Editor's note: This post was written by Mike Menkes, Senior Vice President at Analytic Partners.
Plans do not always go as expected.
Business leaders have been starkly reminded of this reality, re-emphasizing the vital importance of scenario planning in a smart business strategy. Luckily, we now operate in a world where data and technology are empowering new levels of informed, proactive, data-driven planning.
Marketers do not need to rely on intuition or guesswork to prepare for what’s next. And we do not need to be afraid of the unknown.
Data and Analytics Guide to Modern Scenario Planning
While some may claim that analytics cannot effectively leverage historical results to predict outcomes given the unpredictability of our current times, we have found that many fundamentals still hold true. There are robust and viable ways to holistically measure business impact, even amidst uncertainty.
In fact, data and analytics have become even more important due to these challenges, and those who want to adapt must also adapt their measurement approaches.
One challenge marketers face is that of quickly-changing consumer behaviors. We have seen not only accelerated shifts to ecommerce and direct-to-consumer, but also shifting consumer priorities. And of course, many families face or will face economic challenges. Will some of these changes stick?
Change can present unprecedented challenges, but it is not always bad. Over the past two decades we at Analytic Partners have seen many trends lift companies who were either already well-positioned, or proactively leaned into a trend. This can result in meaningful business growth which can be amplified with strong marketing and product support.
A Template for Measured Scenario Planning in Marketing
How do you identify customer trends and understand which changes will be permanent? Business leaders should at times consider gut feelings, but ultimately make data-driven decisions. To succeed in the new era, companies must create a test-and-learn culture that allows them to move quickly, test, measure and repeat. While each industry and brand will be impacted differently, those who move away from slow and infrequently updated insights toward always-on holistic measurement and scenario planning for multiple outcomes will be able to quickly respond to changes.
Build a Strong Framework for Measurement
A holistic measurement framework that includes controllable, non-controllable, macro-factors, and the ability to isolate the impact of 2020’s events (and other disruptions) is an approach all businesses should adopt. And in order to be prepared for a range of outcomes, businesses must leverage scenario planning, refining those plans as the latest insights are available.
To begin scenario planning, business leaders need to understand performance drivers and incorporate multiple KPIs for a full short-and long-term view of the business. Levers to consider that are within a business’s control are the amount of investment, creative quality, the ‘halo’ of other products in the portfolio, mix of media, and optimization.
Understand and Quantify Drivers of Success
This is the idea behind the ROI Genome market intelligence solution we developed at Analytic Partners. Our ROI Genome is designed to account for the fluidity and complexity of modern marketing, and also to provide benchmarking context for new tactical ventures. Even if your business has never delved into a particular activity, we aim to provide insight on how it might perform given the industry, country and brand profile attributes.
This is just one example showing how marketing intelligence and its applications have evolved. Today’s marketers now have tools at their disposal to understand their surrounding environment not just as it is, but as it will be. The data is out there.
Plan for a Range of Outcomes
In your mind, you can probably envision a best-case scenario and worst-case scenario with regards to your business in terms of how it would be affected by outside circumstances. What are some events that would trigger increased demand for what you offer? What would cause demand to dry up? When you build your scenario planning to factor in each of these possibilities, and anything in between, you reduce the odds of being caught off-guard.
Not only should business leaders hypothesize about certain scenarios, they should actually walk through them. Our ROI Genome shows that companies that adopt data-driven simulations drive 5X the growth of those that do not.
Principles of Effective Scenario Planning
As you create your roadmap, here are a few key guiding factors to keep in mind:
- Successful scenario planning is data-driven, collaborative, and evolving.
- Your strategic framework should include measurements of success, performance drivers, and consideration of critical business dynamics.
- Include into your assumptions the halo, which represents corollary sales of other products or services in the brand portfolio generated by advertising one specifically. (ROI Genome shows halo typically contributes half of the impact of marketing.)
- Tailor scenarios around typical variables in performance — for instance: weather, seasonality, and economic factors.
- Account for competitive actions and wargaming. What would it mean for your business if a similar-sized competitor decided to double its advertising and promotional investments?
- Incorporate multiple KPIs for a short-term and long-term view of your business.
Stay Nimble and Be Ready for Anything
By developing a data-driven program built on test-and-learn strategies and scenario planning, businesses can quickly prove out learnings and identify potential risks by forecasting multiple potential outcomes – whether understanding the impact of disruptions, creative messaging, changes in stores, or changes in pricing or products.
We may not know where the current rollercoaster will leave us, but we can all be smarter about planning for what is around the next corner, and be better prepared for what comes after by creating a test-and-learn culture.
To learn more about effective scenario planning and Analytic Partners' ROI Genome, watch the Live with Marketers: What Marketers Should be Measuring Now broadcast.