Q&A with Jeff Zabin (Fair Isaac)

 

MarketingNPV (MNPV): What needs to be done to make marketing more accountable and measurable? Do marketers need to collect more or different data? Build new internal relationships? With what functions? Toward what end?

Jeff Zabin: Making marketing more accountable and getting a true read on the extent to which a given marketing program is contributing to shareholder value is the Holy Grail of corporate marketing. Getting there goes well beyond just implementing new technologies and processes and increasing the types and quantities of customer data collected. Companies need to put database-driven programs in place to capture, integrate, and enhance customer data; to analyze the data to derive actionable insights; and to use the insights to drive more efficient and profitable customer interactions. This is the essence of precision marketing.

But creating marketing accountability also requires that some fundamental changes take place in how people within the organization think and act. The problem is that human beings are generally loath to change their behavior. This means that the mandate for change needs to begin at the top, with the CEO.

Companies also need to address the fact that, in many cases, the CMO is not a P&L person. Shouldn't the head of marketing be able to quantify the business outcomes of the group's marketing investments? It's surprising to me that so few CMOs are required to report on customer acquisition, retention, and cross-sell metrics in any systematic way. The formula for success may simply lie in the creation of a cross-functional team that brings together strong finance people with strong marketing people. I also suggest divorcing the art from the science. Create two separate functions, and let each one do what it does best. Let art focus on messages, ideas, and creative management, and let science focus on the analytics of data management, as well as on the underlying economics of the overall marketing program. It may even make sense to add a new executive position: director of marketing economics. Reporting directly to the CMO, the person would oversee all activities related to marketing ROI.

MNPV: Should the old metrics like brand awareness and customer satisfaction be discarded in light of new objectives, written with quantifiable measurements in mind?

Zabin: I really don't think that it's an either/or proposition. Traditional measurements like brand awareness will continue to be useful in a mass marketing context. But with the rise of precision marketing, the marketing group now has a whole new set of metrics to report and track against metrics that are directly linked to top-line revenue growth. Because the business outcomes are usually knowable, given the ability to track marketing effectiveness at an individual customer level and determine incremental sales lift, the CMO can better meet the CEO's demands for increased financial responsibility with more scientific approaches to the measurement process.

Traditionally, attitudinal measures such as focus group surveys were essentially the only tools available to marketers to predict campaign effectiveness prior to launch. Now, companies can employ out-of-market experimental design methodologies that harness the power of advanced analytics to test precision marketing effectiveness. In the past, marketers could use only incremental sales data from syndicated reseller channels along with brand awareness studies to try to get a handle on the financial impact of a specific marketing campaign. Today, using precision marketing techniques, marketers can easily quantify marketing ROI simply by looking at customer acquisition and cross-sales performance.

Marketing expenditures have often been rationalized on the basis of vague propositions. Such propositions can be hard to test, especially in the short term. After all, brand awareness does not necessarily translate into a purchase decision. Nobody can say for sure that a specific percentage change in awareness will invariably lead to a specific percentage change in revenue. Yet marketing and media planners continue to play out various hypothetical scenarios by making assumptions.

Precision marketing, on the other hand, allows them to play a whole different ballgame. Precision marketing programs can be tested against a control group to determine the specific impact on the underlying business objectives.

Read our review of Jeff Zabin and Gresh Brebach's Precision Marketing: The New Rules for Attracting, Retaining, and Leveraging Profitable Customers.