In our MarketingProfs article, Marketing Activity Metrics Mean Little: Here's How to Really Prove Marketing's Value, we asserted that "marketers need to be smarter about the performance metrics they select." We also found ourselves concurring with David Dodd's claim that "many senior leaders are no longer satisfied with the tactical performance indicators (campaign response rates, content downloads, etc.) that marketers have traditionally used to describe marketing performance." From these two sentiments (and a lot of other research) we have concluded that far too many Marketing metrics are tied to activities and efficiency rather than Marketing effectiveness.
A Forrester study, Winning In The Connected World: How Aligning Finance And Marketing Will Drive Business Success, found that CFOs want Marketing to "measure the effectiveness of Marketing" related to the overall organization's financial goals. The traditional metrics of measuring ROI and reducing spend, on the other hand, were at the bottom of the CFOs short list.
Marketers making headway on measuring their effectiveness to the business are taking an outcome-based approach to their metrics. Operating in this fashion allows Marketers to tether their measurement data to key business outcomes and drive the organization's financial goals.
It is also those same Marketers who are focused on being effective and are able to work the numbers to most accurately track and report on their performance.
How To Take Your First 5 Steps Towards Effectiveness
1. Own your company's positioning
Creating customer value is directly tied to your company's bottom line. Customer value is a financial calculation and it is increasingly seen as a key source of competitive advantage and a basic ingredient for the company's positioning. Effective Marketing organizations know how to create a value proposition that is superior to and more profitable than those of their competitors. In fact, Trout and Ries introduced us to the idea that a company positioned as the leader gets about 50% of the market, No. 2 gets 25%, No. 3 gets 12.5%, and the rest of the competitors split the remaining 12.5%.
2. Focus Marketing on real value creation activities
Establish and own a sustainable process of value creation. Take the lead on keeping conversations and investments focused on developing a continuous stream of products and services that offer unique and compelling benefits to your customers. Some of your first efforts might include, but shouldn't be limited to, product and process efforts, gaining insight into the needs of well-defined segments, harnessing data and analytics to accelerate efforts within existing markets or creating new markets, and reconfiguring company and/or industry value chains.
If your current work doesn't meet the above criteria, discuss where it fits among the priorities for Marketing and readjust.
3. Serve as an integral member of the business team
As marketers, we talk a lot about demand generation, marketing channels and attribution, marketing activities (such as content, social, email, brand, search marketing, etc.) and customer engagement. However, marketers who want to be effective have realized that it takes more. Marketing must also be an integral part of the business.
4. Develop a deep understanding of strategy
Effective Marketing organizations guide strategy. Strategy selection provides focus and enables an organization to concentrate limited resources on building core competencies that create a sustainable competitive advantage to support pursuing and securing the best value creation opportunities. It provides the guidance and direction for channeling the organization's precious, and often limited, Marketing resources to generate market traction, penetration, and dominance.
5. Define measures of success tied to effectiveness, value, and impact
We started this post by saying that marketers need to be smarter about metrics. Hopefully we've made it clear that choosing the right measures is far more important than the quantity of data measured. While there are many ways to approach this task, one way to make sure you keep your focus on the right measurements is to have a Marketing measurement playbook.
Your marketing measurement playbook should provide you with a strategic approach for building your measurement processes, selecting metrics that emphasize effectiveness, reporting those metrics in a way that delivers real business value, and executing the right activities to continue to improve over time. To ensure that you are on the right path, contact us to help you develop a Marketing measurement playbook that tells your team not only what to do but how to make it happen.