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The Comprehensive Guide to Building an In-House Performance Marketing Department vs. Outsourcing – Assessing the B2B Company’s Make or Buy Decision.

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This Blog Post's Table of Contents

As performance marketing has developed over time, it has become a succession of specialized but integrated functions. And business-to-business marketers who run comprehensive performance marketing programs use all these basic functions: plans and strategies, concepts, copy, graphics, testing and research, customer database development and maintenance, analytics, IT, media and traffic buying, response handling, fulfillment, and telemarketing.

Some marketers get the complete range of needed services through performance marketing agencies or advertising agencies. The majority of marketers, however, choose to handle some functions in-house. But it is rare indeed that a business-to-business marketer has all the functions together in-house under direct control. The marketer’s objective is to strike a balance that works best. The perennial question, then, is which functions, if any, should be established in-house and which should come from outside resources.

Make or Buy Issues

First you need to examine the make or buy issues that surface regardless of the specific functions involved. You need to place a value on those specific issues that focus on where the services can be performed for you at less cost, more creatively, and more effectively.

Then you can examine the specific functions that are most in demand: creative services, telemarketing, traffic buying, IT and analytics support, and response-handling services.

Costs of an In-House Department vs. Outsourcing

Advocates of in-house operations point to several reasons why their costs can be lower than those of the independents:

  • There is quicker turnaround time and no overhead costs.
  • Accounting audits of outside service organizations and other duplicate efforts are eliminated.
  • In-house people claim more comprehensive cost control with the elimination of elaborate client presentations, entertainment, and other “window dressing.”
  • Corporate cash flow can be more easily controlled in-house.

Business-to-business marketers say that when running the in-house operation of performance marketing department as a profit center, management is provided with a more realistic measure of its productivity and value, and in so doing, demonstrates the cost savings most dramatically by simply adding up the profit. This profit goes directly to the corporate financial statement.

Outside services people claim that the in-house operation becomes “an expensive tenant,” committing to long-term costs of equipment and maintenance. When adding up true costs companies do not always remember to include overhead, benefit programs, and expense accounts. Direct salaries, they assert, represent only one-half or less of the total cost of maintaining an employee.

Independents emphasize that productivity is often higher in their outside resource firms because keen competition forces them into the most efficient and cost-effective methods and systems. They believe that the marketer’s return on investment could well be higher when using outside resources.

Creativity in an In-House Department vs. Outsourcing

Proponents for in-house creative services say they know how to turn out winning plans because performance marketing creative talent is not restricted to outside performance marketing agencies only. Moreover, having continuing contact with the decision makers in the company lets an in-house marketing department creative staff dig out in-depth information as may be needed to focus on the real selling proposition. This interaction fosters client confidence in the validity of the proposed creative plans.

In-house performance marketing department people contend that this direct communication without any intervening layers is an advantage that permits more on-target programs. The integration of performance marketing into the company organizationally guarantees that everyone speaks the same language. This means that all company information, sensitive or not, can be shared.

In addition, insiders suggest turnover of creative professionals is healthy. Hiring talented people who continue to grow in their careers and then wishing them well as they move into other positions is a way to continually have bright talent that keeps the operation sharp and contemporary. Also, to stay competitive creatively, in-house performance marketing department managers say they employ freelance and “a la carte” creative services occasionally to compare quality.

Outside service firms and performance marketing agencies claim they are the leaders in performance marketing and its individual functions. They feel they are better at recognizing a really creative professional and therefore can hire superior creative talent. They say talent is in short supply, and is most productive when in the stimulating environment of the outside agency and firm whose business is idea creation and implementation. Outside groups maintain that in-house services cannot hold the creative talent nor can they find replacements easily.

The agencies and service firms that specialize in performance marketing claim they not only have more creative people to choose from but they provide the opportunity for their employees to make career moves without leaving the performance marketing business.

Another issue raised by the in-house advocates regards evaluation of programs. In an outside firm, independents say there is a built-in evaluation by the firm’s associates.

Objectivity of an In-House Department vs. Outsourcing

Outside resource firms accuse in-house people of being intimidated by pressure of company management, thus preventing objectivity. Since outside people are shielded from client management, they are more apt to make an unbiased “call.”

Because they deal with many clients who have various goals and problems, outside service firms contend they can be more objective in the way they approach a problem. They have a broader perspective than the insiders who focus only on their company’s products and markets.

And that is not all. In many cases, the user of the service in the company is the same person who controls the service. This places the performance marketing department manager in a position of approving his or her own work.

In-house employees imply that just because they are directly associated with the company’s strategies and programs, it does not necessarily mean they are not objective. However, to prevent any lack of objectivity, they feel the occasional use of outside consultants for opinions on inside work minimizes any problem of in-house bias.

Standards of Performance in an In-House Department vs. Outsourcing

In-house managers claim they have the same discipline and dedication to the individual service function as is found in its outside counterpart. Standards of performance are high when measured by copy and concept testing, readership studies, awareness scores, and detailed daily time sheets.

Outside performance marketing service firms indicate their performance standards are usually higher because they have learned from many thousands of hours of experience how to operate efficiently and effectively. In competition with many other firms, they have to keep their standards high to stay in business and make a profit.

Convenience of an In-House Department vs. Outsourcing

Insiders say that getting the job done in-house can actually minimize reaction time because lines of communication are shorter. Questions get answered sooner and problems get resolved quicker. Increased efficiency in creating and approving work ends up in significant time savings and therefore it becomes easier to do business, Business-to-business marketers get what they want when controlling the service.

Independent resources point to the flexibility the business-to-business marketer has when using outside services. With relative quickness the outside resource can be turned on or off as business conditions dictate. A campaign can easily be curtailed, a program cut off in midstream, or a resource put on hold or replaced when budgets are reduced. Putting an in-house performance marketing department staff on hold can be much more of a problem if not an impossibility.

Specific Function of an In-House Department vs. Outsourcing

When examining the specific functions that they require most, performance marketers are faced with a more clear-cut choice. Here the question is less of a debate and more simply a matter of “Where will I get the most effectiveness for my performance marketing dollar in the long term?”

The answer comes from a careful analysis of the marketer’s needs. Some key considerations are identified below for the functions most in demand by marketers.

Creative Services

Having an in-house creative director is an advantage, since the more knowledgeable the creative head is about product benefits and market needs, the greater the chance that creative concepts will be on target. This also applies to copywriters specialized in lead generation for the complex sale and, perhaps more so, to direct sales copywriters who must have numerous questions answered before the complete promotional package (e.g. a complete landing page selling a product) is written.

The more creative business-to-business campaigns are done by outside performance marketing firms and usually include all production elements as well as creative elements.

An in-house graphics person may not be warranted, especially for the smaller company or division of a larger company. But, if there is a need, the first graphics person hired for the staff should be the graphics designer.

Since there are more graphics professionals than copywriters available in the marketplace, compensation is lower and they are easier to locate and hire. Like performance marketing copywriters, creative graphics artists are stimulated by creative input and need to be continually challenged and rewarded.

Telemarketing Services

Depending on the volume, types, and consistency of calls, going in-house with a telemarketing operation can have a payoff in dollars for business-to-business marketers. Since a telemarketing facility involves a large initial outlay in ergonomically designed facilities, phone lines, hardware and software, staffing, and training, this investment, in effect, institutionalizes the function. Of course, the more sophisticated the interactive scripts and systems automating the work, the higher the cost to develop and maintain.

Marketers who have a first-time need for a telemarketing program, but who cannot justify the initial cost or the time to start up an in-house telemarketing center, often run their new program with an outside service as a test. If the test is a winner, they then establish it in-house.

Media and Traffic Buying Services

Both large and small business-to-business performance marketers need traffic and media buying services. The level of sophistication of the media platforms and expertise called for is determined by the size and volume of the program.

The high unit cost of media and rate card discounts available to media houses and agencies discourage the formation of in-house media buying teams by all but those marketers who use large volume of traffic on a continuing basis.

However, there are those marketers who use traffic in unique ways and find it advantageous to bring the media buying inside where everything is under direct supervision and control. For instance, some programs use micro traffic sources which are not available to the public but are brought on a barter/swap basis.

In these cases, the process of outsourcing such services would be economically not viable as media houses or agencies would be looking for scale due to their commission-based rates. With the media buying inside, communications can be more direct, thus enabling the use of these low-traffic (but hopefully high quality) sources.

What is more, it is also easier for the in-house manager to change schedules to accommodate rush campaigns.

6 Considerations When Making A Resource Choice: In-House Performance Marketing Department Or Outsourcing

Your decision to bring one or performance marketing services in-house will depend on the following considerations:

  • Company philosophy and style
  • Type of business
  • Existing capabilities of staff
  • Volume and consistency of services to be performed
  • Dominance of the performance marketing discipline in the company’s objectives
  • Type of product or service

By reviewing these considerations you can make more intelligent choices.

Company Policies and Management Style

Companies that are centrally organized lend themselves more naturally to in-house performance marketing department functions. These operations most often have “captive” clients and are more inclined to generate the in-house volume needed to fund the necessary expertise, facilities, and systems.

Decentralized companies are structured as commercialized entities: business units, subsidiaries, and autonomous divisions. For the most part, these companies do not maintain large internal staff departments. However, in-house performance marketing shared service centers can succeed in this environment especially when chartered as profit center line operations.

Traffic buying, creative, and telemarketing services, as well as fulfillment, IT and analytics services, or any other key performance marketing functions can actually thrive in-house in a decentralized company.

A decentralized policy usually allows divisions or business units the prerogative of choosing their own resources. Under this policy, the in-house performance marketing shared services center cannot expect to have all the company’s performance marketing business.

Fast-track, independent company divisions and business units take advantage of their freedom by looking outside the company for many different resources. But in spite of this aspect, it also works as a built-in motivator, challenging the in-house performance marketing operation to excel.

The problem caused by use of outside services can be offset by a management policy that allows an in-house operation to solicit business from outside clients. While in general this brings additional risks, it may not only help balance the work flow but more important, establish the necessary free-wheeling commercialization that the in-house enterprise needs to compete with its outside counterparts.

Better than average talent is needed to run a successful in-house performance marketing shared service. When good people leave an in-house operation, replacing them may be difficult. Not only are experienced, talented business-to-business performance marketing people scarce, but they command higher salaries from outside performance marketing specialist firms.

The salary increases needed to keep good people can be more than corporate salary-management policy guidelines will allow. However, if in-house operations are functioning as profit centers and are soliciting work from outside clients, they may have less trouble getting such salary approvals.

Type and Size of Business

Multiproduct and multimarket B2B companies are the ones that usually generate enough volume and activity to economically support in-house performance marketing departments. Companies with highly seasonal products – unless balanced with products for alternate seasons – have difficulty maintaining full-time in-house functions.

Small companies, which make up the great bulk of business-to-business marketing, often lack resources and expertise to have an effective in-house performance marketing department. And some of these companies do not have a large enough volume of work to justify doing it in-house.

In addition, these companies and small divisions of large companies often do not have the budgets that attract outside performance marketing service firms. This forces many marketers to do the work themselves without the necessary expertise, all too often producing less than satisfactory results.

Staff

Manager

The manager of an in-house performance marketing shared services center should have highly respectable performance marketing managerial credentials. There is a temptation in many companies to slide a promotable but unqualified employee into an in-house manager’s slot.

Managers who have previous experience with in-house performance marketing programs in other companies know what it takes to succeed. They know how to sell their ideas and services to others. They know how to motivate people and they know how to handle volume work flow.

In addition to demonstrating financial responsibility, they may also know how to run a cost center, or better yet, a profit center.

Personnel

When transferring company staff into line operations of an in-house performance marketing center, the manager has to make sure these people make the adjustment. It is much more difficult to conform to the stricter rules of the in-house profit center than to the less stringent operating environment of a department budget center.

Yet, if company staffers can become competent in appropriate performance marketing functions with a minimum of training, and can adapt to new direction, hiring problems can be resolved.

Hiring of outside professionals is not easy either, since much of the available performance marketing talent is steeped in the consumer side of the discipline rather than the business-to-business side.

In fact, after determining the length of the learning curve required to train a qualified employee to run the function, or the time it takes to locate and hire an experienced performance marketing manager from outside, you may decide to postpone or abandon the decision to bring the operation in-house altogether.

Justifiable Volume of Work

To perform any of the major performance marketing functions in-house requires high fixed costs of office space, software, tools, systems, and staffing. Volume of work governs investment risk – usually the more volume, the less risk. But volume alone is not enough. Consistency of work flow is critical for a cost-effective operation.

If a 90 percent or greater use of the resources can be projected over a 24-month period, chances are it can pass at least one part of the ROI test.

Outside resources respond to peaks and valleys efficiently because their work is spread over a larger client base. The business-to-business marketer pays for this in overall fees. But for many marketers it is worth the extra dollars since erratic work flow can play havoc with productivity ratios and can cost an in-house operation heavily.

Dominance

When the performance marketing function plays an important role in the company’s long-range strategic plan, there is more of a commitment to performance marketing programs.

This is true for a relatively small number of business-to-business performance marketers who generate huge quantities of marketing efforts on a fairly consistent schedule. These are marketers whose products and services have universal appeal that crosses all businesses horizontally. For the most part, their very existence depends on the results of direct response efforts.

But, even though performance marketing is their dominant method of selling, the temptation to go in-house with all of the performance marketing service functions is tempered by the cost of high technology and specialized processes.
For instance, it is not unusual for a business-to-business company to process its own orders, maintain inventory, and run accounting records, sales analyses, and reports in its own in-house IT department.

However, the traffic and media buying function, because of its need for more sophisticated software, expertise, and media buying discounts may be contracted outside. The payback on any large in-house investment calls for a consistency of use normally outside the range of an individual business-to-business performance marketer.

Complex Products and Operations

One reason business-to-business companies or their divisions go in-house with performance marketing functions, particularly marketing planning and creative ideas, is because their products or operations are extremely complex and difficult for outside performance marketing agencies to readily understand.

The problem is compounded by the high turnover rate of outside resource service employees, which results in the expenditure of extra company time and dollars to continually orient and educate the replacements who service the account.

In-house staff turnover not only decreases, but educating and training the staff are easier because those functions become by-products of the daily job. These employees have easy access to the information bases surrounding the products being promoted. They speak the language of the company experts and product managers, and are on the spot where all the marketing interaction takes place.

Companies with sensitive operations need the security implicit in a tightly controlled environment. Others with highly technical products tightly control what is said about their products as well as how their corporate identity is used.

Many of these business-to-business marketers have in-house support centers because they feel outside creative groups usually have problems conforming to their stringent corporate guidelines. Also since specialized copywriters work within the company, they are in a better position to use the terminology peculiar to specific products.

Keys To Effective In-House Performance Marketing Department

For an in-house performance marketing department to succeed, aside from adequate capitalization, it must have the key elements that comprise effective in-house operation:

  1. Staff talent and skill
  2. Managerial competence
  3. Motivation to succeed
  4. Freedom of action
  5. Selling know-how

How well this mix of abilities, incentives, and policies is formulated will determine the degree of success of the effort.

Staff Talent and Skill

The range of talents and skills in use today in business-to-business performance marketing is enormous. Some individual talents are in great demand by both in-house and independent performance marketing services – specialists, strategists, and creative idea people top this list.

Even though most performance marketing professionals lean toward working in independent performance marketing firms and agencies, a sizable number in just about every performance marketing category will opt for the relative job security of the business-to-business marketer’s organization.

Effective functioning of an in-house performance marketing department or shared services center focuses on talent and it begins at the top. The right manager in that spot knows how to hire talented, skilled, and motivated staff members.

The professional most in demand for any marketing position has the right mix of experience, education, talent, personality, supervisory skills, and energy. However, performance marketing also requires sophisticated training, state-of-the-art knowledge, and commitment.

Recruiting top talent takes time. Forecasting the need well in advance improves the hit rate. If the decision is to go in-house with a performance marketing function, it is vital to get state-of-the-art talent and skill.

Managerial Competence

Even though an in-house operation may not be chartered as a profit center, it should be managed like one. If it is to succeed in the long term, it must be able to compete on the basis of value with its counterpart in the open market. In-house operations have a tendency eventually to either disband or grow into profit centers.

So the in-house manager, if not already operating the unit as a profit center, should be prepared to expand the operation’s financial parameters to include profit and loss statements, balance sheets, contribution to promotion and profit analyses, and other key financial documents.

The in-house manager of performance marketing department must be able to calculate and compare the estimates with the actual costs of each completed job. All work effort must be pinpointed precisely not only to ensure a proper cost accounting system but also to learn who is good at a particular task for future assignments.

Managers can compete better with independents by keeping track of the productivity of each employee with daily time sheets.

The manager may find a need for more personnel to handle increased demand of in-house services. Ordinarily, hiring additional people may not be a problem. But, for instance, if the company has a temporary ban on new hires, the manager is challenged to come up with another solution.

Overcoming this and other road blocks creatively is a necessity for in-house management effectiveness, especially in larger corporations. In this case, the solution could involve use of temporary help, employee overtime, or use of freelance or contract workers. Although this may seem to cost more, a short-term solution can be more prudent over time.

Motivation to Succeed

More and more company managements are beginning to understand and appreciate that salary alone is rarely enough motivation for an in-house manager to succeed. The reason is simple. The manager competes with independent businessmen and businesswomen in performance marketing service firms who have a different and powerful motivation – personal profit.

The in-house manager may be motivated for only two or three months until the effects of the latest salary incentive wears off. Therefore, special bonuses, profit sharing, and other rewards tied to the results achieved from the in-house operation are necessary as well as non-monetary motivation, e.g. personal recognition, decision autonomy etc.

Freedom of Action

Company guidelines and policies inhibit the in-house manager’s decision-making ability and activities. Restrictions on overtime, hiring and firing, pay scales, and use of facilities and equipment stifle the freedom that the in-house manager needs to compete with outside resources.

The more that an in-house performance marketing department or shared services center resembles a profit center, the more freedom the in-house manager is allowed to get the job done.

Selling Know-How

Managing an effective in-house performance service center also includes competence in selling services to others and selling a point of view on occasion. Since outside firms survive or fail on their ability to sell their services, those who remain have mastered the techniques of selling.

In the same way, by understanding and effectively using these skills, the in-house manager will not have difficulty getting and keeping internal clients.

Creating an In-House Performance Marketing Shared Services Center or Department

Business Plan

A well-formulated business plan precedes the start-up of any in-house performance marketing function, whether or not it is a profit center. Of course, the underlying reason for a plan is its help in gaining financial support if the operation is a profit center. Other reasons for the plan are:

  • It forces the performance marketing manager to think through the basic aspects in a businesslike way.
  • It makes the marketer more disciplined and decisive by committing in writing to an action plan for achieving well-defined objectives.
  • It spells out the mission and becomes a track to run on as implementation of the in-house plans move forward.
  • It sets parameters for measuring operating results and allows the planner to maximize strengths and lessen potential problems.

A useful preliminary to the development of the business plan is visitation with in-house managers who run the same or similar performance marketing functions in other companies. Such meetings produce valuable advice that can help form ideas and expose pitfalls.

The written plan will list potential internal clients and a calendarized forecast of services that these clients will require from the new in-house performance marketing department. If the forecast is too low, the in-house operation will be understaffed and underequipped, damaging its reputation and causing problems in meeting internal clients’ needs.

If too high, many fixed costs and considerable overhead expense can result in higher internal client charges or a loss to the operation. Either way, the operation can lose. However, having a forecasted work load gives the marketer a target to shoot at and a basis for action when off the mark.

Beyond this, many questions need to be answered in the writing of the business plan. Among them are:

  1. What can be done better in the new in-house performance marketing department compared to an outside independent service?
  2. What are the short- and long-term objectives for the performance marketing department?
  3. Specifically, how will it be organized?
  4. What special strengths will the performance marketing department have that should be emphasized in the selling plan to internal clients?
  5. What are marketing plans and schedules?
  6. Will charges to internal clients reflect competitive pricing?
  7. Are performance objectives high enough?
  8. Do performance marketing service descriptions adequately cover in-house capabilities?
  9. Is there substantiating research back-up for the plan?
  10. Will original capitalization cover start-up expenses?
  11. What can cause the plan to change in the next 12 months and what is at risk?
  12. What is growth potential?

You should prepare a pro forma profit and loss statement and balance sheet for your own benefit, even if it may be a break-even operation. This exercise in financial responsibility can only help it become more cost effective. A return on investment analysis is mandatory in any case.

You will have a detailed blueprint to follow when the in-house performance marketing department business plan is approved. Next, you need to implement major action items early:

  • Charter development
  • Organization of personnel
  • Budgets and financial plans
  • 12-month timetable

The Charter

Although your charter for an in-house performance marketing function may not consist of more than two ages, its importance should not be underestimated. In it the scope, functions, and authority of the in-house performance marketing service are spelled out for all in the company to see. In effect, it becomes a legal document or a tie breaker in those cases when interdivisional disagreements occur.

The charter typically includes the extent of the company’s commitment to the in-house performance marketing service, if it is established as a profit center or a cost center, and the degree of autonomy and authority the operation has. You should also include a statement indicating whether the policy is to allow the in-house group to solicit outside business and whether all divisions of the company would be “captive” or be permitted to choose their own services.

Staff

It is not really difficult to attract talent. Although in-house salaries are not comparable to those of outside independents, there are some talented performance marketing people who are interested in the benefit package that the larger business-to-business companies offer.

Long-term benefits and better job stability are the most prevalent reasons why in-house performance marketing departments can attract these experienced professionals.

However, in an effort to promote from within, sometimes companies justify putting the wrong person in the slot. Managerial knowledge and experience in an in-house performance marketing function is mandatory. The more successful in house performance marketing department start-ups are run by managers who have entrepreneurial qualities.

More and more corporate cultures today allow entrepreneurial spirit to thrive. The entrepreneurial (or intrapreneurial) style is to make decisions quickly, and act on them fast. It can uncover failures quicker, establish successes quicker, and show a keen desire to focus intensely on goals. There are seven major qualities of an intrapreneur:

  • Low need for support
  • High need for achievement
  • High need for independence
  • Leadership ability
  • High level of energy
  • Integrity
  • Good judgment

Budgets and Finances

Only after having fully explored staff and software systems needs can you prepare a realistic calendarized budget. Starting-up a performance marketing department can generate sizable expenditures well before your in-house operation receives internal client income or allocations.

Consequently, a firm understanding of the financial commitment and knowledge of how the in-house performance marketing department will be capitalized during this period helps establish implementation plan priorities. This knowledge could help avoid roadblocks caused by an unexpected event, such as management change or a company profit shortfall, that may prevent the full planned funding from moving forward on schedule.

But aside from any funding problems, it is typical for an in-house performance marketing operation not to break even the first year or two.

Soliciting the interest and guidance of financial and accounting management, and thoroughly acquainting them with the performance marketing goals, strategies, and programs, benefits the operation and the company. Most corporate financial people are not well informed in the performance marketing discipline and they welcome the orientation.

Chances are that the more they understand the business plan and charter, the more conversant they will be in performance marketing, and the more they will support your new department.

Timetable

A well-constructed timetable can eliminate some of the confusion, time delays, and extra costs. Programming a detailed network of events and action items can lead to an up-and-running in-house performance marketing department. The timetable delineates a plan for accomplishing the projects in the precise order needed to optimize time and dollars.

After you identify the interaction that occurs among the various facets of the project, you can make an estimate of the “best case/worst case” time frames for each step in the progression of events. From this you establish a time schedule that alerts you early enough to take remedial action when a crucial date may be missed.

Evaluation of a Functioning Performance Marketing Department or Shared Services Center

The most objective evaluation of services handled in-house should come from your internal clients: product managers, sales managers, program managers, and others whose budgets and profit centers get charged for the in-house work performed for them.

The in-house manager who may also happen to be the sole client for the services of the in-house performance marketing center must rely on the bottom-line profitability figure as a measure. If the department is not a profit center, the manager will have to pay for an outside objective opinion. However, either way, any in-house group should operate under the assumption that it is competing with the best of the independents.

In-house performance marketing department managers should periodically ask internal clients, “How are we doing?” questions. Of course, the questions will relate to the types of performance marketing services performed. But there are some basic qualification and performance criteria that apply in most situations. Questions about charges, quality, and timeliness of the service usually lead the list.

Getting the internal clients involved in the evaluation starts with a questionnaire. This is sent to clients followed by a personal review session between the in-house manager and each client. In this way performance analyses can be made for each criterion being measured. In addition, the relative importance of each criterion is taken into account and weights assigned accordingly by the in-house performance marketing department manager.

When all internal clients have made their comments in response to the specific questions, you compile an overall rating of the in-house services. A quantitative view of the value of each criterion is derived by employing a rating guide. By comparing the clients’ comments, you assess the importance of each criterion on a comparative scale.

To accomplish this, give each criterion a rating of 1 to 10 (10 is excellent), and determine a composite rating from the analysis of internal client’s answers. After you determine all the composite ratings for each criterion, calculate an overall weighted rating simply by multiplying the weighted factor by the rating in each column for each criterion.

See the example:

CriterionComposite RatingWeightWeighted Rating Points
Competence80.97.2
Creative Excellence100.99.0
Knowledge of Internal Client Needs90.87.2
Pricing of Services60.84.8
Fast Turnaround50.73.5
Product Knowledge70.64.2
Performance Standards70.64.2
Market Knowledge70.64.2
Cost Control60.63.6
Motivation80.54.0
Total Rating (out of a possible 70)51.9
Performance marketing department or performance marketing shared services center evaluation worksheet.

Creative excellence scored here high as did knowledge of internal client needs. Improvement is required on moving work faster and on cost effectiveness. Performance criteria established and weights assigned will vary depending on the evaluated performance marketing functions and your opinion of the relative value of each criterion.

Performance questionnaires and rating systems can improve rapport between in-house employees and their internal clients. Open communication helps clarify each other’s needs and leads to a strengthening of an in-house operation or a switch to an outside service.

Beyond this, the rating guide based on actual client evaluations minimizes the tendency of managers to defend that which they have built long after its value has eroded.

Note: general performance rating as described above will be more valuable than a per-project or per-task ratings (as popularized by project management software suites) as these tend to be inflated because the raters think more about the individual assigned to the project or task rather than the actual performed project or task.

Outsourcing Options

The Performance Marketing Agency

Another of your resource options is the performance marketing agency or general advertising agency that has business-to-business accounts. However, since performance marketing embraces many different functions that must be performed by people who have specialized expertise, it is not always cost effective for an agency to have all the functions performed by the personnel within the agency.

Some agencies draw on the talents of independent outsources services, e.g. telemarketing services, as standard procedure. Some use outside creative boutiques and freelance copywriters and graphics artists necessitated by peak periods.

These agencies usually operate with a minimum of staff, using outside sources for the details of tactical implementation. You may or may not feel comfortable with this approach. The mode of operation, however, is not what makes an agency deliver the results that the client marketer is looking for. It is the people who develop the plan and concepts and who know how to select the talent and put it all together.

The performance marketing agency account director is a key member of the team that represents the needs of the client to the agency and provides the best the agency has to offer to you, the client.

When as a business-to-business marketer you search for a performance marketing agency, you should look for one that has an understanding of and experience in these seven areas:

  1. Performance marketing planning
  2. Segmentation analysis and market targeting
  3. Prospect and customer database concepts
  4. Traffic and media buying sophistication
  5. Research and testing techniques
  6. Copy and graphics expertise
  7. Experience in the marketer’s performance marketing application

Business buyers react more positively to businesslike approaches. They have different buying motives and require more justification before making a purchase. Performance marketing agencies that have consumer experience only will tend to build their learning curve on the business-to-business side with the first few business-to-business accounts. The astute business-to-business such as yourself will avoid being the first.

It is also wise to investigate the area of performance marketing where the agency principals get most of their income and profit. It is in that area of specialization, whether in general counseling, campaign planning, media and traffic buying, creative services, or testing, that the marketer will get the most value from dealing with that support service.

Size and location are also decisive factors in a performance marketing agency selection. Size is important in terms of budget. When an agency is too large then if you are a low-budget client you may get minimal attention. The big-budget client, on the other hand, can overwhelm a small agency’s facilities and personnel.

Location is a key factor because you want to get service when needed. And, of course, you should always expect intelligence, good judgment, and intellectual honesty in those who run and work in the agency.

You should make sure that agency personnel are available who have experience in the specific type of business-to-business performance marketing application needed, such as landing page optimization, ecommerce selling, lead generation, or other types of sales support campaigns and telemarketing.

As full service performance marketing agencies continue to proliferate, they offer more and more opportunities for business-to-business marketers to get complete performance marketing programs planned, implemented, and measured.

Consultants

Consultants are another resource group. Specialized consultants have expertise in one function of performance marketing. These specialists, highly knowledgeable in their field, often are financially connected to a service firm in their individual specialty.

Independent consultants, on the other hand, offer advice and recommendations on a broad range of topics and are completely objective since they have no financial arrangements with other performance marketing service firms.

The professional chosen for this job should have the proper experience to help you make the right decisions fast and with little risk.

Actually the more outside people on a project, the broader the range of ideas that can be applied to it by those who have worked on all kinds of projects, using the tools of performance marketing in many applications in different fields and industries.

Using consultants permits you to profit from the vast experience and the current techniques employed by other marketers – the kind of experience you generally cannot afford to have on the payroll.

You can be more flexible and yet have more overall control. With the right consultant leading the effort, it can be an effective way for you to launch a program and to learn for future use how it is done. Retaining a professional consultant long-time is a logical extension of this concept if performance marketing volume and program continuity warrant.

Summary

  1. Before determining the “make or buy” decision you need to evaluate each of the performance marketing services required. Those most often in demand include creative services, telemarketing, traffic and media buying, analytics, and response handling services. Each of these functions is performed differently depending on whether the performance marketing objectives are sales support (e.g. lead generation for a complex sale) or direct sales.
  2. You need to understand the points of view continually debated between in-house performance marketing proponents and outside resource specialists. Issues center around whether the in-house or outside resource will provide services more creatively and more effectively for less cost.
  3. The consideration of carefully weighed options will lead you to intelligent resource choices. Considerations focus on philosophy and style of management, type of business and product, existing capabilities of staff, volume and consistency of services, and dominance of the performance marketing function in your company’s objectives.
  4. Centrally organized companies lean toward support of in-house performance marketing department. However, these units can thrive in decentralized companies as well, when operated as a profit center.
  5. Abilities of personnel, management incentives, and organizational policies comprise the keys to effective operation of the in-house performance marketing department. A mix of talents and skills of staff people, in-house managerial competence, motivation to succeed, freedom of action, and selling know-how raise the in-house performance marketing department to a professional level, functioning conceptually as a profit center even though organizationally it may not be one.
  6. A well-thought-out business plan provides an in-house performance marketing department start-up with a disciplined approach and a blueprint for follow-up. High-energy achiever types have department start-up successes with early implementation of key action items: charter development and organization of personnel, along with financial plans and a 12-month timetable.
  7. The best evaluation of an ongoing in-house performance marketing service comes from its internal clients. Performance criteria can easily be established in the form of questions to be answered by the clients of the service. By consolidating the responses and adding weights, you can develop a performance rating guide that will point out service strengths and weaknesses.
  8. For those business-to-business marketers who elect to use outside resources, there are performance marketing agencies, ad agencies, consultants, and thousands of independent performance marketing specialist firms from which to choose. Services cover the full range of the marketer’s needs.

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The expert's thoughts on direct response - growth hacking - performance-based marketing activities - DIRECT MARKETING

About Me, Rafal Lipnicki.

the direct / performance marketing consultant with a strange sounding name

Who.

Not your usual "guru" but a real-world performance marketing & innovation consultant based in Europe and an experienced senior executive at leading multinational companies.

What and Where.

I am a consultant for hire, working remotely and on-site all over the world (but Europe is always preferred). See my consulting services page for details.

How.

Contrarian advice most of the time. Document-based audits, workshops, one-off projects, mentoring programs, and more.

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