We start with the end in mind...
It's important for every marketing client to clearly define at the outset of our projects their "shared purpose" which encompasses their brand strategy, objectives and plans. From this we build a 'base plan' consisting of their brand P&Ls for the next 3 years. It's then our job to improve on these base plans as that's where we add our measurable value.
Having the 'base plan' we then enter 2 to 3 years historic data including sales and all marketing campaigns into our time series system. We then use this data to build our best model of the past with a high R2 (extracted from thousands of models) and from this we are able to generate the response curves. Each response curve represents the effect a particular marketing activity has caused on sales. The modelling is to a certain extent a 'black box' although we can involve the client in selecting which elements to include and exclude when identifying the right model.
The real skill not to be under-estimated, (acquired through a combination of business acumen, experience and creativity) is when MROI subsequently creates the optimal 3 year plan based on the competing response curves and compare this to the 'base plan' to understand the differences. It's at this last stage that the client needs to work most closely with MROI in order to extract the most value from the project. It's for this mission critical reason that we always start with the end in mind, never losing site of the business objectives and that's where MROI earns its stripes and keeps senior management happy!
Sometimes MROI is asked to run a complete marketing ROI project that covers the client's entire range of products, other times we run a pilot on one brand and then roll this out to the rest of the portfolio.
Why is it so challenging?
In order to create the optimal fact-based marketing plan requires an incongruent mix of analysis and intuition, black box and collaboration, ingenuity and creative flare; and those last few % points in quality can make all the difference.
Creating an MROI culture in your marketing department is the only way forwards, all marketeers will be using econometric modelling in 10 years time, some will take longer to adopt this approach than others but it is inevitable.
Besides improving the MROI this fact-based approach also makes marketeers' work more transparent, accountable and credible. Marketeers can once again feel proud of the value they add to their business, instead of feeling like a necessary painful cost that management wants to find ways to avoid. Not all but most MROI projects show how longer term brand building efforts have a far greater long term benefit over short term in-store promotions, but it's one thing to say this and another to show the facts to the sale team.
To succeed it requires a deep seated obsession from the top and from the heart of any organization. Although challenging to implement, it pays off in spades.
Delighting our Clients
The essence of MROI's client service philosophy is summed up in the book True Professionalism by David Maister. Our pledge to clients is that if they aren't 100% satisfied with our service then we don't charge! We can live with this philosophy because we are independent, small and strongly believe in the high quality and value-add service that we deliver. So far we have always charged clients!