Questions to Guide Your Marketing Metrics and Analytics
- What are your specific objectives for marketing investment and how will you connect your investments to incremental revenue and profit? Note: we are seeing marketing as an investment are you viewing marketing as a pure cost (and inconvenience)
- What impact would a 10% change in your marketing budget (up or down) have on your profits and margins over the next year? The next three years? Five years? Some recent thinking is that unless we are strategically thinking ten years ahead we are simply reacting to known factors
- Compared to relevant benchmarks (historical, competitive, marketplace), how effective are you at converting marketing investment into revenue and profit growth? Such a great question as many businesses have no idea how effective their marketing is, especially as they get sold on the latest emperors new clothes marketing silver bullet
- Which are appropriate targets for improving revenue leverage (defined as £ Pounds of profit over £ Pounds of marketing and sales spend) over the next few years? Which initiatives will get you there?
- What questions do you still need to answer with regard to your knowledge of the return on marketing investments? What are you going to do to answer them?
Marketing Metrics and Analytics
Do you know what profits a 10% increase in your marketing budget would generate?
According to the Lenskold Group’s Marketing ROI Study, the most common answer to this question is “I Don’t Know.” Forty-four percent (44%) of qualified marketers have no idea what a 10% budget increase could do for their companies.
Now unfortunately many SME businesses don’t have a specialist / dedicated marketing person let alone a professional qualified marketing person. Someone of equivalent standing who can sit alongside Finance, Operations, Production even Sales
If you fit into this 44%, you will experience difficulty protecting your budget. In fact, you’ll likely find yourself asking the question the other way around: “What will happen now that my budget has been decreased by 10%?” A situation that is far more likely in this post pandemic environment.
You can’t expect your organization to place value on something you’re unable to quantify. This article will help you do just that and we cover some key questions like:
- What are the most important marketing metrics for you to use?
- How can I measure my various marketing activities’ impact on revenue and profit?
- How can I best communicate marketing results within the business – whether that means the MD, the management team or the board?
- Which personnel, procedural, and cultural changes need to occur within the organisation so I can implement marketing measurement?
Marketing Metrics and Measurement Demonstrates Accountability & Builds Respect
Seventy-six percent (76%) of B2B marketing professionals agree or strongly agree that their “ability to track marketing ROI gives marketing more respect.” Source: Forrester Research
Marketing suffers from a crisis of credibility. Typically, people outside the marketing department perceive that marketing exists solely to support sales. Even worse when it is seen as an arts and crafts function that churns out coloured brochures and leaflets or spends time chasing likes and retweets on social media platforms. Perhaps the worst case scenario is when marketing isn’t even allowed to talk to customers!! That’s another subject though as many businesses aren’t that keen in talking to customers.
Either way, while marketing is seen as “glorified crayoning” it will not be able to command the respect it deserves.
What can marketers do so they are seen as part of a machine that drives revenue and profits? How can marketers take more control over the revenue process, build the respect of their organizational peers, and earn a seat at the revenue table?
Use metrics that matter to the MD, CEO and board.
It’s no secret that typically MD’s & CEOs don’t care about the open rate of your last email campaign or your last press release’s number of views.
In today’s uber difficult and competitive economy, MD’s and CEOs care about growing revenue and profits:
- How much faster are we growing now versus last quarter? Last year?
- How much profit was made last quarter versus this quarter?
- How much revenue and profit do you forecast for the next quarter?
- Why are you confident in the above answers?
Soft metrics like organic search rankings, website traffic, brand awareness, GRP, impressions, contact form completions and reach are important – but only to the extent that they quantifiably connect to hard metrics like pipeline, revenue, and profit. Now we know many companies who employ marketing people who deliberately don’t even measure these soft rankings. WHY – because many agencies don’t want you to be able to track their effectiveness!
Of course, marketers must track and measure the impact of all key marketing activities, both hard and soft. But keep all but the most critical metrics internal to marketing. By speaking the same quantitative language as the MD’s FD’s and CEOs marketing will better communicate marketing’s value and impact to the business.
Know the results and impact of each marketing investment
If you can’t confidently identify which parts of your marketing truly deliver financial returns, marketing’s impact and influence will continue to be limited across your company.
We have got to be realistic with monitoring and analysing. That sale that “suddenly” appears could well be down to years of emails, exhibitions, articles etc. For many B2B businesses the gestation period from initial “thought” to actual “purchase” can take many years. Therefore whilst activities may not show immediate return, knowing the customer journey can showcase knowledge of real marketing performance.
Recognising the above not knowing marketing’s performance will not only reduce marketing’s influence and credibility; it can also prevent your business from making the right strategic investments to improve results over time.
Forecast results, not spending
Forecasting is perhaps the single most important thing marketers can do to change the perception that marketing is a cost centre.
In the same way that you can’t drive quickly if you rely only on your rear-view mirror, you can’t be an effective marketer if you only report what has happened in the past.
The best marketers forecast the results they expect in the future – and quantify their forecasts in terms of enquiries leads, pipeline, and revenue.
Now there are some critical elements that I must add to this
- Forecasting results is not the same as guaranteeing results. This might seem obvious but I have met a number of MD’s and CEO’s whose gambit is “this <marketing> is expensive what returns will you guarantee?”
- Now this starts to get tricky when you generate an enquiry but at the point of making the sale the customer experiences
- that the cost of the product / service is significantly higher than competitors with no additional benefits or value
- that the product or service isn’t available in the timeframe that’s needed
- Poor communication as part of the sales process i.e. the design team are so busy its taking us 8 to 10 weeks to get a proposal out
- that your actual product or service isn’t very good when I start to look at in detail before committing to actual spend
When you talk about marketing spending, other Directors and Managers think of costs and profit loss. When you talk about future “possible” results, they think of revenue and growth.
To formulate accurate forecasts, Sales, Marketing and production must sit together at the revenue table.
Make justifiable business cases for marketing spending
With its forecast in place, marketing must then make a hard business case for the resources it needs to deliver the results it has promised.
This requires knowing what it will take – in Money, Time, and Effort – to acquire new qualified leads and nurture those leads until they are ready to talk with sales.
By using this type of rigorous methodology “marketing” are able to frame their budgets in terms of investments, not costs, and are better able to justify and defend their budgets.
Why Now is the time for Marketing Metrics and Analytics
70% of the buying process is now complete by the time a prospect is ready to engage with sales.
The way that prospects research and buy solutions today has been forever transformed by the abundance of information available on websites and social networks, and this in turn fuels a significant change in the way marketing and sales teams must work – and work together – to drive revenue.
91% of prospects say they would be willing to engage with salespeople early in their buying journey
Some believe that because they have ready access to information, buyers resist engaging with sales until much later in the buying process.
In all honesty I think that there are so many variables “this depends”. Where it is the case this presents an incredible opportunity for marketing to reinvent itself as a core part of the company’s revenue engine. As the function that “owns” the relationship with these early stage prospects, Marketing now is responsible for a much greater portion of the revenue cycle than ever before. But with great power comes great responsibility.
The Need for Marketing Metrics to mange the power
MD & CEO ratings of marketing’s performance directly rise and fall with marketing’s ability to quantify how their campaigns and programs deliver value in line with company revenue objectives. Some will see and take a longer term view, others will want immediate results and marketing silver bullets.
It is more important than ever for marketing to link the impact of its efforts and financial investments to revenue and profit, and establish a true process for marketing ROI in their companies.
The Stages of Marketing Accountability
#1: Denial Marketing
Marketing is an art, not a science. It can’t be measured. The results will come; trust me!
At first, the marketing person / team may deny the need to be accountable for results. Being stuck in this stage often leads to marketing’s isolation from other departments and executives.
#2. Marketing Fear
What if my marketing activities don’t impact the bottom line? Will I lose my job?
Taking on accountability can be scary, especially when you don’t yet know how well (or poorly) your department is doing.
Marketing accountability is a double-edged sword, shining a bright light on weak performance as well as good performance. Some marketers / marketing teams may be tempted to avoid accountability just to avoid facing which category they are really in.
#3: Confused Marketing
I know I should measure marketing results, but I just don’t know how.
At this stage the person responsible for marketing knows that marketing accountability is inevitable, but the path to achieve it remains hidden.
Basic metrics such as lead source tracking and cost-per-lead are put in place, but there is no holistic understanding of how marketing activities are impacting key bottom line metrics
I have seen this in place where marketing metrics were established, but no one would put in place metrics to measure in bound telephone calls. So sales calls couldn’t be ( and weren’t attributed to any marketing activity)
#4: Marketing Self-Promotion
Hey, come look at all these charts and graphs!
In a desperate attempt to appear accountable, marketing measures everything that can be(easily) measured — from website page views to press release downloads to search engine rankings.
These marketing people proudly display their results and claim marketing accountability. However, important as these metrics maybe, they lack an explicit connection to hard metrics like pipeline, revenue, and profit. The result is a focus on soft marketing KPIs instead of hard revenue growth, on short-term ROI over long-term marketing accountability. Inevitably, this will reinforce the perception that marketing is a cost centre, not a revenue-producing asset.
Note: There are still web marketing companies out there who will send through a fifty plus page of web analytics that is auto generated. The reports are just “Data” there is no information, knowledge or insight included. These are the elements that add real marketing value.
#5: Accountable Marketing
Revenue starts with marketing.
The utopian stage, where marketing truly finds its place in front of the revenue pipeline and marketing stops being a cost centre and starts justifying marketing expenditures as investments in revenue and growth.
This is when “marketing” can act, and talk, like a true C-level executive, measuring and forecasting marketing’s impact on metrics that matter to the MD, FD and CEO. This is when marketing truly earns a seat at the revenue table. Getting to this final stage of marketing accountability is difficult for any organization. It requires top-level commitment, discipline, and investment in the right systems and tools. It can also require a rethinking of marketing incentives and compensation. The journey may not be easy, but the results—in terms of peer respect and impact on profits—are clearly worth it for any marketing team.
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