Stop Looking in the Rearview Mirror to Predict the Future

ITSMA research shows that the discipline of measuring the return on marketing activities leads to better resource allocation, which in turn leads to improved results. But to get the full benefit of marketing measurement, it must become a crystal ball, able to predict the success of a particular program or portfolio before a single dollar is spent.

Few companies have built this kind of analytical capability yet. But at least marketers are preparing the foundation. A recent ITSMA survey found that 76% of marketers have increased their emphasis on measuring marketing. Effectiveness skyrockets when marketers are accountable and they measure results. Indeed, of the marketers who said that they were having a significant business impact, 40% have measurement as a line item in their budgets.

The Virtuous Cycle of Measurement

Better allocation of marketing resources is a top benefit of measurement. Indeed, measurement creates a virtuous cycle. When marketers have the data about which marketing activities are more effective, they can shift the budget and change the marketing activity mix so that they are spending more of their time and budget on the activities that are most effective.

However, making this transition to predictive analysis is difficult. In part, thats because marketers and businesspeople are used to relying on their gut instincts to make allocation decisions. They view metrics as fodder for making a gut decision rather than as the leading factor in the decision.

Beyond the Gut

Marketing strategies are often based on perceptions of value that may or may not be true. Without hard data, impressions harden over time until they seem like data.

Perhaps the only thing worse than businesspeople doubting the value of marketing is their certainty that the wrong program adds value. The only true certainty is disappointment when the wrongheaded strategy fails to live up to expectations. Reliable metrics are the best way to wean people from relying on their gut instincts.

But there are flaws in current marketing metrics that need to be resolved before moving to the analytical level:

• Too soft. Marketing measures tend to focus on softer concepts such as awareness, attitudes, and recall that do not tie to outcomes.
• Fragmented. Metrics tend to focus on specific campaigns rather than providing a holistic view. Divisions in business line, geography, and field versus centralized marketing also fragment data.
• Backward looking. Historical data won’t predict the future unless it is modeled and analyzed properly.
• Limited scope. Most companies measure only some of their marketing activities, which prevents a comparison across the portfolio.
• Lack of systems integration. If marketing activities are captured within computer systems at all, those systems are usually fragmented so that data cannot be analyzed in a holistic fashion.

The Steps to Looking Forward

Corporate marketing needs to take the lead to get past these hurdles. Only corporate has the influence to integrate measures across all of marketing to create a holistic view and a more direct line to business results.

But that is just the first step. Creating a truly predictive analytical capability also requires the following:

• Gather adequate data ranges. Accurate predictions come from a truly representative set of historical data. For example, HP loaded two years’ worth of past marketing campaign data into its predictive model to mitigate the effects of unusual anomalies or one-off campaigns.
• Do the math. Create algorithms for analyzing the historical data to provide predictive analysis.
• Segment for accuracy. Results for particular marketing campaigns can vary widely, even if the campaign is of uniformly high quality. Different audiences may respond differently to the same campaign, whether the differentiating factor is an issue of rank, purchasing goals, the product or service sold, geography, or culture. One ITSMA member company segmented its data by business unit to be able to analyze the effectiveness of programs by particular products and services.
• Put the competition in the model. It is important to understand competitors’ product and service strategies as a factor in determining the future allocation of marketing services. For example, if a competitor is planning to introduce a new product, marketers should factor that into the analysis of future marketing resource allocation and monitor the competitor’s conversations.

Have you made the move to predictive analytics? Do you have best practices to share? Contact us at jschwartz@itsma.com or ckoch@itsma.com.

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ITSMA specializes in helping companies market and sell services and solutions more effectively. We work with the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA annual program clients include business leaders such as AT&T, Cisco, Deloitte, EMC, Fujitsu, Hewlett-Packard, IBM, Microsoft, SAP, and Tata Consultancy Services, among others. Our comprehensive research, consulting, and training on topics including ITSMA Account-Based Marketing℠, Brand Positioning, and Solutions Development provide the insight and experience companies need to improve business results. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.