Justifying an MRM Strategy
Consumer goods manufacturers make enormous investments implementing systems, acquiring information and purchasing data from third-party providers to uncover new ways to further penetrate and expand their customer base, while cornering the competition. Market and brand success is largely dependent upon understanding the bigger picture and making connections between different data sets.
While many possibilities exist for what Marketing Resource Management (MRM) really entails, at the very least, pundits would agree that it involves a common business process, with a related system, that provides consistency, process discipline and automation. The areas that MRM covers? Well, that's where lines of definition begin to blur. Certainly, MRM taps into consumer marketing language, consumer/trade marketing planning and budgeting, marketing/trade program approval and even financial tracking of marketing expense.
Interestingly enough, the consumer goods industry is late to the game when it comes to MRM, according to Mark Lush, who helps lead the global marketing practice at Deloitte. Lush says industries that have adopted MRM early on include transaction-intensive industries such as Financial Services and High-Tech Manufacturing where a more direct link between marketing campaigns and a transactional response can be seen.
In addition to Kimberly-Clark, companies like Procter & Gamble and The Campbell Soup Company have set the leading edge pace for MRM. Both developed their solution several years ago. P&G tried to spin off a company, called Emmperative, to sell as an ASP solution their software to help other companies. While the company failed, the solution has helped transform P&G's marketing organization to improve operational efficiency as well as marketing effectiveness. P&G has also invested in marketing mix optimization which is a capability few utilize in the industry but has certainly set pace not only for other consumer goods companies to follow but other industries as well.
Selling the Idea
So how can consumer good firms sell the concept of an MRM strategy to upper management? Selling an MRM strategy involves a comprehensive look at the entire marketing lifecycle, says Lush. " If you do this, you'll find key opportunities to tangibly increase marketing efficiency and effectiveness," says Lush. "MRM helps organizations optimize marketing spend by better allocating marketing assets and resources throughout the entire marketing lifecycle. In this way, a tangible ROI can be identified and communicated to executives in a powerful way to focus marketing efforts based on facts, not blind intuition."
However, Lush says a challenge still prevails in the marketing, particularly in consumer goods, where it becomes far more challenging to trace consumer marketing activities with follow-on consumer purchasing behavior. "This challenge is the fact that many consumer goods marketing organizations may resist implementing an MRM approach because a key hallmark of MRM is to track marketing spend and measure marketing results," says Lush. "For consumer goods, the first part is easy, the latter part is very challenging."
As a result, articulating the MRM value proposition to CPG marketing leadership can be difficult whereas selling the ROI story to other executes (e.g., CFO's, CEO's CIO's) can be easier as they are responsible for finding new ways to improve company performance.
Finding the Return
How can marketing departments justify not only for the cost associated with MRM technology, but also the time spent on day to day MRM activities? Leslie Ament, founding partner of Hypathia Marketing & Communications encourages consumer goods firms to prove the value. "The benefits of MRM are enormous from a cost savings and revenue growth potential. Once people understand what MRM does, the benefits become obvious, and it is easy capture interest." Saving 10 percent of marketing budget or being able to reallocate it towards higher growth opportunities is very attractive to senior management, for instance. Deloitte's Lush says MRM ROI exists across the marketing lifecycle:
4Marketing Strategy: MRM reporting from a prior period (e.g., prior quarter or year) provide input into how the new period's marketing strategy is formed 4Marketing Planning/Budgeting: MRM "forces" marketing to commit its spend judiciously across various medias, channels, and with its internal (e.g., IT) and external (e.g., agencies) business partners -- knowing that it will be tracked and analyzed for ROI.
4 Marketing Execution: based on the prior planning/budgeting process, ensuring that marketing execution stays on track and budget during the marketing/campaign management process 4Reporting and Analysis: analyzing marketing results to manage/alter marketing campaigns -- often in real-time -- to optimize consumer response and overall ROI, as well feed into the Marketing Strategy step to start the lifecycle all over again
Where doesn't it exist?
In addition, analysts have cited percentages from 10 - 30 percent of time lost merely due to tracking and retrieving digital assets and information necessary to create collateral, online, press release and direct campaigns. Better planning and profiling of customers would yield significant ROI through a simple reduction in production, postage and fulfillment costs. The ability to run "what if" scenarios to pinpoint the correct channel/ customer mix/pricing/touch-point medium would yield another significant return on marketing investment for consumer goods companies -- and can range from 10 percent upwards depending on the sophistication of infrastructure and process discipline in place at an organization, according to Leslie Ament, founding partner of Hypathia Marketing & Communications. If MRM were as neat and clean as the afore-mentioned definitions, life for marketers would be a bowl of cherries. The truth is that many consumer goods firms are using bits and pieces of MRM along side CRM, according to Ament, and manually importing/exporting data from one tool to another in the process.
The Missing Link
What is missing is a holistic "marketing value chain" approach in support of end-to-end marketing, says Ament. "Currently, many of the established or bigger players, including CRM vendors, are offering pieces of MRM functionality that fit into an enterprise," says Ament. "Other companies are focused on their "best of breed" features, niche offerings or serving the SMB market with a specific capability around Marketing Automation and/or Campaign Management. I would expect the smaller vendors to specialize within one of the above categories and/or seek partnerships with complimentary vendors in order to provide customers the capabilities they seek for a holistic infrastructure."
A Real Time Saver
Since MRM hold the ability to improves a company's overall business process, time is saved and companies get to market more quickly. Not only does this save costs but getting to market early helps firms capture windows of opportunity to beat the competition and drive revenue faster. MRM also provides firms with a "corporate memory" so they know what works and what doesn't. "They don't waste time and money recreating assets or campaigns/programs that don't work or create marketing assets no one uses," says Ament. "Measurement enables firms to understand marketing effectiveness for different campaigns so they don't waste resources on low performing campaigns and can allocate resources to ones that are higher performing." Optimization and demand planning can enable firms to bundle and price to capture higher margins.
Looking Into the Future
What will the MRM space look like one year from now? Probably much the same as it does now, says Ament. While revolutionary for most marketing organizations, MRM is something that will happen for most firms within a year. "It's a journey not a destination. I think we will continue to see growing interest in MRM and more of a holistic approach by companies...and a growing globalization of MRM within firms but most will be taking baby steps."
Marketing automation, particularly outside of database marketing, is new to many firms, so it is a gradual process of increasing sophistication. "Expect more dashboards with KPIs and interactive data mining capabilities for business users. Optimization will also start to garner more interest," says Ament.
Deloitte's Lush agrees that MRM is still firmly entrenched in a maturation phase. "As a result, organizations today will engage in MRM v1.0, by implementing basic MRM capabilities for marketing planning, budgeting, tracking, and reporting. This initial version will also loosely integrate MRM with other key financial and transaction systems such as ERP invoicing and accounts payable."
Next year, Lush says the aforementioned integration capabilities move to MRM v2.0 by extending key MRM capabilities on a global scale for larger firms and by more tightly integrating MRM tools with other marketing, financial, and supply chain systems.