Many businesses plan substantial marketing budgets using nothing more than Excel spreadsheets. Most of them are aware that, whilst Excel is an excellent tool for analysis and modelling, it really is not appropriate as the detailed system of record in which to build and store the business plan/budget. However, until now, making the change to a better system has always been too frightening to contemplate.
The trouble with spreadsheets
There are many reasons why Excel is not ideal: the inherent fragility of a file-based system, the danger of overtyping a formula, the difficulty of collaborating with colleagues or the risk that someone will be working off the wrong version, to name but a few. Today I want to focus on just one problem inherent to the basic concept of a spreadsheet: its fundamentally two-dimensional nature.
A spreadsheet by its very design is defined in terms of rows and columns. Indeed, this is its great strength – it is a simple format that is easily understood and maps well to the concept of a sheet of paper (albeit a very smart one). To be fair, this design does cover the vast majority of business and personal needs extremely well. However, business planning and reporting are inherently more complex. It was to address these requirements that multidimensional (‘OLAP’) databases were first invented in the 1970s. Whereas a spreadsheet is defined by its two-dimensional structure, even the simplest sales data will typically have three or more dimensions: a classic requirement being what you are selling (Product), where you are selling it (Geography/customer) and when you sold it (Time). The key understanding of OLAP databases was that you are just as likely to want to split your reporting by any combination of these dimensions or none, so you might equally want to see a breakdown of all sales in a particular account by product category, or all sales of a particular product broken down by customer. The way the data is stored, and the syntax of the underlying language are ideal for this sort of analysis.
Real life is multi-dimensional
The planning of marketing activities typically requires a rather more complex data model than this. Even though the plan might be built at a high level, there are all sorts of effects that flow from planning any activities that drive business. For a start, there are many different metrics to be calculated – orders, revenues, costs etc. For another thing, there might be a product or a market dimension to the planning. If a basic planning spreadsheet has, say, months across the page and marketing activities going down the page (individual campaigns or just top-level activity headings), then whilst it might be possible to represent a few key metrics as separate rows under each activity, adding further splits is more or less impossible in two dimensions.
Another problem is the level of detail at which it is appropriate to plan. A typical planning spreadsheet might use months as its basic unit of time. However, once the new financial year has started, a business is not going to want to wait until the end of the month to know how sales are proceeding against budget. This implies a need, at some point, to break the forecast down, at least to the week level. Fast-moving, short-lived, marketing campaigns, such as direct mail or e-mail campaigns, really need a forecast at the day level as the great majority of responses might be expected to come in within one or two weeks. This may require further spreadsheets or tabs which break the monthly sales down to a weekly level (daily is rarely feasible), and possibly, yet more linked spreadsheets to break the sales down in different ways, or carry out aggregations.
Whilst all this is just about possible, it is:
- Hugely time-consuming and complex to use
- Highly difficult to maintain as the business evolves
- A source of massive business risk (what if the one person who truly understands it leaves?)
- Still vastly less capable than a proper multi-dimensional database, which has specifically been designed for this purpose
Finally, this whole approach to planning still primarily ties sales to time periods. Dropping a campaign, or moving its start date by a couple of weeks requires a lot of work in such a structure, as does evaluating the success (or otherwise) of a marketing campaign or activity in itself.
A solution is at hand
Our award-winning COMPAS software has been designed from the bottom up to address all of these problems and more. Originally designed for global companies that are leaders in their respective fields, such as Unilever UK and Direct Wines, it is now available to more modestly-sized businesses as a low-cost, low-risk cloud-based product for planning, monitoring and analysing all manner of marketing activity. With COMPAS, you can:
- Plan at the level of individual campaigns or high-level activities (optionally filling in more details as time progresses)
- Automatically carry out detailed pre- and post-evaluation of ROI
- Assign a start date and sales profile and have the system automatically phase sales, revenues etc. over time
- Have the system automatically reforecast as activities progress and provide a revised view of YTD and YTG sales, revenues and profits
- Take snapshots to maintain a record of how the plan has evolved over time
- Do as much, or as little, product-level planning as you wish
Overall, COMPAS is designed to provide an industrial-strength planning, forecasting and reporting platform for sophisticated businesses. Easily tailored to your specific requirements, it provides the ability to see marketing and financial data side by side and gives the Marketing department the same level of control and reporting flexibility as is available to other functions in the business. Contact us now to arrange a demonstration.