Last week, I was browsing through some sites in order to find a few critical touch points that support the customer strategy. With some thoughts in my mind, I walked over the coffee machine and met a senior colleague who greeted me by saying that he read my recent article Double Trouble – Consumer behavior AND new business models and liked my thoughts on the current state of social and digital adoption. However, he feels that a strong business case is required in order to sell digital capabilities to business leaders, especially to CFOs. While demand has been growing greater for marketers to validate the measurement and benefits delivered by their digital investments, I still feel, financial metrics is just one way of evaluating digital/social media marketing programs.
Use of the internet, digital technologies, and mobile devices has grown exponentially, Yet marketers face tough time measuring their digital investments and in absence of any standardized best practices, they turn to Return of Investment (ROI) as a means of providing digital contribution, but they forget, many benefits delivered by digital/social media are not easily measured in terms of dollars and cents.
We know it’s a tough economy, but marketing is certainly alive and this is a time to increase market penetration and gain share from potentially vulnerable competitors, while keeping yourself informed of options to stay ahead in the game.
The right digital strategy for building brand and growing your businessDigital channels are providing new ways to interact that help marketers stay close to the customers and establish a richer, long-lasting relationship, however on top of it, online programs are highly measurable, providing safe harbors to continue marketing activities in a responsible manner. The best way to measure the significance of digital/social media is through wide range of metrics that are both directly and indirectly financial. If you go back in 1996 and read (re-read) Dr. Robert Kaplan and Dr. David Norton’s old classic Balanced Scorecard basics, you will find one of the key principles behind its framework that financial metrics, although important (in assessing how successful a company is), only tell us what have been happening in the company till now.
In other words, to be successful and faster in decision making process, we need to complement the financial indicators with three major perspectives – Customer, Internal Processes and Learning & Growth. With this strategic management tool, Balance Scorecard, Kaplan and Norton offered an approach for avoiding narrow ROI based performance and instead presented a means to highlight and capture all the benefits that can help achieve your business goals. Since digital/social media offers a wide range of advantages to customer-centric organizations, the similar Balance Scorecard approach can be used to fully capture the benefits delivered by digital technology and tools.
A strategy framework helps tracking organizational performance on more than a financial basis
The illustration above is a customized representation based on the current digital drivers - impacting all the four strategic perspectives.
Remind your CFOs that in order to prosper financially, first you need customers and for winning new customers, you need to get in line with their expectations. Mostly likely, in today’s business scenarios what needs to be done for two major perspectives (Internal Processes and Learning & Growth) SHOULD be driven by what the customer anticipates.
The Balance Scorecard is just NOT a financial measurement process, when thoroughly defined it can help gain control of the future and the destiny of your organization.
Keys to successful implementation
- Business leaders should focus on programs/services and commit allocations to meet the corporate objectives – return on objectives (ROO), not just sales and ROI.
- Act on three majors areas for a successful implementation – Commitment, Credibility and Communication (i.e. as a business you need to stay doing well, focus on delivering specific needs to customers, and involve them in co-creation).
- Build a stronger relationship with your CFOs – let them know that you want to change your marketing model the similar way how he changed his business model.
- Inputs, feedback and understanding are crucial at every step – Take account of the needs for all stakeholders and build collaboration around the common objectives.
It’s time to convince your CFOs and show them the business value digital brings to the tableFirst, your marketing personnel need to appreciate the level of understanding with this new digital domain – Do you have a little or no exposure to digital? Or you know about it and believe in digital with reasonable exposure? Not to be worried in both the cases, since you can work with either.
In regards to digital technologies, I believe we are all learning more from each other from the amount of cases everybody sees. It is not right to say that the senior executives are just against digital. Sure, they are all using smartphone devices but a bit suspicious of those mobile apps they read in the press and are likely to be sensitive in revealing information on various digital channels.
The point is, your CFOs are paid to ask hard questions, to make holes in your marketing plans and for scrutinizing operational costs on a regular basis; however they also accept the fact that marketing is indeed required to stand against other organizations, i.e if you stop marketing your sales will be down. So you got a valid point to build further on this so to begin with - Start sharing articles from business pages about digital and social media, help them understand their relevance to the business, do a quick search about your competitor’s social accounts and show your CFOs what the customers are talking!
Spend time with CFOs and understand their prospective. You have to convince that in this age of the customer, the only sustainable competitive advantage is knowledge of and engagement with customers – In nutshell, market to your CFOs.