Z Score lets you compare “apples and oranges”

Z Score lets you compare “apples and oranges”

The Z Score is the magic bullet of Six Sigma, allowing you to objectively compare “apples and oranges” and be confident of the results.

In simplest terms, the Z Score demonstrates the “efficiency” of any investment, showing how well scarce resources (such as Marketing dollars) are used.

Let’s take an example: Think of the fuel efficiency of cars. One car gets 30 miles per gallon, the other 15 miles per gallon.

This doesn’t mean the car with 30 miles per gallon is a better car than the 15 miles per gallon car at all. It simply means in the ONE task - efficiency of fuel consumption - the 30 mpg car rates higher. 

That vehicle may also accommodate only two people – making it entirely impractical for moving a large group. 

In our determination of efficiencies of Marketing investments, we are trying to accomplish the same thing. Which opportunity will go the furthest on the same amount of resources?

There may well be compelling reasons that can overshadow this metric – as in the car analogy. Independent of these other reasons though, we essentially are trying to determine which investment is the most efficient in delivering on the set of goals we have identified.

Our application of this theory using the Z Score is “dimensionless.” What does this mean? It is not restricted to one metric, such as fuel efficiency. The dimensionless model allows us to compare activities that are trying to achieve widely different objectives.

For example, in a social media campaign we may wish to capture names of qualified leads. After analysis, we find that activity has an efficiency Z Score of 2.5.

A separate experiential marketing initiative may have as its goal employee recruitment and retention. It turns out to have a Z Score of 3.1.

So which is better? It’s the same as fuel efficiency – the larger the number, the more efficient the process is at achieving the goal for which it has been designed.

The ability to determine investment efficiency provides Marketing decision-makers an unsurpassed tool in planning, evaluating and directing the use of scarce resources.

The Business of Marketing is Business

The Business of Marketing is Business

Marketing calls on a wide range of skills: Creativity, originality, artistic vision, psychology, analytic ability, salesmanship, political savvy, trend-spotting, heuristics.

In fact, the Marketing team can include narrowly focused subject matter experts in any or all of these fields.

But it’s vitally important for the Marketing executive to remember one simple truth: The Business of Marketing is Business.

If you get swept away in the process – no matter how brilliant – you are lost.

Taking the Marketing By Objectives approach espoused here is the surest way to guarantee keeping your eye on the prize.

It also helps to stave off analysis by paralysis. Consider:

• -        For most businesses, the most important goal by far is the bottom line.
• -       Marketing’s impact on the bottom line most frequently occurs at arm’s length – or further.
• -       Quantifying this impact can then become an exercise in inference – not the type of discussion you want to have very often.

Fortunately, corporate leadership has already broken this task down for you. Key resources such as the corporate report, 10K and 10Q filings and other official guidance provide Marketing with an unerring compass with which to chart a goal-oriented course that will deliver to the bottom line.

So by all means, build a team with all of the complementary specialties needed to devise and implement brilliant Marketing programs. Reward their efforts. Foster collegiality.

But at the end of the day, to be relevant to corporate leadership, measure your results against truly relevant goals.

Deliver the Business.

Apply the “crawl, walk, run” approach

Apply the “crawl, walk, run” approach

The essence of an enlightened Marketing By Objectives approach is to maintain a clear focus on the company’s goals, and measure the effectiveness of all your programs against these goals.

You need not be intimidated by the apparent complexity of Six Sigma as outlined in these blogs. It is simply a tool that has already been shaped and sharpened to serve you.

Remember that the first time we tried to ride a bike it seemed a daunting task.  But once the basic skills were mastered, a whole new world of mobility opened up! 

Once you climb on Six Sigma, keep pedaling and remember that the key improvements to Marketing management that this process provides are very real.

First, significant gains are made with the adoption of the DMAIC process.  This can be executed in an extremely aggressive manner with intense and in-depth application – OR, it can be executed as simplistically as starting with the commitment to Defining what is to be accomplished and then broadly applying the rest of the MAIC process. 

Successful application does not require roll-out to every individual initiative. In fact, we recommend a judicious and measured application within an existing Marketing framework.

We have many clients that have taken this crawl-walk-run attitude:

·      Start easy, with a few of the company’s programs or with one division, and generate a few success stories. This is the crawl phase. 

    

    When moving on to the walking stage, often it is decided to apply this methodology to one full segment of the business. This could be complete application through DOEs in one division or for one segment of Marketing such as sponsorship or celebrity endorsement.

·     

    The running phase begins when, through many small and intermediate successes, the management feels confident in rolling it out as a complete program for their company.

Second, you will enter upon a path of continual improvement – an unending “do-loop,” in computer parlance.  You will establish a new foundation or baseline of performance measurement – and as important – a new expectation for results.

90% of marketers not trained in marketing performance, ROI

A woeful lack of training in marketing performance and ROI within marketing qualifications, coupled with marketers entering the profession with no formal marketing qualification, has led to many being unable to properly demonstrate to top management the business effectiveness of their marketing spending, campaigns and activities.

by Helen Leggatt

Marketing performance measurement and management firm The Fournaise Marketing Group has released what it calls "eyebrow-raising" findings from its Global Marketing Effectiveness Program. They found that a worrying 90% of marketers are not trained in marketing performance and marketing ROI.

As a result, 80% find it hard to properly demonstrate to their top management that the marketing strategies they put in place are effective.

Furthermore, more than two-thirds of marketers (67%) demonstrated a total lack of understanding of what ROI is about by implying that marketing ROI doesn't require a financial outcome. Unsurprisingly, these are the same marketers who are unable to correctly identify the correct formula for marketing ROI. In fact, 31% of marketers believe that simply measuring their audience reach is as good as signifying marketing ROI and 64% rely on brand awareness as their top marketing ROI key performance indicator.

It gets worse.

Nearly two-thirds (63%) of marketers present marketing results to their top management without including any financial outcome reporting. Not surprising when you learn that more than 80% are unable to converse in the language of finance and accounting and put together a profit and loss or balance sheet or give the correct definitions for basic financial key performance indicators such as EBITDA, P/E Ratio and ROE).

According to Jerome Fontaine, global CEO and chief tracker at Fournaise, the problem lies with marketers' education. Analysis of hundreds of marketing degrees and diplomas revealed that a whopping 90% do not contain any specific marketing performance or marketing ROI training while the vast majority of marketers (85%) enter the profession with a qualification that is not marketing related such as English, Journalism, Sociology or Foreign Languages.

"In other words," says Fontaine, "every Tom, Dick and Harry is a marketer, lacking the scientific and financial knowledge necessary to inform and optimize the creative side of Marketing. CEOs have told us again and again: they want ROI marketers, i.e. 360-degree performance machines trained to deliver (real) business results and prove/optimize ROI. As long as marketers continue to fail to get trained in, master the use of and optimize marketing performance and marketing ROI, they will struggle to demonstrate to CEOs that they are not 'money spenders who jump on (and hide) behind the latest fads and blow smoke', but real business generators."

Six Sigma Enables Faster, Better Decision-Making

Six Sigma Enables Faster, Better Decision-Making

One of the greatest advantages of using the Six Sigma process in Marketing is the inherent capacity to speed up decision-making while increasing accuracy. 

Let me explain these two effects.

Speed.  Once we have designed a Marketing program around specific, measurable goals, launching the program becomes much like letting a bird leave the nest, sending a child to school or launching a new business.

In following Six Sigma precepts, we have clearly defined the parameters for correct and responsible decision-making, whether at the global, national, regional or local level.

We don’t need to get involved in the minutia.  Instead, we monitor metrics, control charts and processes to assess the big picture. In eliminating micro-management, we facilitate decision-making that will be based upon the performance of each component part against its defined goals.

It becomes less critical for corporate headquarters to review what the northwest division may or may not be considering, as they now have the tools to make the decisions to invest resources in ways that they know will maximize their goal attainment.

Accuracy.  With these clearly defined and designed goals, we are now more certain that the decision-making at various levels in the organization will accurately reflect the overall goals of the company and advance the corporate agenda.

The guessing and second-guessing often employed in the past can be replaced by the qualitative and quantitative assurance that investments are being made to meet goals.

Don’t Forget About Secondary Goals

Don’t Forget About Secondary Goals

You’ve identified your Marketing goals – all of them – and given thoughtful weighting to each one, in order to establish a hierarchy or goals matrix.

What’s next? Do you:

-       Focus all of your resources on the primary goal, to the exclusion of all others?

-       Pro-rate your budget according to the precise weighting given to each goal?

-       Establish some cutoff point, and only devote resources to goals above that line?

Each of these approaches could seem reasonable. But simply selecting one over the others would be arbitrary, and that’s not worthy of our Six Sigma methodology.

We also must consider the relative cost of success in order to achieve efficiency.

If it will be difficult or impossible to move the needle on a relatively high ranked goal, but easy and inexpensive to dominate share of voice on a lesser goal, our process will earmark “just enough” capital on the latter in order to achieve greater overall success.

No one would suggest focusing a major campaign on insignificant goals. However, by periodically stepping back to review the “big picture,” you frequently will find opportunities for quick wins lurking among those secondary priorities.

Let’s look at a simplified analysis:

Goal one is ranked at 60 points on a 100-point scale. It’s pretty important.

Goal two is ranked at 25 points – fairly low-priority.

We estimate our current performance on goal one at 4 out of 5. We’re doing quite well.

On goal two, we’re only earning a 1 out of 5 – we are essentially irrelevant.

Through the best analysis available, we believe that if we devote a $500,000 campaign to goal one, we could improve our performance to a grade of about 4.25. If you multiply that incremental increase against the weighting, i.e. .25 times 60, our total Marketing performance would improve 15 points.

In contrast, we estimate that we could improve the performance grade on goal two from 1 to 3 quite easily by holding a single public relations event, at a cost of $50,000. That 2-point shift in performance multiplied by the weighting of 25 points gives us an overall Marketing boost of 50 points – a larger contribution to the overall Marketing goals matrix, at one-tenth the price.

This theoretical example readily shows how important the weighting process becomes as a decision-making tool.