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Marketing Metrics That Matter

Every CMO and senior marketer I talk to these days is striving to improve marketing ROI (MROI).  Most have become proficient in measuring and reporting on marketing effectiveness.  But few believe they have succeeded in proving the value of marketing to their CEO and peers, especially the CFO and head of sales.  Why is this so?   There are a lot of reasons, including not having a complete or robust data set, not constructing marketing dashboards in a manner that is as easy to understand as a standard P&L report, or simply not having delivered sufficiently compelling data to support MROI assertions.   From my experience, however, the primary gap results from not being aligned with the CEO and your marketing peers on what metrics really matter.

To illustrate this point, there’s an entire category of metrics that don’t matter much to anyone besides marketing:  activity levels.  In other works, the quantity and frequency of marketing activities, such as the issuance of press releases, emails sent, campaigns designed and executed, collateral created and delivered, Web site visitors, even the number of Facebook fans and Twitter retweets.   While all of us set objectives calling for increased activity levels in nearly every facet of marketing (other than efforts to stem the tide of negative press or poor social sentiment), the intrinsic value of activities is virtually zero in the eyes of the CEO and C-level peers.   It’s not the amount of activities that matters, it’s the results.

I don’t even think effort matters for much.  What matters most is what has the most measurable impact on sales.  Did sales increases, did win rates increase, did average deal size increase, did retention rates increase, and what was marketing’s measurable impact on any and all increases?  It may sound too simplistic, but determining what the most meaningful metrics that influence sales success is actually very difficult for most marketers.   In B2B firms with simple products or services and short sales cycles (e.g. 30 days or less), these measures may not be that difficult to demonstrate.  But in complex enterprise sales characterized by multi-stage approvals, group decision making and longer sales cycles (e.g. one year or longer), proving marketing’s contribution is very difficult.   With so many influencers and inputs into the equation, proving attribution to marketing (i.e., something happened entirely due to marketing) is next to impossible.  Because of this, I’ve removed the word “attribution” from our marketing vocabulary and instead concentrate on demonstrating “contribution” to sales.

There are many ways to objectively demonstrate relative contribution by marketing, such as percentage of leads generated, percentage of pipeline generated, and for some organizations, pipeline acceleration – i.e. shortening the sales cycle, if truly measurable – as a result of nurturing campaigns and other marketing tactics.  If you can attain agreement on the acceptable numbers and percentages for these and related measures, you are well on the way to showing the value marketing contributes.

Sirius Decisions, as one of the leading firms helping B2B companies improve sales and marketing effectiveness, has developed best-practice guidelines around some of the more meaningful metrics.  To aid marketers in creating useful dashboards, they organize measurements around three elements: metrics, KPIs, and financial.  For metrics, Sirius suggests tracking inbound inquires (the best of which is the “contact me” request) and influencer advocacy (i.e. supporting and recommending your company).  For KPIs, they suggest tracking customer satisfaction and demand or sales waterfall conversion rates.  For financial, they suggest showing reduced cost per lead and where possible, cost per sale.   Any of these measures can help advance the case for marketing and build confidence in not just what marketing does, but how it impacts the top and bottom lines.

So if you’re still struggling with what to measure, how to measure it, and how to report marketing returns to a range of stakeholders, the most important part of this journey is getting agreement from the CEO and your peers on what metrics matter to them and what returns are expected.   Once you have achieved this, you can work on presenting the information in a readily digestible format that conveys facts and figures in a compelling fashion.   The first rule of effectiveness in communications applies equally well here: it’s not what’s said, it’s what understood.  When you achieve their understanding, you are well on your way to proving not just the effectiveness of marketing, but also its worth.

Now on to the next challenge:  how to ask for an increase in the marketing budget.  Let’s save that for another day, because this conversation typically goes as well as it did when, as a kid, you asked your parents to increase your allowance because of good behavior.


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More Stories By Grant Johnson

A dynamic, senior-level technology executive with a proven track record building businesses on a global basis. As Chief Marketing Officer for Pegasystems in Cambridge, MA Johnson is responsible for worldwide marketing strategy and execution. He oversees corporate marketing, field marketing, industry marketing, product marketing, marketing programs, marketing communications, analyst and public relations, and global web strategy. Previously, Johnson was the Vice President of Marketing at Guidance Software (GUID) and Vice President of Marketing and served as an officer for FileNet Corp., a $400+ million enterprise software vendor acquired by IBM in 2006. Prior to that, he was Vice President of Marketing for FrontBridge, an email management vendor acquired by Microsoft. Johnson led the company’s re-naming and re-launch, built the marketing team and delivered integrated marketing programs to support significant and sustained revenue growth. He has also served as Director of Marketing for Symantec, with worldwide responsibility for the Norton brand, and as Senior Vice President of Marketing at Ethentica, an enterprise security vendor. Johnson received his bachelor of arts from the University of California, Santa Barbara and his master’s in business administration from Pepperdine University. He has also published several articles on best practices in high tech marketing and co-authored the book, PowerBranding™

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