1. © 2009 Lenskold Group. All rights reserved. 1 March 12, 2010 44 th CMAG Meeting How to Deliver Insights that Deliver ROI

2. © 2009 Lenskold Group. All rights reserved. Lenskold Group Overview  Lenskold Group founded in 1997  “Marketing ROI” book named one of the 5 most influential marketing books of 2004  Marketing profitability management ROI Framework Measurement & Analysis ROI Tools & Dashboards Workshops & Training  Global 1000 and emerging corporate clients  Workshops conducted in 9 countries with 1,500+ marketers  Leading marketing ROI innovator 2 Partial Client List

3. © 2009 Lenskold Group. All rights reserved. 3 ROI Opportunities ExistMarketing ROI Framework Provides SupportKey Measurement ConsiderationsMaximizing ROI from Market Intelligence & Research Agenda

4. © 2009 Lenskold Group. All rights reserved. 4 ROI Opportunities ExistMarketing ROI Framework Provides SupportKey Measurement ConsiderationsMaximizing ROI from Market Intelligence & Research Agenda

5. © 2009 Lenskold Group. All rights reserved. Market Intelligence & Research ROI  Why invest in intelligence & research?  Where is the “return” from that investment that delivers and improves ROI?  Should MI be required to generate an ROI?  Insights are critical to guide marketing effectiveness and profitable performance  Insights are applied to improve performance and profitability  Absolutely. 5 Net Profit (Gross Margin – Marketing Invt) ROI = -------------------------- = ------------------------------- Marketing Invt Marketing Investment

6. © 2009 Lenskold Group. All rights reserved. Challenges & Opportunities for MI-ROI Challenges  Intelligence and research are delivered to decision-makers who may or may not take action on the insights  Marketing complexity often leads to uncertainly in interpreting insights  Measurement objectives are not well defined by “clients”  Profit drivers critical for ROI are often neglected Opportunities  Identify and present ROI potential with reliable ROI framework  Align insights to a common customer funnel  Guide decision-makers on defining measurement objectives that are strategic and actionable  Use ROI to build and maintain executive support 6

7. © 2009 Lenskold Group. All rights reserved. 7 Goal is Performance & Profitability Σ Profits – Investment ROI = ------------------------------ Marketing Investment Marketing Strategy & Position Measurements & Metrics Tracking Financial Assessment Decision & Mgmt Tools Marketing Performance Customer & Sales Analytics

8. © 2009 Lenskold Group. All rights reserved.  Target  Media  Offers  Message  Revenue  Less CGS/Expenses  Less Incremental Expenses 8 Customer Behavior / Response Sales Activity  Funnel Progression Perceptions/Attitudes Actions/Response  Customer Base/Activity  Transaction Volume  Transaction Size/Mix Contact-to-Impact Provides Strategic Insight Marketing Strategy & Execution Financial Contribution Budget Profit ROI

9. © 2009 Lenskold Group. All rights reserved. Traditional Metrics - Incomplete 9

10. © 2009 Lenskold Group. All rights reserved. Users See Only Two Types of Insights  Marketing ROI is an improvement process, not a pass/fail evaluation GOOD NEWS OR BAD NEWS Intelligence is…  Filtered  Cherry-picked  Sugar-coated 10

11. © 2009 Lenskold Group. All rights reserved. Insights Drive ROI Improvements  What is not working & why A good marketer will take actions to improve strategies  Customer behavior & influence on key profit drivers Customer value Funnel leakage  Impact of non-controllable factors Competitive and market condition influence  Evaluation or assessment of alternatives Drive ROI with better marketing effectiveness Greater success potential to improve, not replace 11

12. © 2009 Lenskold Group. All rights reserved. 12 ROI Opportunities ExistMarketing ROI Framework Provides SupportKey Measurement ConsiderationsMaximizing ROI from Market Intelligence & Research Agenda

13. © 2009 Lenskold Group. All rights reserved. ROI Management Process 13 Strategy Tactical Plan Measurement Plan Measurements Impact & Contribution ROI Scenarios ROI Measurement Supporting Insights Test Variations in Plan Objectives Best Assumptions History to guide future campaigns History to guide future campaigns

14. © 2009 Lenskold Group. All rights reserved. Quantify ROI Potential & Outcomes Campaign inputs:  Marketing budget  Cost of marketing staff  Assumed impact on sales Option to detail “funnel”  Sales-driven costs (offers, incentives, discounts, etc.)  Target profile Financial inputs :  Average revenue per sale based on target profile and products  Gross margin % Outputs:  Incremental sales, revenues, and profit  Return on Investment (ROI) 14 Net Profit (Gross Margin – Marketing Invt) ROI = -------------------------- = ------------------------------- Marketing Invt Marketing Investment “Gross Margin” equals the Discounted Cash Flow (Net Present Value) of incremental profits and costs that result specifically from the corresponding marketing investment

15. © 2009 Lenskold Group. All rights reserved. Know ROI Scenarios to Prioritize Insights 15

16. © 2009 Lenskold Group. All rights reserved. 16 Align Insights to Customer Buying Funnel Profitable Sales 1,000  150  10  2 Brand/Awareness Demand Generation Sales Conversion Customer Experience Retention & Cross-Sell Revenue Incremental Sales Impact Profit Contribution & ROI Funnel Progression Strategies & Tactics Unaware Prospects

17. © 2009 Lenskold Group. All rights reserved. 17 Understand Funnel Leakage Adapted from “The Leaky Funnel” by Hugh Macfarlane (www.leakyfunnel.com) Wrong Target Not Yet Won Efficiency Effectiveness Profitable Sales Unaware Prospects 1,000  150  10  2

18. © 2009 Lenskold Group. All rights reserved. 18 Biggest Wins for ROI Improvement 3. Reduce leakage with better integration 4. Accelerate leakage of low- potential prospects 1. Target High – Value / High – Potential Prospects 5. Reduce over- spending beyond progression rate 2. Improve conversion later in the funnel Closing sales Customer retention/growth

19. © 2009 Lenskold Group. All rights reserved. Framework Provides Perspective for Insights  ROI scenarios show required outcomes  Customer purchase funnel provides a consistent view of diverse insights  Leakage points and leakage reasons can be quantified financially  Diagnostic measures provide deeper insights Funnel perspective Segment performance (existing segments or derived from behaviors) Gaps in marketing and sales alignment Insight into customer behaviors goes beyond data points Influence of market conditions provides proper adjustments Feedback loop from sales to marketing supports better alignment 19

20. © 2009 Lenskold Group. All rights reserved. Agenda 20 ROI Opportunities ExistMarketing ROI Framework Provides SupportKey Measurement ConsiderationsMaximizing ROI from Market Intelligence & Research

21. © 2009 Lenskold Group. All rights reserved. 21 Baseline Measure Marketing Effectiveness 1. Incremental Contribution Modeling Market Testing Pre-Post Trending Quantitative Research 1 2. Diagnostics Data Mining Funnel Analysis Linkage Analysis Segmentation Analysis 2 3. Predictive (in Long-Term) Planning Tools Modeling Forecasting 3

22. © 2009 Lenskold Group. All rights reserved. 22 Pre-Post Analysis – Basic Campaign Example  Track value and behaviors prior to marketing treatment to establish baseline for comparison to campaign period results  High risk of outside influence (non-marketing) on sales levels decreases the validity of results analysis

23. © 2009 Lenskold Group. All rights reserved. 23 Tactic 1 Offer 1 Sales Channel Tactic 1 Offer 1 Sales Channel Market Testing – Basic Campaign Example  Experimental design “Test” group with marketing treatment compared to control group without treatment Isolates impact of selected treatment Comparisons can go deeper than sales and revenue lift to include customer value and funnel progression to assess lead quality Different marketing treatment to comparable portion of target audience Test Group“Control” Group Plus Tactic 2

24. © 2009 Lenskold Group. All rights reserved. 24 Marketing Mix Modeling Base/SeasonalAdvertising Trade PromotionConsumer Promotion Modeling correlates marketing activity with sales activity Look for correlations to customer behavior where data is available

25. © 2009 Lenskold Group. All rights reserved. 25 Marketing Mix Model Conclusions Courtesy of Interlocking Analytics

26. © 2009 Lenskold Group. All rights reserved. 26 The measurement plan must build more and more insight over time Integrated Measurement Plans The best measurement plans are:  Intentional measurements planned in advance  Diverse methodologies integrated for maximum insight  Designed to work together to deepen and build knowledge  Prioritized based on profit opportunity, benefit, and cost  Aligned to the ROI framework for consistent interpretation Measurement Plan (example) Marketing Mix Modeling Market Test Segment-Level Analysis Customer Value Research 1Qtr2Qtr3Qtr4Qtr Sales Tracking

27. © 2009 Lenskold Group. All rights reserved. What about Brand?  Does brand awareness count?  Is advertising recall important?  What about the contribution to long term brand?  Where does customer experience research fit in? 27

28. © 2009 Lenskold Group. All rights reserved. Brand & “Intangibles” 1.Influence customers throughout the buying cycle today Incremental sales, leads, engagement and/or intentions Assess incremental contribution 2.Influence top of the funnel metrics to condition the market for demand generation and sales contacts Lift in effectiveness of next tactics Assess integrated campaigns 3.Invest in re-positioning of key attributes with high influence on purchase decisions Change in competitive position Commitment for long-term Should have lasting impact (brand promise plus brand experience) 28 Perceived Competitive Position

29. © 2009 Lenskold Group. All rights reserved. 29 Brand Attribute Position Brand Influence on Sales Perceived Competitive Position *High Performance *Inventory Available *Active Supporter of Community *Secure *Responsive Support * Variety of Models *Durable *Price-Value *Quality Resellers Example: Equipment Manufacturer

30. © 2009 Lenskold Group. All rights reserved. Funnel Perspectives Company view of the funnel shows how measurements align to marketing decisions and implementation effectiveness. This view is used to guide measurement objectives and select methodologies. The buyer’s view of the funnel shows how measurements capture insight into purchase behaviors and leakage points. This view guides the measurement direction to generate insights tied to behaviors that are valuable for developing new strategies. 30 Brand Perceptions Product Purchase Intention Brand Awareness & Consideration Consumer Actions Retail Experience Purchase Decisions Halo Purchases Company Funnel No Need Aware Value Prop Interest Consider BRAND Need to Purchase Prefer BRAND Research Options Prefer BRAND Identify Solution Visit Retailer Purchase Prefer BRAND Buyers’ Funnel

31. © 2009 Lenskold Group. All rights reserved. Example of Measurement Coverage 31 No Need Aware Value Prop Interest Consider BRAND Need to Purchase Prefer BRAND Research Options Prefer BRAND Identify Solution Visit Retailer Purchase Prefer BRAND Buyers’ Funnel Ad Tracker Survey Web Visitor Intercept Survey Store Intercepts Survey Market Testing Sales Tracking Modeling Website Tracking Sales Associate Research

32. © 2009 Lenskold Group. All rights reserved. Agenda 32 ROI Opportunities ExistMarketing ROI Framework Provides SupportKey Measurement ConsiderationsMaximizing ROI from Market Intelligence & Research

33. © 2009 Lenskold Group. All rights reserved. Managing Marketing Insights  Better objectives for marketing decision-makers Quantify expected outcomes Probe on decisions & options for alternatives  Integrate customer funnel into intelligence initiatives Identify leakage points Uncover leakage drivers Present insight into behaviors  Concentrate on high value and high potential segments Better vs. bigger  Quantify ROI scenarios and run ROI analyses to motivate actions Profit potential also justifies investment into marketing intelligence 33

34. © 2009 Lenskold Group. All rights reserved. Calculator for ROI on Insights 34

35. © 2009 Lenskold Group. All rights reserved. Calculator for ROI on Insights 35

36. © 2009 Lenskold Group. All rights reserved. Role of Marketing Intelligence Teams  Marketing ROI process Based on bringing new insights into strategic and tactical planning  Marketers need clarity in guiding intelligence Strategic plans with clear path to end goals Measurement objectives should tie to decisions Know profit drivers  Align diverse sources of intelligence for consistent and cohesive guidance  Prioritize and integrate measurements Maximum influence Strategic and tactical support  Present ROI and profit potential with intelligence  Assess and track the actions taken on insight 36

37. © 2009 Lenskold Group. All rights reserved. 37 CONTACT INFORMATION Jim Lenskold Lenskold Group 2517 Highway 35 Building N, Suite 202 Manasquan, NJ 08736 Phone: 732-223-8886 E-mail: jlenskold@lenskold.com Lenskold Group Advantages Lenskold Group offers an unsurpassed depth of capabilities in marketing ROI processes and measurements. We deliver practical, actionable solutions that truly generate profit improvements. We are a best fit for companies that: Require financial integrity to earn credibility outside of marketing Want decision tools that leverage insight from multiple measurement sources instead of single-methodology solutions Have a marketing organization committed to profit improvements Prefer a customized solution over a one-size-fits-all approach Need a marketer-friendly approach Value a transition plan designed specifically to their culture and skills Want analysis and intelligence that can create a clear competitive advantage