While surviving CMOs will focus on lead generation, pipeline management, branding, and customer acquisition, the most important ingredient for thriving CMOs is their ability to connect the dots between all Marketing activities and the corresponding investments and business results.
If you’re like most Marketing leaders, you work for CEOs and CFOs whose performance is evaluated based on financial and strategic measures. That means that you’re going to have to support your CEO in their endeavors with the relevant numbers. Research suggests that nearly 9 in 10 organizations “expect their CEO to lead the organization on a strategic growth trajectory.” Market penetration, market expansion, product expansion, diversification, and acquisition are among the most common growth strategies. Four of these strategies – market penetration, market expansion, product/market development, and diversification – all require effective Marketing. So, it is reasonable for your leadership team to expect Marketing to play a primary role in developing and implementing these strategies to support the business’s growth initiatives.
Research published in AdAge at the end of 2016 helped decode today’s five CMO priorities. Two of those priorities fell squarely into the domain of marketing performance management (MPM). The first priority was measurement. However, the study revealed that not just any kind of measurement is sufficient. To be effective, you need to be able to measure Marketing’s impact on the business. The second priority was the need to do a better job of justifying Marketing investments.
AdAge was not alone in shining a light on those CMO priorities. The trend towards more compelling measurements of value was also reflected in a Chief Marketer article that identified six trends for 2017, three of which included some type of measurement: cross-channel measurement, more sophisticated marketing measurement, and real-time attribution. Additionally, a Forbes article predicted that 2017 would be the year Agile Marketing will be taken more seriously. Why? Because “agile marketing results in a measurable improvement in marketing performance.”
Thriving CMOs Know How to Connect the Dots
It is Marketing’s job to connect the dots between the work of Marketing and the business results. Yet far too often Marketing’s metrics measure activity that does not impact the business. How can you change that? Marketers making headway on measuring their value to the business take an outcome-based approach to their metrics. Operating in this fashion allows Marketers to effectively tether their measurement data to key business outcomes. When done well, the links between activities and outcomes form a metrics chain, which enables Marketing to measure value and impact.
Considering that Marketing’s purpose is finding, keeping, and growing the value of customer, the work of Marketing—i.e., marketing activity—should focus on creating customer value. Therefore, every Marketing metric must in some way positively affect customer value. Achieving that objective requires knowing the following:
- The value drivers for your organization. Market share is an example of a common value driver that Marketing can influence.
- The way customer value is calculated. One of the most accepted methods of calculating customer value is customer lifetime value (CLV), which measures how valuable a particular customer (or customer segment) is to the company over his or her lifetime.
- The current customer value.
- The desired customer value.
- The way Marketing’s contribution will be tied to customer value. This is the most critical step. Once the connection between Marketing and the organization’s business values (such as customer value) are made, you can then choose a means to measure Marketing’s performance within the context of business value.
Are you curious to learn more about advancing the value of your metrics? Register, log-in, and use these resources to enable your Marketing organization to move from tracking activity to measuring value.
- Read our How to Guides. We recommend: What You Must Know About Marketing Centers of Excellence: A Why and How Primer.
- Listen to educational recordings. A good place to begin is with the webinar: Got Marketing Data? Use analytics to Make It Actionable.
- Read our case studies to learn how companies made value happen. In particular, we suggest Case Study 40: How to Create Data Chains that Measure Impact and Value.
Laura Patterson is known for her practical, no-nonsense approach to proving and improving the value of marketing. Inventive and engaging, she quickly gets to the heart of the matter to provide actionable recommendations and solutions. Because her 20-year career began in sales and now spans customer relationship management and Marketing with a capital “M”, her recommendations are always cross-functional friendly. Laura is a strategic marketer, data and metrics master. Her company, VisionEdge Marketing has helped hundreds of companies, in a variety of industries, fulfill their marketing potential and achieve competitive advantage. An early pioneer on the science side of marketing, Laura is recognized as one of the leading authorities in marketing measurement and performance, content management, operations, and data and analytics. Follow her on Twitter and connect with her on LinkedIn.
This article was first published on Integrated Marketing Association.