This week’s Internet Rorschach test involved a disgruntled husband’s spreadsheet to his wife about how much sex they are not having (http://www.thepoke.co.uk/2014/07/21/sex-spreadsheet-causes-marital-row/). Comments poured in fast, including this excellent women’s response spreadsheet (http://www.inspiredgirl.me/a-wifes-response-to-spreadsheet-guy-he-tracked-his-wifes-excuses-to-not-have-sex/) but the funniest responses criticized the author’s Excel and relationship skills: “I’m not a marriage counselor,” writes Bob Powers of Someecards, “but I’m pretty sure that if you and the spouse aren’t sleeping together as much as you’d like, the way to turn her on is not with passive-aggressive use of Microsoft Office.”
The same applies to the relationship between marketing managers and their significant others. Indeed, the highest-paid marketing executives are those who have developed strong relationships with other C-suite executives — primarily the CEO, CIO and CFO (CMO Council, July 23, 2014). Passive-aggressive complaints about unapproved marketing budgets sure won’t help here either. So how can a spreadsheet strengthen this relationship?
The above scroll bars and heatmaps are easily implemented yourself in Excel and have helped several companies in having better discussions on marketing allocation, budgets and return on marketing investment. As detailed in the first case study of my book, typical meetings at the US branch of a foreign car company included higher (stretch) targets for sales and profits in the coming years, but at the same time lower marketing budgets. Unfortunately, US management had strong gut feelings, but no way to demonstrate how much older models and lower ad budgets would weigh on profits. After validating the econometric model with managers and in a hold-out sample, we used the model estimates to create two simple Excel tools: the scrollbar (or Slidebar) and the Heatmap like the ones above. Managers enjoyed the ability to try out different scenarios by (1) moving the scrollbars and observing the predicted profit outcome and (2) focusing on changing 2 marketing inputs to observe the best profit that the model could achieve in the heatmap.
Key to dashboard acceptance and use was the correct feeling that the model did not replace the decision maker by providing one ‘optimal’ or ‘right’ answer, but helped the decision maker in running what-if analyses (e.g. “if the average model age increases by one year, how much do our incentives have to increase to achieve the same profit level?”, “how about we increase the communication budget instead?”). The dashboard tools also allowed the more involved user to ‘unhide’ the Excel columns that show the model estimates and to question or change them. Indeed, headquarters did not simply ‘roll over’ presented with evidence that profits would drop 20% on the combination of older car models and lower ad budgets (while the target profit was 10% higher). Instead, they demanded the detailed econometric evidence (check) and questioned whether specific estimates could not be improved in the coming year (as compared to the past data used to estimate the model). This changed the discussion from a general ‘you just have to work harder and smarter’ to the specific tradeoffs managers face and how to join forces to overcome them. For one, the low average profit effect of an often-used activity challenged common wisdom and urged managers to give creative employees more latitude to think further outside the box in that area. In the end, a new marketing plan was adopted with substantially higher spending on some items, lower spending on others and smarter use of the same budget for the remainder. Profit exceeded even the stretch target the next year.
In sum, it is not the size of your spreadsheet, it is how you use it. Which spreadsheet tools have you used to make your case and arrive at a profitable consensus?