How
to turn marketing efficiency into growth
At
Western Union, fueling growth starts with taking a hard look at how effective
current marketing programs are. Chief Strategy, Product and Marketing Officer
Libby Chambers explains how it’s done.
Growth leaders are adept at finding money to
invest in initiatives that drive revenue. In this interview, Libby Chambers,
Western Union’s chief strategy, product and marketing officer since 2015, talks
with McKinsey’s Barr Seitz about how she has focused on ratcheting up marketing
effectiveness and efficiency to release funds for growth programs.
Thinking like an investor
The investing metaphor
is apt in that you’ve got many different places where you can spend your
money—countries, channels, products, and customer groups. You almost have to
think like a CFO. You really need to stay on top of your numbers. I also think
the marketing discipline has evolved over time to a place where being
quantitatively rigorous and having as much financial acumen as the finance
people has become really important.
We embarked on a
marketing ROI project where, over eight or nine months, we broke everything
down into two elements: efficiency and effectiveness. On the efficiency side,
we consolidated our agency roster and got significantly better at running a
really rigorous RFP and negotiating commercial terms with our agencies, be it
media buying, creative, research—all the different parts of the agency
constellation. That side of the work included getting better at understanding
our costs and then being very precise about competitively bidding out the work.
The other side of the
marketing ROI project included a number of different effectiveness measures
like improved targeting of our digital-media buy, understanding exactly where
the money was going and where the best ROI was. We also examined our research
activities over time to make sure we weren’t duplicating the same study over
and over again but were actually building and sharing knowledge.
A crucial aspect of the
entire process was the creation of test-and-learn discipline. We did a bit of
teaching to make more people aware of the fact that test-and-learn can help you
navigate budget constraints by pinpointing the right thing to do. We probably came
up with 50 different measures that we’ve been able to put in place and are now
tracking.
Reallocating marketing spend: How much is enough?
e put our captured
savings in a “pot,” where we measure it and then redeploy it to a series of
growth projects. The challenge is to identify which of the many competing
growth projects we should put the money into. I think a lot of people in the
business thought it would just kind of fall to the bottom line, or the savings
would just sit wherever they accrued, or they would be spent on a bigger
campaign in that particular market or part of the business. But we designed a
pretty clear mechanism around capturing it and redeploying it in a very
purposeful way.
That’s because we’d had
a peanut butter approach, where everyone was getting a constant percentage of
sales. So the marketing budget would literally be the same percentage of sales
everywhere, independent of whether the country was growing or shrinking or
whether it was a priority or not a priority. So there was a lot of aligning the
budget, not on a percentage-of-sales basis, but on a much more sophisticated,
what-are-we-actually-getting-on-our-return basis for that marketing spend.
We had what we call
“sufficiency” problems in many markets, where the money we were spending was
not reaching any kind of critical mass to achieve the impressions needed to
move the dial. There was lots of money being spent on paid search, for example,
that wasn’t yielding anything like the sort of results that you would expect.
So in a lot of markets, we said, “If you’re not going to be sufficient to
actually achieve anything, let’s turn it off, and then let’s come back in with
something that actually makes more sense for that market.” We also spent a lot
of time looking at correlations between countries where we were spending a lot
of marketing money and countries where we weren’t, and were actually seeing no
difference in the measured business results. That gave us a clue that we might
want to pull back on spending in those markets and do some AB testing around
whether putting in more or less money actually even mattered.
So there’s been a
little bit of doubling down and a little bit of pulling back and not doing
things that aren’t moving the needle. There’s also been some more careful husbanding
of resources to concentrate on the bigger bets.
Efficient marketing is science, not magic
I’ve spent most of my
career in direct marketing, so for me, some of the science has just been
rebranding stuff that people in the credit card or the publishing world have
been doing for 50 years. But I do think that the cost of data has come down,
the cost of the tools has come down, and the level of “real-timeness” of the
information has gone way up.
The science is
basically just classic: looking at test and control, reading the results,
figuring out what worked, what you should do next, what didn’t work, what to
stop. There isn’t a huge amount of magic to it. It’s just getting it all in one
place and being able to produce analysis and information that people can use to
make decisions. What’s changed is we’re trying to make the whole analysis
through insight through decision cycle more rapid. Digital marketing has
massively enabled that.
I think there’s a big
process of just teaching marketers how to use the tools that are there. It’s
less about having the latest and greatest tool kit and more about just making
sure that everyone’s using it.
http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/how-to-turn-marketing-efficiency-into-growth?cid=other-eml-alt-mip-mck-oth-1706&hlkid=ad3a1fa8cf944f48af5d668a2a39061d&hctky=1627601&hdpid=76b6b86a-9bf1-4824-a04f-213a98ba7fa1
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