Every day CEOs tell us that the business environment is fraught with challenges and fierce competition. Firms of all sizes are trying to understand how their marketing efforts are contributing, which channels and content to leverage, and how to best invest their limited time, energy, and talent. As the CEO it is reasonable that you expect your marketing to generate measurable value and for your marketing team to be able to demonstrate Marketing’s impact on the bottom line.
More than likely, your marketers report on a myriad of metrics. Perhaps you see measures related to the state of the budget, or the number of emails distributed and the open, click through or bounce rate for these, or perhaps you review website or social media metrics. Hopefully, your marketing team is taking their measures one step up the ladder, and at least measuring and reporting on the number of new qualified opportunities and the cost per opportunity marketing delivered to the sales team. These may be exactly the right metrics for your organization. Or maybe you need metrics that help determine marketing’s contribution to share of preference, customer loyalty, or the rate of adoption of a newly launched product.
As the CEO, here are three questions your Marketing team should be able to answer to help ensure you receive the right metrics:
- How is Marketing impacting and contributing to the business
- What is and isn’t working
- Does the data enable course adjustments?
If your Marketing metrics don’t answer these “So What” questions, have your team step back and return to the drawing board. Have the team go back to the marketing plan and make sure every marketing objective is directly tied to a business outcome and has an outcome-based performance target. So while this may take some work, it makes sense to invest the time to create a set of metrics that will serve you better.
Here are three steps to get you started:
- Achieve Alignment. From a decade’s worth of research, we have found that the number one practice of best-in-class marketers when it comes to proving the value of marketing is alignment. Lean teams and resources combined with today’s breakneck pace and channel explosion makes it easy for marketers to become tactically oriented. Best-in-class marketers focus on making sure their marketing objectives are tightly aligned with business outcomes and developing strategies and associated tactics to deliver on these objectives. Unfortunately, every year we see numerous marketing plans that are really just dressed up tactical plans with output-oriented metrics. For many CEOs, COOs, and CFOs, these plans fail to deliver expectations. So ask your marketing team to take the time to approach things in the right order. “First things first” as Covey says, and the first thing is to have clarity around the business outcomes. In addition to business targets such as revenue, margin, market share, etc. business outcomes include the strategic initiatives that the organization must achieve in order to realize the business targets. As the executive leader, provide the guidance they need in specific quantifiable team so your marketers can develop measurable customer-centric marketing objectives aligned to the business outcomes. We highly recommend that your marketing objectives clearly show how Marketing will impact customer acquisition, retention, and growth in order to drive revenue, market share, and customer equity targets.
- Build your data chains. By starting with the business outcomes and measurable marketing objectives and then creating the strategies and tactics your marketing team will be able to create the data chains that connect marketing activities and investments to business results. For example, a data chain might be: <new product revenue:><new product adoption rate><marketing-generated opportunities win rate:><marketing generated qualified opportunities ><marketing generated conversations from campaign Y<<X# qualified opportunities/webinar or event at $Y/opportunity>. This chain shows the relationship between the qualified opportunities from a series of marketing tactics and investments (webinar and events) associated with a particular campaign, marketing generated customers, and revenue for a particular product. Data chains enable marketers to connect outputs with outcomes. Ask your marketing team to share their data chains so you understand the link between the marketing activities and investments and the business results.
- Select your metrics. There are so many things marketers can measure that it can be hard to decide which ones matter. Request that the metrics Marketing reports to you answer their “So What” questions. Use the data chains to identify how marketing tactics, objectives and outcomes relate to each other, what data elements are needed, and what if any analytics will be required. Once your Marketing organization has all of these components they select metrics that will be meaningful to you. Evaluate the metrics based on whether Marketing is capturing marketing’s impact and contribution in at least these areas: customer acquisition, customer retention, customer/brand equity, competitive position, and operational efficiencies and financials.
These three steps will help you and your marketing organization establishing the right metrics. Armed with the right metrics you will be able to fine tune your marketing efforts and ensure you are investing your limited resources (time, money and energy) the best way. Measuring marketing may not be easy and you may encounter some challenges, but it will be worth the effort when you have the information you need to more effectively and efficiently acquire, keep and grow the value of your customers. Find out how well your and our marketing organization measure up when it comes to marketing performance, take the annual MPM survey.