Get ready for the CEO-marketing 'show me the metrics' conversation
Increasingly, marketers are shifting focus from awareness and image to business outcomes such as increasing revenue, customer acquisition and value, cash flow and shareholder value. But how do marketers prove that "we mean business" when only 18 percent of the leads generated in business-to-business companies end up in the sales pipeline… and more than 60 percent of leads never receive sales follow up? What's the meaning behind the metrics? Are we generating poor quality leads? Is sales delinquent in their follow up? What's happening and why? Furthermore, do we marketers have the evidence to demonstrate all we do to grow the top-line?
A marketing performance measurement strategy is essential to validate marketing decisions and investments. Success measurement must quantify the impact of every program in the marketing mix on broader business goals for revenue generation, new market entry, profitability, market share and awareness.
In the quest to acquire, retain, and perpetuate the "profitable customer," closed loop analysis (a process intended to set business goals, monitor progress, assess impact or effectiveness and realign objectives as required) is essential to ensure that marketing activities are optimized to support profitability targets.
But - it is too often an uphill battle. First, marketers must identify the right success metrics for every executed campaign, whether direct mail, web marketing, telemarketing, advertising, webinars or podcasts or some combination across the customer interaction channels. The complexity is further compounded by the need to roll each success metric (e.g. percentage of downloads, open rates and click through rates) into broader marketing KPIs, such as lead to sales conversion rates that ultimately measure marketing's contribution to revenue generation.
Getting the big picture in the age of accountability: Why is it so hard?
The new age of accountability also requires that marketers take a holistic, 360-degree perspective. To deliver the greatest value, closed loop analysis should ideally leverage revenue and cost data from financial and operational data sources (ie. sales, finance and even customer service). This perhaps presents the most formidable challenge.
Most marketing campaign management platforms provide tactical reports that do a good job of presenting raw campaign metrics. However, they often fail to offer the outcome analysis marketers need to complete the picture. Questions such as, 'which marketing channel is delivering the best ROI for customer acquisition,' 'did advertising or public relations have more of an impact on market awareness,' 'what is search engine optimization's impact on new sales inquiries' go unanswered.
Closed-loop analysis is hard to perform because of organizational data silos and separate line-of-business reporting. Answers to tough questions like: 'what is the lead to sales conversion ratio,' are buried across disparate systems ranging from marketing campaign management platforms that capture leads, sales and CRM systems that track pipeline opportunities and financial systems that book revenue. How do we get all the data we need in one place - and presented in dashboards, scorecards and reports to give us a visual map of "what's happening," "why" and "what can be improved to meet and exceed company goals?"
For the few campaign management systems that offer OLAP-based analytics, the complexity associated with data consolidation and mining from multiple sources involves technical mastery beyond the average marketer. These systems require cost, time and expertise that are prohibitive to lean marketing organizations. They're too difficult to build, too rigid once built, too hard to maintain and keep current. Finally, when marketers typically have to depend heavily on IT to configure, drill and maintain dashboards, scorecards, reports and alerts, campaign data is no longer "fresh" or worth much by way of action by the time the analysis is done. Marketers cannot afford to wait around for IT to do a post-mortem analysis "after the fact" after precious marketing dollars have been spent. This is lag-induced reactive analysis. Neither can marketing organizations afford to generate and compare tons of reports to understand if a campaign was successful. Why wait for IT or the business analyst team to provide us the answers we need? Tough challenges, yes, but not insurmountable.Tools and technologies
Start by making a commitment to measurement. Fund it as a line item on marketing budgets so it gets flagged for C-level review. A recent industry survey reported that a scant seven percent of senior financial executives were satisfied with the ability to measure marketing ROI. It should therefore not be an uphill battle to get executive buy-in and budget for success measurement. In fact, the C-Suite will applaud our proactive approach to promoting accountability.
Once funding is secured, begin to evaluate software tools that automate closed-loop analysis. "Self-sufficiency" and "sustainability" must be top priorities when evaluating analytic solutions. Of the many analytic tools and services available it's important to distinguish between predictive analytics that focuses on who you should 'sell to' vs. 'outcome analytics' to perform closed-loop analysis. Spreadsheet reporting is not a viable option - it is a time-consuming, error-prone and laborious process. It is not a sustainable measurement system. Measurement is an ongoing effort and it is unfair to expect endless support from IT or corporate statisticians.
Marketing performance management technologies offer alternatives to costly business intelligence solutions or home-grown data consolidation and analysis projects - and thus can eliminate much of the headaches involved in closed-loop analysis. Shifting the mindset from reactive reporting to proactive analysis, MPM should allow organizations to:
- Automate formerly cumbersome manual process for reporting and analytics
- Sample data from disparate sources
- Monitor and measure activity and performance states
- Assess performance vs. goals
- Weigh and score the outcomes
- Detect exception conditions and poor performance
- Analyze the extent and root cause of the degradation
- Expand the good and fix the bad
Success measurement is our responsibility. That means marketing must be in the driver's seat to take charge of a process that we are capable of maintaining independently, cost-efficiently and with ease and reliability.