the proposal should be reviewed
by relevant stakeholders and "approvers" in
a Gate Review. Since there will usually be many proposals
competing for finite resources (facilities channels, money,
and people's time), in most organisations it will make
sense to hold regular proposal review sessions (monthly
or quarterly, depending on the business). Assuming all
stakeholders and appropriate managers can be involved,
these management reviews should become the formal approval
mechanism to invest time and energy in the next phase
of evaluation. In the early stages, plans can be somewhat
vague, but they are built-up as an increasing level of
detail is required during the planning process.
Since
most organisations will have a formal marketing planning
process, this evaluation methodology can be used to review
marketing programs which implement the plan. The process
allows for programs in the core plan to be compared alongside
proposals from any stakeholders, and should allow a "level
playing field" / objective basis of evaluation and
prioritisation.
As
with all good management activity, the proposals should
not be overly opportunistic or thought up in isolation.
Achieving the strategic business goals and implementing
the go to market strategy should be front of mind in all
proposal development.
More
on Marketing Gate Reviews and Phases
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