ROI-Based Marketing Program Evaluation and Budget Allocation Process

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1 A three-page excerpt from our 17-page Best Practice Guidebook: ROI-Based Marketing Program Evaluation and Budget Allocation Process

2 1 Best Practice Guidebook ROI-Based Marketing Program Evaluation and Budget Allocation Process guidebook summary Firm: Kimberly-Clark Professional Industry: Provider of hygiene, surface cleaning, worker productivity, and safety solutions Headquarters: Roswell, Georgia, USA Geographic Footprint: Global with four Regions: North America, Europe, Middle East and Africa, Latin America, and Asia Pacific Ownership: Public Revenue (2011): $20.84 billion USD (Division of a $19.1 billion company) Problem: Under pressure to prove the efficiency and ROI on its spending, Marketing needs a process to allocate funding to programs based on their viability and to monitor their effectiveness. The process must: Identify the most viable marketing programs Increase the efficiency of marketing expenditures Embed consistent ROI measurements across geographies and business units Solution: Kimberly-Clark Professional develops an ongoing process to identify and monitor the most viable marketing programs by: Centralizing marketing funding under a cross-business unit team Developing an ROI Toolbox to guide program creation and monitoring Instituting an ROI-based process to evaluate, select and monitor programs Benchmarking program performance to refine metrics and identify best in class programs Business Results: A 17% improvement in marketing efficiency (measured through net sales as a percentage of direct marketing expenses). Resources Required: A cross-functional core team including representatives from Marketing, Finance, Sales, Sales & Marketing Operations, IT, and Marketing Communications A group of marketers to test the new process and tools The use of a vendor to develop the ROI Toolbox A year-long commitment to build the initial process and train staff Applicability of Best Practice to Executive Functions: Function Applicability Marketing Sales Management Corporate Strategy

3 best practice guidebook 2 key takeaway: Kimberly-Clark Professional creates a process to evaluate, fund, and monitor marketing programs based on their projected ROI and strategic fit ROI-Based Marketing Program Evaluation and Budget Allocation Process Overview 1. Program Proposal Creation Objective: The marketing managers create a viable proposal that has a strong ROI (which is the adjusted gross margin divided by the marketing program cost) and supports the overall Marketing strategy. 5. Program Benchmarking Marketing and sales leaders assess the year s marketing programs to refine predictive models, identify general program guidelines, and highlight best-inclass ROI Toolbox The ROI Toolbox provides key infrastructure for the process. It contains: A searchable database of current and archived programs; A simulator to create and evaluate different program proposals; A repository for all program assessments performed by the MLC and Business Unit (BU) Leaders; A set of best practice benchmarks, templates, and tools 4. Post-completion Assessment The MLC analyzes the marketing program s results to compare actual versus planned performance. 2. Program Proposal Review A Marketing Leadership Committee (MLC) assesses proposals to allocate funds to those that seem most viable. 3. Mid-Program Review The MLC reviews progress to identify any needed adjustments to the scope of application Alignment Kimberly-Clark Professional applies this process to align marketing strategy between: Regions: Phase One: North America (process and Toolbox rolled out) Phase Two: Europe, Middle East and Africa (process rolled out, developing the Toolbox) Phase Three: Latin America and Asia Pacific (future expansion over next three years) Business Units Brands Distribution channels End-user segments Sales Funding Kimberly-Clark centralizes marketing funding for each region to support the global alignment of marketing strategy and priorities. Program Proposal Threshold This process is used to allocate funds and monitor approximately 100 marketing programs annually. Programs are assessed and reviewed by their respective BU Leader unless they are labelled key initiative Key initiative programs are projects whose funding requests are either in the top 20% of proposals or that require sales resources. Approximately 20 of each year s marketing programs are considered key initiatives. Source: Kimberly-Clark Professional; Growth Team Membership research.

4 best practice guidebook 3 key takeaway: Create marketing program proposals in the context of strategy, current programs, and previous programs To begin the proposal creation process, marketing managers use the ROI Toolbox to evaluate their initial program concepts against current marketing strategy and existing and archived programs ROI Toolbox: Marketing Program Database (Illustrative) marketing program proposal prep-work To develop high-roi based proposals with a strong strategic fit, the ROI Toolbox enables marketers to: 1. Review current marketing strategy to align program with company goals 2. Evaluate current programs to avoid overlap 3. Assess benchmarked studies and archived programs to identify baselines and patterns in successful programs 4. Identify and export relevant archived programs as templates to be used in proposal creation MARKETING STRATEGY Strategic Goals This delineates the current company objectives and related strategy for each business unit and brand. Example: Penetrate existing Washroom Accounts with a broader bundle. Penetrate existing Manufacturing End-user Segment with Safety solutions. Acquire new Manufacturing Accounts with Safety or Industrial Wiper Solutions. General Program Guidelines The guidelines encompass the key lessons learned regarding tactics used in previous marketing Example: Avoid dependence on Sales Literature as a tactic given its low ROI. Utilize distributor promotions for success in lead generation. CURRENT AND ARCHIVED PROGRAMS Program Status: Current Archived Best-in-class Search by: and and Limit Search by: Year: to ROI: to Payback Period (Months): to Keyword Goal Brand End-user Segment Distribution Channel Tactic SEARCH RESULTS 1. Program ID: 2864 Description: Distributor program targeting mid-size manufacturing accounts. Planned ROI: 142% Actual ROI: 95% Program Cost: $50,000 Payback Period: 6 months 2. Program ID: 7989 Description: Integrated campaign to drive acquisition of new manufacturing end-user accounts. Year: 2006 Planned ROI: 5% Actual ROI: 20% Program Cost: $40,000 Payback Period: 12 months EXPORT FOLDER Search Results (1 to 2) of 5 items Source: Kimberly-Clark Professional; Growth Team Membership research.

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