CLOSE Survey Finds Marketing / Sales Integration Gaps

CLOSE (Coalition to Leverage and Optimize Sales Effectiveness) is a “peer-led community of over 3,000 sales, marketing and channel professionals” within the CMO Council. The group recently surveyed its members (mostly business-to-business marketers) about sales and marketing integration. The report is not yet officially released, but they did send me a preliminary copy which I discussed with CMO Council Executive Director Donovan Neale-May.

In my eyes, the survey results boiled down to two main points: marketing’s main job is to provide good leads, and alignment between the two groups depends more on processes than technology. Neither of these is surprising. But there were some anomalies that are worth considering.

Let’s start with the role of marketing. The survey asks about this in several ways, but the most telling question was, “What metrics and measures marketing should use to quantify its impact on sales results and business outcomes?” The top answers were unambiguous: 19% said “pipeline and prospect flow” and 18% said “volume and caliber of leads.” No other answer had more than 12% of responses. So it’s clear that marketing’s job is to get good leads, right?

Not necessarily. When asked what “role” marketing should play in optimizing sales performance, there was a statistical dead heat between lead generation (29.1%) and providing sales materials (29.2%). Effectiveness measurement followed close behind (24.5%). Those are three very different things.

In another question about how marketing is “viewed” by their organization, by far the top answer was providing content and sales materials was by far the top answer (41%). Answers relating to leads and demand generation combined for another 32%, while the remaining 27% pretty much said marketing was useless. (I’m not exaggerating: 15% chose marketing provides “no real customer insight or value-added thinking” and 12% said marketing “operates in a vacuum; programs do little to affect sales.” Ouch.)

So: leads are the main measure of marketing impact, except that producing sales materials and analysis are just as important when it comes to marketing’s role or how it is viewed. This seems like a contradiction.

Neale-May’s take was that marketing is viewed as tactical (i.e., a provider of sales materials) because it doesn’t think or act strategically. He felt that marketing would be more effective and get more respect if it took more responsibility for lead nurturing and measuring final results, rather than simply catching leads and passing them immediately to sales.

It sounds so crazy that it just might work.

Back to the survey. When asked to list the key elements to maximize sales, the number one response was “lead quality and ROI” (52%). I suppose this explains why “better integrate and align with marketing” showed up as the highest ranked way to improve sales effectiveness (41%). That is, working more closely with sales would help marketing to generate better leads.

There’s just one problem with alignment: few people seem to do it. Only 16% of the respondents reported an “extremely collaborative” relationship between marketing and sales, although another 40% shrugged that they had “relatively good information sharing”.

Even scarier, less than half (42%) reported “any” formal programs, systems or processes to align sales and marketing, and only half of these (47%) said the programs were successful. That means three-quarters of the companies are not addressing alignment effectively.

One bright spot is that respondents do seem to recognize that the key to alignment is process, not technology. At least, that’s how I interpret their citing “limited processes and systems in place” as the largest challenge to integration (41%), followed by “reporting and organizational structures” (30%) and “siloed operations” (29%). The truly technical issues of “no shared data and real-time information” rank just sixth with 20%.

In terms of existing technology, 12% reportedly live in the paradise of a “well-integrated, real-time view of all customer interactions; readily accessible on-demand by all functions.” Another 37% report that “sales has good visibility into prospects, pipeline, deal flow and conversion rates”. But the other half lives poorly indeed: 20% report that “marketing hands off leads to sales and has no insight into conversion and close process”, 13% report that “most leads are never captured, qualified or acted on”, 11% have “no customer relationship management system or on-demand CRM service in place”, 7% “still use spreadsheets for tracking targets and prospects” and 1% just plain “don’t know”.

The numbers are somewhat similar for CRM systems. A lucky 13% report that CRM is “highly valued and widely deployed” and another 42% say it is “growing acceptance and adoption”. Again, the other half are in bad shape: 15% say the system is “difficult to customize and use”, 10% report a “high level of dissatisfaction”, and 21% have “no CRM system in place.”

Analytics are a slightly different story. A near-majority (46%) report that sales and marketing can both access customer analytics, while another 8% each report that only sales or only marketing have access. This leaves a little more than one-third flying blind.

Or is it really much worse? On the specific issue of “tracking and optimizing customer lifetime value and profitability”, just 6% said they had already made a “significant investment in analytics and programs.” Half the remainder (46%) are working on it, while the other half (48%) apparently are not.

But while just 6% have significantly invested in analytics, 24% list analytics as the best way for marketing to help sales to grow customer value. That was the most popular answer. The difference between 24% and 6% suggests an embarrassingly large gap between what marketers say and what they do.

Over all, it seems that about two-thirds of the companies have reasonably good customer data and analytic tools, but a much smaller elite--fewer than 15%--take full advantage of them.

Neale-May commented that marketing often does not have full access to CRM data. But he added that many marketers could make better use of the tools they do have available. Specifically, they must track prospects through the end of the sales process to understand what makes a quality lead. And producing higher quality leads is what really counts.

Can Brand Value Really Measure Effectiveness?

One more comment on the ANA’s Integrated Marketing survey that I wrote about yesterday. I was struck that brand tracking studies ranked second among effectiveness measures, and brand equity measures ranked fourth. (Numbers are in yesterday’s post.) This is the more respect than brand measurement usually gets.

I suppose this reflects the nature of the survey respondents, who are mostly consumer marketers and (this being the Association of National Advertisers) are largely focused on conventional advertising. I suspect a survey of, say, Direct Marketing Association members would get very different results.

But it seems that brand value is also accepted as an effectiveness measure by people outside of marketing at the survey respondents’ companies. This suggests these people live in a very brand-oriented culture. Indeed, although a couple of speakers yesterday said they had trouble getting their company to believe ROI calculations based on marketing mix models, no one mentioned any problems gaining acceptance for brand metrics.

Lest you think the respondents are all packaged goods marketers, 20% of the survey responders worked in financial services and insurance. (One nice thing people used to good research is they publish all the details.) Computers and technology accounted for another 10%. The traditional brand-centric categories of consumer packaged goods were 11% and food, beverage and tobacco were 9% of the total.

One reason the high ranking of brand value measures caught my eye was that I had just compared brand valuations from two different sources: Millward Brown Optimor and Interbrand. Taking Google in 2007 as an example, Millward Brown gave it a value of $66.4 billion and Interbrand gave it a value $17.8 billion (Millward Brown’s 2008 figure for Google is $86.1 billion; Interbrand 2008 is not yet available.)

Any way you slice it, this is a very big difference. Rankings also diverged: Millward Brown placed Google first among all brands while Interbrand had it at number 20.

My point here is the financial values produced by brand valuation methodologies are very imprecise. It’s actually a bit frightening to think that advertisers would use them to measure effectiveness. The consumer attitudes captured in brand tracking studies are probably much more reliable, even though they cannot be directly converted into a financial measure.

Side note: I had no sooner finished this post than I received an email survey from ANA asking my opinion of the conference. These are definitely people who take their research seriously. Good for them.

ANA Integrated Marketing Conference

I spent the today at the Association of National Advertisers Integrated Marketing Conference in New York. Presentations ranged from a nuts-and-bolts description of reaching government buyers to a frothy view of why consumer “conversations” will supplant traditional media. All quite interesting.

But the one comment that resonated most strongly for me personally came in the conference introduction by ANA President and CEO Bob Liodice. As a result of technology, Liodice said, marketing has changed more in the past five years than in the previous thirty. Marketing must reinvent itself in four primary areas: brand building, integrated marketing communications, marketing accountability, and marketing’s internal organization.

In a way, Liodice’s statement explained why a conference on integrated marketing is still needed. After all, the idea that marketing campaigns should coordinate across channels is by now a fairly old one, and it ranks with Mom and lapel flag pins as a beyond attack. So you would think we could just assume that all marketing communications would be integrated, rather than treating integration as a special case.

And perhaps we could, if we were only dealing with traditional channels like broadcast, direct mail, events, and so on. In reality, as we’ll see in a minute, even those aren’t as integrated as everyone would like. But the challenges of creating that integration are nothing new.

What is new is that various digital channels—Internet ads, social networking, mobile, etc.—have a potential so obviously huge that marketers cannot ignore them. Integrated marketing takes on a new urgency because marketers integrate the digital channels to take advantage of them. Indeed, most of the sessions at today’s conference dealt with digital issues.

One session that didn’t focus on digital showed results of an ANA-sponsored survey on integrated marketing issues. This found that the barriers to integration were largely organizational rather than technical. Specifically, the top four barriers were:

· 59% existence of “functional silos” inside the company
· 42% lack of strategic consistency across communications disciplines
· 36% insufficient marketing budget
· 36% lack of a standard measurement process

It’s only when you reach number five that the answer even might be related to technology:

· 33% lack of skill sets among marketing staff

Answers to other questions reflect a similar lack of obsession with digital channels. Indeed, the ranking of marketing communications programs by which “provides greatest value to your business” lists conventional channels first:

· 34% general advertising
· 11% in-store/point-of-sale
· 11% word-of-mouth/viral
· 8% public relations
· 8% direct response advertising
· 8% search engine marketing (at last!)
· 7% sales promotion
· 7% event marketing
· 3% internet advertising
· 3% sponsorship
· 2% social networking

One way to read these numbers is that ANA members are old-school mass advertisers who may dabble in digital channels but don’t take them seriously. But judging from the keen interest in digital at today’s conference, I don’t think that’s the case. Rather, I think these numbers mean two things:

1. most of the ANA members' business is still driven by conventional media, so by “value” they meant sales volume.

2. the obstacles to integrating digital media are the same, primarily organizational, obstacles that block integration of conventional media.

That the second of these points is true seems almost self-evident: although new technology can certainly be tricky, the real issue is figuring out what to do with it, not how to get it to work.

The first point seems more doubtful, because I think of “value” as a quality or efficiency measure (as in, “value for money”) rather than a simple volume measure (as in "value of sales").

But the ANA respondents may see things differently. When another question asked “the most important measure of effectiveness of your integrated marketing communications programs”, the ranking was:

· 35% sales growth / volume
· 11% brand tracking study
· 10% ROI analysis (e.g. econometric modeling)
· 9% brand equity measures
· 8% market share
· 8% response data (e.g. cost per lead, cost per sale, cost per click, etc.)
· 6% customer acquisition
· 4% customer relationship management data
· 3% profitability
· 3% lifetime value of a customer
· 2% advertising research
· 1% other

In other words, this group really does focus on sales volume. In fact, even the relatively high ranking of “ROI analysis” is misleading because it relates to econometric models, which primarily predict changes in sales volume. You have to get down to number nine, and a whopping 3%, before you actually reach the true value measure of “profitability”.

To be honest, these answers make me a little sad. I haven’t really given up my belief that lifetime value is really the most important marketing measure, even though I’ve pretty much abandoned hope of seeing it widely adapted. (See If Lifetime Value Falls and Nobody Measures It, Has It Really Gone Down? and a slew of earlier posts on my Customer Experience Matrix blog.) I’d be happy with profitability as a primary measure as well. But of the top measures listed in the survey answers, only ROI analysis has any real hope of tying specific results to specific marketing programs. All the others are important business value measures, but almost useless for measuring the contribution of individual marketing programs.

I’m not saying that I’m smarter than the ANA members who answered the survey. Quite the opposite: this is a very experienced group, with an average of 15.6 years in marketing. If they’ve concluded that volume and brand measures are the most important measures of effectiveness, I’m pretty sure that’s because they’ve tried them all and found volume and brand work best. And I’m guessing the reason is those are the measures that people outside of marketing—in sales, finance and the boardroom—pay attention to.

In short, what we have here is a rather tart dose of reality. Digital channels and subtle value measures may be new and cool and important. But the old media, organizational challenges and basic volume and brand measures are still what matter the most.

What's the Biggest Obstacle to Marketing Performance Measurement?

In work with my own clients and discussions with other people, I have found that the biggest obstacle to marketing performance measurement is the lack of necessary data. But when I mentioned this in passing to a marketing measurement expert whose opinion I greatly respect, he challenged me. He said that his experience had shown cultural, skills and experience gaps to be more important.

This really didn’t sound right, but there’s no point debating opinions. So I looked around for some more objective evidence in the form of survey results. I found two sets of results:

- In its 2007 Marketing Performance Measurement Benchmarks for Midsized Companies (free with registration), The Marketing Leadership Roundtable found that “lack of quality data” was by far the biggest factor contributing to dissatisfaction with marketing measurements. It was cited by 84% of respondents, while the next most common factor, ‘inability to generate predictive results’ was cited by only 56%. Score one for me.

I do have to note, though, that when the same survey asked about challenges to improving performance measurement, improved data came up in third place (70%), behind improved reporting systems (81%) and improved linkages to financial results (74%). Quite frankly, I don’t know what to make of the discrepancy. I suppose that marketers answering the second question were addressing the practical issue of what could be done within existing constraints.

Incidentally, this study also proves a very detailed list of the metrics people use in different areas, with percentages to show how often they are employed. Such lists are apparently quite popular, so if you’re into that sort of thing, it’s well worth a look.

- Aberdeen Group reported in its February 2008 study CMO Strategic Agenda: Demystifying ROI in Marketing
(requires payment) that the number one challenge to identifying marketing return on investment was lack of data (48%). Again this was substantially ahead of the next-ranked issue, timely access to relevant information, cited by 36%. Other issues ranked fairly close behind: lack of human resources, difficulty in identifying the right metrics, and communication between sales and marketing.

For what it’s worth, there is also another Aberdeen study from the same series, CMO Strategic Agenda: Automating Closed Loop Marketing, which is available for free for a limited time. Data also comes up as the top issue in this one, although the question is implementation challenges for closed-loop marketing. Specifically, the study shows 47% of respondents citing data consolidation as a top challenge, compared with 36% citing lack of technical skills and 32% citing continuous access to actionable information. Although this is a significantly different issue, it does confirm the general proposition that lack of data is a big problem for marketers.

Of course, none of these studies is definitive. But I think that despite my respected colleague’s comments, I’ll continue to maintain that lack of data is performance measurement Issue #1.