How to Know if Your Marketing Strategy is Working

The foundation of all effective marketing efforts is a sound marketing strategy. Most marketing leaders feel fairly comfortable formulating strategy, but many find it difficult to measure how well their marketing strategy is actually working. The solution for this perennial challenge is a marketing Balanced Scorecard.

When Robert Kaplan and David Norton introduced the Balanced Scorecard in the early 1990's, they saw it as simply a better way to measure organizational performance. However, many early adopters started using the Balanced Scorecard as a tool for implementing business strategy. They recognized that if the objectives and measures included in their Balanced Scorecard were derived from their strategy, the scorecard would become an effective tool for describing the strategy in
measurable terms. Therefore, the Balanced Scorecard quickly evolved from a pure performance measurement system to a tool for managing strategy.

This is my third post about using a Balanced Scorecard to measure and manage marketing performance. In my last post, I described the four "perspectives" used in a Balanced Scorecard. In this post, I'll describe how a Balanced Scorecard can help you determine how well your marketing strategy is working.

The key to using a Balanced Scorecard to manage marketing strategy is something called a strategy map. A strategy map is essentially a set of linked strategic objectives that are organized using the four Balanced Scorecard perspectives. The diagram below depicts a high-level, generic version of a Balanced Scorecard strategy map for marketing.



Each of the rectangles in a Balanced Scorecard strategy map will contain objectives that are derived from your company's marketing strategy. In the above diagram, the rectangles contain descriptions of the kinds of objectives that would be included. For example, in the internal process perspective, one set of objectives will relate to the campaigns or programs that marketers design and execute.

In a Balanced Scorecard strategy map, the lines connecting the rectangles represent the cause-and-effect relationships that exist among your company's strategic marketing objectives. These causal relationships define the "logic" of your marketing strategy, and they tie the objectives together to create a cohesive strategy. Describing these cause-and-effect relationships is one of the most critical steps in building a sound marketing strategy, and using a strategy map forces you to make these relationships explicit and visible.

In a Balanced Scorecard strategy map, the cause-and-effect lines indicate that achieving one objective is what enables another objective to be achieved. For example, the above diagram is indicating that if a company successfully achieves its customer value proposition objectives, the company will achieve its objectives relating to customer acquisition and customer loyalty. And, if the company achieves its customer acquisition and customer loyalty objectives, it will be able to reach is revenue growth objectives.

The most powerful argument for using a Balanced Scorecard to measure and manage marketing performance is that it provides a mechanism for demonstrating and documenting how individual marketing activities fit into and support your marketing strategy, and for connecting individual marketing activities and programs to ultimate business outcomes. The objectives and measures used in the customer, internal process, and learning and growth perspectives are leading indicators of the business outcomes that define marketing success. So, by monitoring your progress toward achieving all of the objectives included in your strategy map, and by testing the validity of the cause-and effect relationships you've defined in your strategy map, you are also measuring the effectiveness of your marketing strategy.

Marketing TILT

TILT was launched eleven days ago. I am thrilled with the reviews the book has received so far and with the reactions of those who have read it and tweeted about it.

I have done a number of interviews about the book. Soon, a number of articles expanding on the ideas in the book will be appearing in the Harvard Business Review, Strategy + Business, the Ivey Business Journal, and elsewhere.

But

Crossing the Divide: The Art of Closing the Sale

We see it again and again: professional services sellers misread the real desires and priorities of their buyers, and consequently stumble in the art of closing the sale.

The Hinge Research Institute conducts regular research on the professional services marketplace. For our most recent study, we set out to examine how successful providers cross the perception gap between buyers and sellers. In cooperation with RAIN Group, we studied over 1500 matched buyers and sellers and analyzed 42 factors that distinguish the sellers who ultimately close deals from the also-rans.

The top three factors that correlated with successful sales also predicted buyers’ satisfaction with the purchasing process and intent to continue buying services from the seller. You can think of these three factors as a checklist to meeting professional services buyers’ true expectations.

1. Educate me with new ideas or perspectives

Producing educational content for your audiences pulls a lot of marketing weight -- and it contributes to sales, too. Say you’re a small accounting firm that works primarily with small businesses. You might write an ongoing blog about news around small business taxes, along with longer free guides or ebooks on topics like deducting a home office.

This may feel an awful lot like giving away your knowledge for free. And that’s because it’s exactly what you’re doing. By educating your audience with substantial, useful, and search-optimized content, you raise your visibility online while simultaneously raising your credibility with potential buyers. This kind of content helps folks get to know you, so that buy the time you’re closing the sale, the client feels that they already understand both your firm and its capabilities.

2. Collaborate with me

Many sellers will tell you that buyers are looking for a “trusted partner,” but that’s one of those phrases that gets tossed around so often it becomes vague and not particularly useful.

At the beginning of a relationship between buyer and seller, as you’re closing the sale, buyers report that they want to see a willingness to collaborate. They want a problem-solving dynamism in the relationship. Conversely, they don’t want a my-way-or-the-highway attitude from a seller, with rigid offerings and little willingness to find a tailored, cooperative solution to the buyer’s problem. Work with clients to solve their problems -- or chart a path toward the solution -- in a way that leverages both your strengths and the buyer’s in unison, creating a new and unique capability set.

3. Persuade me that you will achieve results

If you’ve produced educational material, your buyer may have learned to see their problem in a new light, or seen how your firm thinks about similar problems. If you’ve shared your collaborative flexibility, the buyer has seen that you’re willing to work toward the right solution for them. Now, they’ll want to see that you can carry out that solution.

There a number of ways you can make this clear. Case studies and client referrals are two effective methods. More broadly, it’s important to cultivate your reputation for results. By refusing to overpromise in one engagement, no matter how tempting, you avoid the risk of tainting your reputation...and you better position yourself for winning the next engagement.

The art of closing the sale isn’t a matter of magical hard-sells -- in fact, it isn’t a matter of “saying the right thing” at all. Instead, it’s a matter of managing buyers’ perceptions of your firm. Your knowledge and credibility, your willingness to collaborate, and your reputation for follow-through -- when these attributes of your firm are visible to the world, you’ll find increasingly that buyers come looking for you.

To read the full results of the study, download a free copy of the new book Inside the Buyer’s Brain.

About the Author: Elizabeth Harr is a partner at Hinge, a marketing and branding firm for professional services. Elizabeth is an accomplished entrepreneur and experienced executive with a background in strategic planning, management, communications, and alliance development. She is the coauthor of How Buyers Buy: Technology Services Edition and Online Marketing for Professional Services: Technology Services Edition.

How a Balanced Scorecard Measures Current and Future Marketing Performance

In my last post, I argued that marketers should use a Balanced Scorecard to measure and manage marketing performance. The Balanced Scorecard was introduced by Robert Kaplan and David Norton in the early 1990's, and it's become one of the most popular and effective business management tools. In the Management Tools and Trends 2013 survey by Bain & Company, business leaders from around the world ranked the Balanced Scorecard as the fifth most widely-used management tool.

The Balanced Scorecard was created to address the deficiencies of performance management systems that rely exclusively on financial performance metrics. One of the main shortcomings of financial accounting measures is that they are lagging indicators. They measure the financial consequences of actions taken in the past, but they can't measure how today's activities will affect future performance.

To address these deficiencies, a Balanced Scorecard uses both financial and non-financial metrics, and it includes measures of both leading and lagging performance indicators. This framework enables company leaders to monitor both current performance and the factors that drive future
performance.

These capabilities make the Balanced Scorecard a powerful tool for measuring and managing marketing performance. A Balanced Scorecard measures marketing performance across four perspectives - financial, customer, internal process, and learning and growth. The financial perspective measures the current performance of the overall marketing function, while the other three perspectives measure the drivers of future performance. The diagram below shows the basic architecture of a Balanced Scorecard.

A thorough explanation of how the Balanced Scorecard is used for marketing would require a book, not a blog post. In this post, I'll briefly describe the four perspectives of a marketing Balanced Scorecard. In my next post, I'll describe how you can use a Balanced Scorecard to measure the effectiveness of your marketing strategy.

The Four Perspectives of a Balanced Scorecard

Financial Perspective - As noted earlier, the financial perspective of a Balanced Scorecard measures the current financial performance of the marketing function. When a Balanced Scorecard is used for marketing, the ultimate financial measure is usually return on marketing investment.
This perspective will also typically include objectives and measures relating to revenue growth and the operational efficiency of the marketing function. For example, most marketing Balanced Scorecards will measure overall revenue growth. Depending on a company's growth strategy, this perspective may also contain specific objectives and measures pertaining to certain sources of revenue growth, such as growth from specific customer groups, products, or geographic market areas.

Customer Perspective - The customer perspective of a marketing Balanced Scorecard will contain a set of objectives and measures relating to customer acquisition and to customer retention, growth, and satisfaction. This perspective will also typically include objectives and measures that focus on the most important aspects of your customer value proposition. Some of the measures commonly found in this perspective include number of new customers acquired (or number of new customers of a particular type) and average deal size. The "logic" of a Balanced Scorecard is that if a company achieves the objectives included in this perspective, the company will achieve the revenue growth objectives in the financial perspective.

Internal Process Perspective - This perspective will contain objectives and measures relating to the internal activities and processes that are critical to (a) understanding your current and potential customers, and (b) communicating your value propositions to prospects and customers. Some of these processes relate to how you gather and use data from and about your customers and prospects, and some will relate to how you design and execute marketing campaigns and programs. So, for example, this perspective is where you track the performance of lead generation and lead nurturing programs. The internal process perspective will also include objectives and measures relating to the operational processes in the marketing function that affect efficiency and productivity.

Learning and Growth Perspective - The fourth and final perspective of a Balanced Scorecard is the learning and growth perspective. This perspective measures the intangible assets that your company must posses in order to perform your critical internal processes with a high level of competence. This perspective will typically contain objectives and measures relating to three types of intangible assets - human capabilities, technological capabilities, and organizational/cultural attributes.

So, how do you determine what objectives and measures should be included in a Balanced Scorecard? In my next post, I'll explain why objectives and measures should be derived from your marketing strategy. When this is done, the Balanced Scorecard becomes a powerful tool for managing your strategy and measuring its effectiveness.

5 Indications of an Ineffective B2B Email Newsletter

Given the success of email marketing in B2B lead generation and its consistent presence in most businesses’ marketing campaigns, it’s hard to imagine that email newsletters would fail. But it does happen, and the problem is that marketers tend to be in denial of the fact that it’s not working and that they need to do something about it.

Marketers need to identify the signs that tell whether or not an email campaign is successful. Although these indications are pretty obvious, they’re the ones that marketers need to take a look at so they can make the necessary adjustments. These indications are as follows:

1. Low subscription rate; high unsubscribe rate. If your list of subscribers got stuck at 20 and no longer growing, then you obviously have a problem. Also, if people seem to unsubscribe constantly, that’s another problem. To address this, go back to the mechanism that allows them to subscribe – is it a tick box on your landing page? Is it a full-pledged form? You may want to rethink your subscription offers, too. Check whether the frequency and/or content are making them happy.
2. Awful open rates. Your subscribers may not be quitting on you, but if they’re not opening the stuff you send them, it’s pretty much the same thing. It could be your subject line. It could be the timing. Or it could be a previous content piece they so disliked that they've decided not to read anything from you, and they’re just too kind to unsubscribe.
3. Unpromising click-though rates. The industry standard is currently at 4.3%. Is your CTR reaching that target? If no, but intermittently, then you might still be in the game. If no with consistency, then you might as well refocus your energy on something else.
4. Calls-to-action are in oblivion. CTAs measure the very purpose of lead generation. If they are being ignored (or worse, if they are becoming invisible), then you need to check what’s going on. Is it the presentation style of the CTA? Is it being too pushy? Does it make the process too complicated for prospects?
5. Spam rates are unusually high. Being marked as a spammer is the ultimate symptom – it means your would-be readers are just too unengaged and will only generate more spam complaints in the future. If your spam rates are going through the roof, it may be best to pull the plug on email marketing (for a while), rethink the strategy and redeem yourself next time.

Why Marketing Needs a Balanced Scorecard

Earlier this year, ITSMA, VisionEdge Marketing, and Forrester Research surveyed marketing leaders about how they demonstrate marketing's value to the business. The survey revealed that marketers are producing more performance data than ever, but that most of the data doesn't resonate with senior company leaders. For example, the survey found that only 9% of CEO's and 6% of CFO's rely on marketing data to make business decisions.

The study authors contend that most marketing metrics don't do a good job of communicating the value of marketing for three reasons.

• They measure marketing activities, but not important business outcomes.
• They measure operational efficiency, but not the effectiveness of marketing.
• They measure past performance, but they don't provide predictive insights about future outcomes.

Measuring the impact that marketing has on company revenues and profits is a critical aspect of managing marketing performance, but an effective performance management system for marketing must also perform several other functions. For example:

• It must measure the performance of individual marketing activities and programs so that marketers can make investment and marketing mix decisions that will maximize results.
• It must enable marketers and other business leaders to evaluate how well their company's marketing strategy is working.
• It must support both strategic and tactical decision making.
• It must enable marketing leaders to measure the efficiency and effectiveness of operational marketing activities and processes.

In order to perform all of these functions, a performance management system for marketing will necessarily include several types of metrics, including some of the kinds of metrics that are now being criticized. Specifically, a comprehensive marketing performance management system will include:

• Financial and non-financial measures
• Metrics for leading and lagging performance indicators
• Measures that focus on the strategic impact of marketing and metrics that support tactical decision making
• Measures of ultimate business outcomes and measures of activities, outputs, and intermediate outcomes
• Revenue and cost metrics

To prove the value of marketing to C-level executives and manage the marketing function effectively, marketing leaders need a balanced scorecard for marketing. Since its introduction by Robert Kaplan and David Norton in the early 1990's, the balanced scorecard has become one of the most widely-used and effective tools in the business management arsenal.

In my next post, I'll describe what a balanced scorecard for marketing looks like.

Are Apple’s New Features Convincing Customers to Buy?

This blog post originally appeared on the HBR Blogs Network.

Barely has the hype from the launch of the iPhone 5s and 5c subsided that chatter about the iPhone 6 has begun. A larger screen size is rumored. Apple’s product innovation strategy places it on a punishing treadmill. If the company does not deliver new products or new features to the market’s expectations and calendar, investors