Beyond Marketing Kaizen: How a CMO gaining line of sight into the testing-optimization cycle can drive triple-digit ROI improvements

A 302% increase in projected profit in a challenging economy is driven by simple changes to PPC ads (with zero net new marketing spend). A brand-battering string of safety recalls is announced by an auto company built on quality. What can we learn from these dream and nightmare scenarios?CMO gain line of sight into test-optimization cycle

Toyota’s image problems have already been written about from every imaginable PR and branding angle. So I’ll avoid the obvious lessons and focus on that thin line between the success we started this piece with and the failure that has sent Toyota scrambling. Namely, what went wrong in example 2, what went right in example 1, and what does it mean to today’s CMO?

The world’s-largest automaker is well known for its practice of kaizen, a.k.a. continuous improvement, a.k.a. “the relentless pursuit of perfection.” Any worker is empowered to stop the assembly line because he spots a flaw. Yet, as Matthew DeBord writes in The New York Times, this system may have allowed Toyota’s executives to become overconfident in the system itself and its front-line practitioners.

Creating a culture that leverages the testing-optimization cycle

Overconfidence may have been Toyota’s problem, but you might be tempted to accuse the B2B marketer that drove that 302% increase of the opposite – they tested some of their most profitable online marketing campaigns. Not only did they challenge what already worked, their culture of testing forced them to constantly reevaluate every assumption they made for their entire marketing campaign – from the PPC ads to the landing page to the checkout process right up until recognized revenue.

And in the end, they made changes to some of their most profitable campaigns. They didn’t stop at what one would call “marketing kaizen,” continuous small experiments that challenge the model; they brought in a traditional “command and control” function to oversee the entire testing process and make sure each piece worked together for a greater whole. The solution, you could say, is kaizen and control.

This begs the question…how are you guiding the testing-optimization cycle occurring right now in your marketing department? And how are you using these tests to improve your overall marketing spend?

If you can’t answer these questions, and are unsure of how to leverage the strategic advantage of the testing-optimization cycle’s ability to generate fast, flexible, and accurate insights into how your brand is performing in real-world conditions, read on. I’m going to give you three quick reasons to schedule a meeting with your key marketing managers today.

Strategic Advantage #1: More return on investment

ROI is a dirty word to some marketers who aren’t able to come up with real, solid numbers. And in one sense, can you blame them? Who really knows how money spent on media that does not have measurable results moves the needle? Branding works because, well, because it just does.

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And branding is just the tip of the iceberg. How well do you understand the real-time performance of your marketing campaigns?

The online testing-optimization cycle produces fast, scientifically validated results to continuously monitor how all marketing spends change interaction with your brand in the actual marketplace. Beyond that, it helps you track, measure, and improve every penny you spend for a fraction of the cost of your overall marketing budget.

A key word above is – improve. As the name “cycle” suggests, testing and optimization used in tandem drive real gains. For our B2B marketer referenced above, the huge ROI increase came in part because it did not involve one extra dime in media spending. The testing-optimization cycle helped them follow the Peter Drucker maxim of “…doing better what is already done.”

Strategic Advantage #2: A real-time competitive advantage

As the economy emerges from a massive recession into a possible growth pattern, behavioral economists have been breathlessly discussing the emergence of a “new normal” in enterprise and consumer purchasing patterns. The implicit underlying threat to CMOs is, “What worked yesterday is now obsolete. Adapt or perish.”

For the CMO that has already embedded strategic use of the testing-optimization cycle in her organization, this new challenge is nothing…well…new. She realizes that the marketplace is an ever-morphing beast that she must constantly tame. And she relishes the advantage that real-world, real-time data gives her over “predictive” focus groups and surveys (what consumer really contemplates the color of a logo that deeply?)

I don’t use this CMO as an example of what I think you should do, I’m suggesting that this is what your competitors are already doing. Since our marketing research laboratory was established in 2001, testing and optimization have grown explosively. Your organization is likely doing this somewhere – whether it has risen to your level of attention or not.

The challenge is to gain the flexibility from this wealth of real-time information to strategically shape your marketing plan as it unfolds.

Let’s go back to our B2B marketer that more than tripled profits using the testing-optimization cycle. A key point to remember is that they didn’t simply do some research on the front end and then launch this campaign. They dynamically tested and changed every element of the campaign while it was live and real customers were interacting with it. Continuous improvement comes from continuous testing and optimization, not one-time research that lets you “set it and forget it.”

Strategic Advantage #3: Clear justification for your existence

This last point is meant to hit you in the gut, and I’m sorry if the blow is a bit harsh. According to a SpencerStuart bluepaper entitled CMO tenure: slowing the revolving door – “It’s jarring to note that the average tenure for CMOs at the top 100 branded companies is just 22.9 months. Compare this to CEOs, who are in their positions, on average, for 53.8 months.”

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The executive search firm goes on to state, “Even when CMOs and the top management teams share the same expectations, CMOs who are unable to clearly articulate their goals and then post results in a public scorecard will make themselves a target for elimination.”

The testing-optimization cycle is a great base for that public scorecard. You gain direct line of sight into how your campaigns are performing and have data to show how changes you make throughout the process generate ROI.

Not only do these metrics justify your decisions and provide credibility to your organization, they boost your viability at budget time as well. The testing-optimization cycle helps you determine the greatest opportunity for your campaign, how to take advantage of it, and, when done right, arms you with persuasive summary profit analyses and ROI projections to show how marketing is truly an investment…

From MarketingSherpa: CMOs face a considerable challenge if marketing is viewed as an expense rather than as an investment – especially at budget time. Tony Barr, a marketing consultant who has spent the past 13 years in B2B marketing leadership positions, says he’s faced that challenge. “You really have to frame marketing as an investment, and the way to do that is to develop a set of metrics that help you demonstrate that marketing is delivering a return,” he says.

How to gain control

As long as every board of directors in the country expects never-ending growth, every CMO will have to deliver continuous marketing campaign improvements. By gaining control over the testing-optimization cycle, you take the keys and sit in the driver’s seat of your marketing campaigns, steering and accelerating as your campaigns unfold in real time.

And beginning is easier than you might think. Someone, somewhere in your organization has likely already started putting the testing-optimization cycle to use. So start by conducting a survey of your organization to see exactly what’s being done and how fragmented it is. Then call your key leaders together and focus on a strategy that uses this initial work as a launching point for a holistic approach to generating marketing campaigns driven by financial performance.

The, most importantly, keep at it. This is a cycle. It allows you to continuously monitor and continuously improve all of your efforts. Each new success you achieve is not an end in itself, but a new base camp to climb from.

Related resources

The Business Case for Testing: How one marketer convinced her business leaders to start testing and drove a 201% gain in the process

Super Chief Marketing Officers: Ensuring Survival of the Fittest in the Online World

Online Marketing Optimization: Does my 95-year-old Grandmother Understand Split Testing Better than your CMO?

Photo attribution: http://www.flickr.com/photos/61417318@N00/ / CC BY 2.0

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