A June 2012 DemandGen report found that 42% of marketers say marketing management and its impact on revenue is actively tracked by their company’s CEO. This is not only telling of the increasingly vested interest the C-suite has in marketing ROI, but of a cultural shift in corporate reporting and accountability.
In the past, marketers relied on multi-step guess-and-check measurement methods, testing different tactics like direct mail or TV ad buys, watching revenue totals alter, and adjusting their marketing strategy accordingly. Even with online marketing tactics like paid search and email marketing, much of the measurement was the same. However there was not always a direct way to connect the dots between a specific marketing activity and the sales leads it produced or total impact it had on corporate revenues.
This is why, unfortunately, marketing has been long criticized as a cost center. However, today marketing departments are much better equipped to prove accurate, up-to-date marketing ROI.
New Measurement Technologies
Marketers have a robust set of tools at their disposal to measure their success. Cloud-based CRM, marketing automation and business intelligence tools have changed the way we look at the value of unique customer touch points and how they play into a larger marketing strategy.
For example, cloud-based analytics tools can calculate a specific cost per touch, cost per lead, cost per demo or cost per customer win quickly and easily. These tools display such information in streamlined dashboards so that marketers can effectively manage data with little time investment. More importantly, these dashboards can be shared with the C-suite.
According to a 2012 CMO study from SiriusDecisions, new CMO priorities point to an “insatiable appetite for the assembly of marketing measurements into a meaningful dashboard.” This appetite is driven by the need to track a customer’s activity from the moment they visit your brand’s website to the moment they buy your product—and every touch point in between.
Dashboards make this process easier by correlating data from multiple sources and generating reports based on previously determined criteria so that a single marketer—or CEO—can quickly analyze the state of their marketing efforts.
Today’s CMO can drive revenues by understanding their data. CMOs can decipher the cost per lead and show which type of lead is the most effective. For example, if you know a free demo lead costs $100 and results in several successful sales conversions, you can plan to spend a significant portion of your annual marketing budget on free demos.
If by mid-quarter you realize free demos are no longer resulting in conversions, you can alter your marketing strategy accordingly in real time. This up-to-the-minute access to marketing data is crucial for building a growth plan that is not only proactive, but reactive to the market.
The Evolving Role of the CMO
Executive meetings typically center on the sales forecast—not necessarily a new marketing program or brand strategy. This is because CEOs and boards need accurate forecasts to make critical business decisions that ultimately affect their bottom line. What is becoming more apparent is the inherent role marketing plays in the larger forecasting and sales strategy of an organization.
CMOs are becoming increasingly called upon to provide input for sales and revenue forecasts, as businesses become aware of the significant impact marketing investments can have on revenues. The data made available by cloud-based analytics tools and other new technologies, come in handy when CMOs need tojustify marketing spend.
"Today's CMO must plan, manage, and measure the ROI of their marketing organization,” says Craig Moore, service director for marketing operations strategies service at SiriusDecisions. “If marketing isn't a part of the revenue equation then it is going to be viewed as a cost center."
Marketing forecasts typically look further down the road than an average sales forecast and prevent revenue loss by offering long-term insights into resource availability and assets management. Additionally, marketing departments are uniquely equipped with visibility into how many leads will be generated in a given period, and how those leads move through various stages of lead nurturing and qualification before they are “sales ready.”
In order to successfully leverage such marketing data for forecasting, marketers must choose meaningful metrics and establish an approach for accurate forecasting. CMOs need to sit down with CFOs to determine appropriate measurements and who is responsible for monitoring these metrics. Together everyone must define the stages of the complete revenue cycle, track how different leads move through the various stages and decipher how each possible outcome will affect the sales pipeline as well as the corporate bottom line.
With Empowerment Comes Great Accountability
Organizations have come to understand that marketing data is valuable and relatable to the health of the business. CMOs are becoming increasingly held accountable for the health and validity of marketing activities. As the role of the CMO continues to evolve and measurement becomes a higher priority, it is important CMOs to continue to measure, translate and communicate the value their efforts bring to their organization.
Hunter Montgomery is vice president of marketing at Vocus.