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“Integration-Driven ROI in A Transformational Marketplace”

Don and Heidi Schultz Agora, Inc.

WELCOME!

ISBM Webinar Series

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…An industry-supported center of excellence; Headquarters at Penn State

OUR MISSION:

• Expand research and teaching in business-to-business marketing and sales in academia…

• Improve the practice of business-to-business marketing and sales for member firms in industry…

ISBM Membership – 2009; Moving to 100 (Capped) by 2010

Agilent

Air Products

Alcoa

Alfa Laval

Analog Devices

Arkema

AT&T

Avery Dennison

Bayer

Brink’s

BSN medical

Ciba Specialty Chemicals

Cisco Systems

ConocoPhillips

Corporate Express

Cox Business

Deloitte

Dow Chemical

Dresser Inc.

DuPont

Eastman Chemical

Eka Chemicals

Ethicon Endo-Surgery, Inc.

ExxonMobil

Ferro

Fin/Econ Partners

Flowserve

Gallup Organization

GE

Grace

Grainger

Greif, Inc.

GyroHSR LLC

Honeywell

IBM

Indium

ITT

JohnsonDiversey

Kennametal

Kimberly-Clark Professional

Kodak’s Graphics Comm.

Lilly

Lonza

LORD Corporation

MARKEM

Monitor Group

Nalco

National Starch and Chemical

New Pig

NIST/MEP

NOVA Chemicals

Objective Management Group

Parker Hannifin

Ply Gem

PPG Industries

Respironics

Rohm and Haas

Sabert

Satmetrix

SAVO Group

Sherwin-Williams

Siemens

Swagelok

3Com

Thilmany

Ticona, LLC

The Timken Company

UBS

WESCO Distribution

Westinghouse

Xerox

ZS Associates 3

“Integration-Driven ROI in A Transformational Marketplace”

Don & Heidi Schultz

• www.agora-imc.com

Integration-Driven ROI in

A Transformational

Marketplace

Integration-Driven ROI in

A Transformational

Marketplace

Don and Heidi Schultz

ISBM Webinar

13 November, 2009

Discontinuous Change Signals a

Transformational Marketplace

Discontinuous Change Signals a

Transformational Marketplace

TimeTime

Ev

en

tsE

ve

nts

Change

When Will Things Get

Back To Normal?

When Will Things Get

Back To Normal?

Most Likely,

This Is Normal!Most Likely,

This Is Normal!

In B2B Marketing and

Communication We’re in a

Marketplace Revolution,

Not a Marketplace Evolution

In B2B Marketing and

Communication We’re in a

Marketplace Revolution,

Not a Marketplace Evolution

Transformation Creates More

Pressure to Justify

Marketing and

Communication Spend

Transformation Creates More

Pressure to Justify

Marketing and

Communication Spend

If You Can’t Count It,

Cut It!

If You Can’t Count It,

Cut It!

But,

Marketers Seem to Have Fallen

Into the Same Financial Quagmire

Trying to Prove Marketing and

Communication Work

But,

Marketers Seem to Have Fallen

Into the Same Financial Quagmire

Trying to Prove Marketing and

Communication Work

� Six Sigma

� Balanced Scorecard

� Marketing Mix Modeling

� Other Quantitatively-Driven, Historical, ROI

Systems

Using Tools That Don’t Fit or

Can’t Be Made to Fit

Using Tools That Don’t Fit or

Can’t Be Made to Fit

� Quantitative financial systems that

assume…

�Static marketing situations

�Availability of optimal solutions

�Are backward-looking

� Ignore any network effects

�Methodologies can be employed in all

situations

Everyone and His Brother

Has An ROI Approach

Everyone and His Brother

Has An ROI Approach

And, More Are Being

Invented Every Day

And, More Are Being

Invented Every Day

The Problem Is:

None of Them Are

Compatible, Comprehensive

and Certainly Not Complete!

The Problem Is:

None of Them Are

Compatible, Comprehensive

and Certainly Not Complete!

Traditional Measures of

Marketing and Brand Returns

Traditional Measures of

Marketing and Brand Returns

Customer-Based

Brand Equity

Attitudinal

Data

Hierarchy of

Effects

Brand Tracking

Studies

Three Pathways

Short-Term

Incremental Sales

Cash

Flows

Marketing Mix

Modeling

ROCI

Branded

Business Value

Present/Future

Brand Value

Discounted Cash

Flows

Brand

Scorecards

And, CFOs Know They

Don’t or Can’t Work

And, CFOs Know They

Don’t or Can’t Work

“Survey Finds CFOs Skeptical of Their Own Firms’ ROI Claims”

� 60% believe their marketing departments have

inadequate understanding of financial controls

� 70% said their companies do not use marketing inputs

and forecasts in financial guidance to Wall Street

Advertising Age, July 15, 2008

Not What You Wanted to Hear

Given Today’s Economy,

Right?

Not What You Wanted to Hear

Given Today’s Economy,

Right?

What to Do?What to Do?

We’ve Been Looking at the

Wrong End of the

“Communication Funnel”

We’ve Been Looking at the

Wrong End of the

“Communication Funnel”

Measuring Outputs, Assuming Valid Inputs Measuring Outputs, Assuming Valid Inputs

We’ve Started Here – ROI

What We Should Have Been

Studying Is What to Put in the

Media Communication System

What We Should Have Been

Studying Is What to Put in the

Media Communication System

Valid Inputs Determine Useful Outputs Valid Inputs Determine Useful Outputs

…Determines What You

Get Out Down Here

What You Put in

Up Here...

Proposing an Alternative Plan

for Measuring Marketing

Communication Success:

Where ROI Is the Result, Not

the Goal

Proposing an Alternative Plan

for Measuring Marketing

Communication Success:

Where ROI Is the Result, Not

the Goal

It All Starts With a Holistic,

Integrated Approach to

Marketing and

Communication

It All Starts With a Holistic,

Integrated Approach to

Marketing and

Communication

Which Has Been Massively

Complicated by Technology

Which Has Been Massively

Complicated by Technology

ConsumerConsumer

Internet – WiFi

Mobile Telephony

iPods/MP3 -- podcasts

Social Networks

Cable/satellite

Blocking Systems - TIVO/DVRs/ Filters/Pop-up Blockers/etc.

Creating Today’s Marketplace Creating Today’s Marketplace

MarketerCustomers/Prospects

Competitors

Competitors

Competitors

Competitors

Messages and Incentives

Products and Services

Word-of-Mouth New Forms of Media

Web Search

Em

plo

ye

es/R

ecom

mend

ers

/Dis

trib

uto

rs/I

nflu

encers

Agency � Media � Sales Force

How Can Anyone Possibly

Untangle All the Brand

Contacts Companies Send

Out and Customers and

Prospects Receive…or,

Generate?

How Can Anyone Possibly

Untangle All the Brand

Contacts Companies Send

Out and Customers and

Prospects Receive…or,

Generate?

You Can’t If You Keep Trying to

Measure Message Distribution

You Can’t If You Keep Trying to

Measure Message Distribution

An Even Bigger Problem…An Even Bigger Problem…

Customer to Customer

Attitudes

Cust

omer

to

Bra

ndSales

Brand to C

ustomer

Brand

Information

and Value

Here’s The Problem

Fact:

ROI Is Assumed to be a

By-Product of Media Distribution

But,

ROI Occurs as a Result of Media

Consumption, Not Media

Distribution

Fact:

ROI Is Assumed to be a

By-Product of Media Distribution

But,

ROI Occurs as a Result of Media

Consumption, Not Media

Distribution

It Is Marketing Communication

Inputs into the Funnel…

It Is Marketing Communication

Inputs into the Funnel…

Inputs Are Key:

Allocation

…That Are Really Important!…That Are Really Important!

Those Determine What Comes

Out in Marketplace

Measurement

Those Determine What Comes

Out in Marketplace

Measurement

If You Do Allocation

Right, Acceptable ROI

Will Follow

If the Message Distribution

Isn’t Right in the Beginning…

You’ll Never Get an

Acceptable ROI…

No Matter How Statistically

Sophisticated Your ROI

System

If the Message Distribution

Isn’t Right in the Beginning…

You’ll Never Get an

Acceptable ROI…

No Matter How Statistically

Sophisticated Your ROI

System

As the IT People Have Said

For So Long…

As the IT People Have Said

For So Long…

Garbage In…

….Garbage Out!

All ROI Measures Assume

CONSUMPTION of the Media

Forms You Distribute!

If It’s Not Consumed,

Nothing Happens!

All ROI Measures Assume

CONSUMPTION of the Media

Forms You Distribute!

If It’s Not Consumed,

Nothing Happens!

What Do We Know About

Media Consumption?

Very Little!

What Do We Know About

Media Consumption?

Very Little!

Only Media Audiences Know

What Media Forms They

Consume and What Impact

That Has on Their Purchasing

Habits…

Only Media Audiences Know

What Media Forms They

Consume and What Impact

That Has on Their Purchasing

Habits…

What We Really Need Are

Media Consumption Measures

What We Really Need Are

Media Consumption Measures

Response

Media

Exposure

Media

Exposure

Media

Exposure

Media

Consumer

Potential Synergy

Via Simultaneous Media Usage

(Messages Reinforced)

Potential Fragmentation

Of Attention

(Message Impact Diluted)

Foreground/Background Media

Time Allocated To Each Media Form

Media Consumption Measures

Are Complicated by

Simultaneous Media Usage,

Multi-Tasking and the

Importance of the Media Form

to the Receiver!

Media Consumption Measures

Are Complicated by

Simultaneous Media Usage,

Multi-Tasking and the

Importance of the Media Form

to the Receiver!

That Means “Integration”,

But,

Not Just Integrating the

Outbound Messages,

Integrating the Entire

Customer Communication

Experience

That Means “Integration”,

But,

Not Just Integrating the

Outbound Messages,

Integrating the Entire

Customer Communication

Experience

Integration of the Entire

Communication System Is Critical

Integration of the Entire

Communication System Is Critical

Customer

Brand Experiences

Internet Systems

Electronic Systems

Brand Experiences

• Web sites

• Customer Service

• Tech support

• Social Media

• Friends

• User communities

• Blogs

• RSS

• Influencers

• Recommenders

Audiences Retailer Agencies Messages

That Calls for a New Media

and Promotional Planning

Approach…

That Calls for a New Media

and Promotional Planning

Approach…

Allocating the Right Media

Forms to the Right Customers

and Prospects, at the Right

Time, in the Right Amount…

In Short, an Integrated

Approach to B2B Marketing

and Communication..

Allocating the Right Media

Forms to the Right Customers

and Prospects, at the Right

Time, in the Right Amount…

In Short, an Integrated

Approach to B2B Marketing

and Communication..

The Customer Focused

Integration Approach

The Customer Focused

Integration Approach

1. Customer IdentificationFrom Behavioral Data

2. Valuation of Customers/Prospects

3. Creating & Delivering Messages & Incentives

4. Estimating Return-on-Customer- Investment

5. Budgeting, Allocation, Evaluation &Recycling IMC

Using a Customer-Focused,

Inside-Out Approach

Using a Customer-Focused,

Inside-Out Approach

� Solutions

� Information

� Values

� Access

S I V A

S Is for Solution to Customer

Problems and Concerns:

S Is for Solution to Customer

Problems and Concerns:

� Customer Question: � How can I solve the problem I have or

expect to have?

� Brand’s Answer:

� Here’s our solution to your problem

S

I Is for Customer Need for

Information

I Is for Customer Need for

Information

� Customer Question: � Where can I learn more about your

Solution to my problem?

� Brand’s Answer: � Here are the answers to your questions

– ways to get the information, plus the products and services you want or need

I

V Is for Customer Questions

About Value

V Is for Customer Questions

About Value

� Customer Question: � What is the total sacrifice or cost to get and

use your solution to my problem?

� Brand’s Answer: � Here’s the total cost for “our solution” and,

here’s the value you get for the price you pay

V

A Is for the Customer Needs for

Access

A Is for the Customer Needs for

Access

� Customer Question: � Where can I get or find “your solution” and,

how easy will it be to obtain?

� Brand’s Answer: � Here’s where you can find “our solution” ,

here’s the total cost and the experience you will have in obtaining and using

A

A Difference in Where

Integration Takes Place

A Difference in Where

Integration Takes Place

� 4 Ps View

� Product

� Price

� Place

� Promotion

� Selling/marketing at the end of the process

� SIVA View

� Solutions for Customer

� Information for Customer

� Value for Customer

� Access for Customer

� Marketing/branding driving

the process from the beginning

S I V A

With a Customer Focus,

You Can Generate

Measurable, Relevant, Useful

and, Believable

ROI!

With a Customer Focus,

You Can Generate

Measurable, Relevant, Useful

and, Believable

ROI!

What Should Go In?What Should Go In?

Customer Product

Usage

Outputs from the Funnel:

Accurate and Relevant ROI

Financial Value

of Customer

Customer

Media Usage

Estimated Customer

Returns

But,

Where Do We Get the

Necessary Inputs for

Allocation?

But,

Where Do We Get the

Necessary Inputs for

Allocation?

Most of the Data You Need Is

Inside Your Organization….

You Simply Need to Find It

and Then Align the

Organization

Most of the Data You Need Is

Inside Your Organization….

You Simply Need to Find It

and Then Align the

Organization

55

Customer

Channel

DataSales

Credit/

Financial

Data

Accounting

Customer

End-User

Data

Marketing

Traditional

Attitudinal

DataResearch Dept.

Customer

Feedback

Data

Customer Service

Product Use/

Application

Data

Tech Support

Customer/ChannelDatabase

Integration of Planning ProcessesIntegration of Planning Processes

Source: Adapted from Cranfield School of Management

Marketing FinanceHuman

ResourcesInformationTechnology Operations

CEO

Step One: Customer Identification fro Behavioral Data

Step Two: Valuation of Customers/Prospects

Step Three: Creating & Delivering Messages & Incentives

Step Four: Estimating Return-On-Customer-Investment

Step Five: Budgeting, Allocation, Evaluation and Recycling

Cu

sto

mers

This Is the Type of Integrated

Marketing and

Communication Approach

We’ll be Discussing in the

ISBM Seminar in January…

This Is the Type of Integrated

Marketing and

Communication Approach

We’ll be Discussing in the

ISBM Seminar in January…

Agenda As PlannedAgenda As Planned

� A New Marketplace – Meeting

The Challenges

� What We Know Abut IMC

� 7 Basic Concepts

� Marketplace Transitions

Change Integration

Requirements

� “Push” vs. “Pull”

� B-to-B Branding in an IMC

Context

� 4 Stages of IMC

� 5-Step IMC Process

� Applying the 5-Step IMC Process to

a B-to-B case

� Basic Thoughts on Measurement

� The Three Pathway Model

� Pathway 1: Customer Brand Equity

� Pathway 2: Short-Term Sales

� Pathway 3: Brand Valuation

� Challenges of Measurement

� Internal Marketing

� Next Steps in IMC

� Summing Up

Day OneDay One Day TwoDay Two

We Hope You’ll Join Us in

Pittsburgh!

January 13 and 14, 2010

We Hope You’ll Join Us in

Pittsburgh!

January 13 and 14, 2010

For more information contact Paula Dorminy at ISBMPhone: 814.863.2782

E-mail: pad148@psu.edu

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Archived recording of today’s event at www.isbm.org

For more information on ISBM:ISBM@psu.edu

814-863-2782

Thank You!