“What’s the ROI on that?”
If that question makes you panic, you’re not the only one. In our new data report, How Today’s CMO Can Leverage ROI to Prove Growth, 84% of marketing leaders say they’re under pressure to prove marketing ROI to justify their investments and any requests for budget increases.
For the last few years, marketing’s been asked to own the growth mandate for their organization. But in the last year, that task accelerated dramatically as companies were forced to adopt new and untested strategies.
Over 80% of marketing leaders said marketing’s role within their company increased in importance over the last year. But there’s still a disconnect between owning the growth mandate and proving how marketing’s creating that impact.
Here are three main problems marketing leaders run into proving ROI and how you can solve them:
ROI means a lot of different things to a lot of different people. And marketing will never be able to accurately report on their business impact and how they’re driving growth for the organization unless finance, sales, and marketing all agree on definitions for “success” and “return”.
We found that 43% of marketing leaders are not aligned with finance when it comes to ROI. But we need to all get on the same page.
As soon as marketing collaborates with other department stakeholders on metrics, they stop being marketing metrics and become company metrics.
Start by defining success and work backward. There’s no end to the amount of measurements marketing could keep tabs on. Invest your time on the measurements that matter, the ones that help answer critical business questions.
These will be different for every organization, so use these three steps to find the metrics that matter to your company.
Step 1 – Identify the key stakeholders around company metrics
Step 2 – Define what problems the company needs to solve
Step 3 – Think about what insights would help them
After everyone’s agreed on the specific KPIs, get alignment on which data sets can support these measurements. Now when marketing speaks to their impact, and how they support overall business growth, everyone is on the same page.
Beyond trust in marketing’s data, this move will put your marketing organization in a better place to receive budget increases. 89% of marketing teams with budget increases post-COVID agreed on quarterly budget targets with finance. When marketing’s investment strategy is working to achieve corporate goals, it becomes a clear path from marketing investments to business impact.
We know what you’re thinking–how will other departments trust marketing’s data if we aren’t confident in it? And this is a big problem: 61% of marketing leaders aren’t confident in their data when calculating ROI.
You’ve probably heard the expression “bad data in, bad data out” (or a more colourful version), so the first place you need to clean up is your investment data. There’s no way that you’ll confidently calculate return on anything until you bring your investment data under control.
But there’s another good reason to focus on investment data first: it’s almost certainly the biggest discretionary budget in your entire organization. Over 40% of marketing leaders say their budgets account for 25-50% of their companies overall budget. With billions of dollars on the line, how much longer can you afford to have your marketing investments managed in spreadsheets?
The first step is using the same structure for all marketing budgets and establishing a clear process for reallocations and transfers to maintain order. If you focus the new structure around how teams are organized and how funds are allocated, you’ll have an intuitive budget hierarchy that’s easier to adopt and maintain.
Then, maintain that budget visibility and control with frequent forecasting. Regularly tracking spend means your team will always know exactly how much budget they have left to invest. We recommend updating forecasts at least once a week.
The last step is a big one: integrate your martech stack. You’ll be able to pull in real-time financial data to your marketing budgets so that you’re working with accurate and timely information. When integrations are done right, you can connect 100% of your marketing dollars, significantly reduce errors, and get real-time views of marketing investments. Now you have transparent, accurate data that can be trusted by marketing and the whole company.
You’re not the first marketer to throw your hands up and say “it can’t be done,” and unfortunately you won’t be the last. In our survey, we found that 47% of marketing leaders said their biggest blocker when it comes to proving ROI is they don’t have the ability internally to calculate it.
Marketers get distracted in the hunt for that elusive “right” ROI number and miss what’s sitting in front of them. ROI is more than a calculation you rush through at the end of a marketing campaign or to wrap up quarter-end reporting. It’s your North Star.
And you do have the ability to calculate ROI. You know which metrics you need to measure and your investment data is under control. But now you need to think beyond your investment data, to how clean all of marketing’s data is–and this is where marketing operations comes in. Clean data will ensure the equations to calculate ROI are trusted.
Start by checking your data sources to ensure they follow a common language taxonomy across systems and teams. For example, “campaign” should mean the same thing to Demand Generation as it does to Product Marketing, and should be reflected in all other automation and CRM systems.
Then think about where all of these data sets are connected, which is most likely a business intelligence tool. To easily create meaningful connections between your various systems and data points, you should use a unique identifier for every marketing activity. We recommend using the Uptempo ID for our customers, but if you’re not a customer you can also use the SFDC campaign or a custom identifier.
The last aspect to consider is how much you can automate. The idea of automation isn’t to remove people from their roles, it’s to free up their time from manual tasks so they can spend it on strategy and execution.
As your marketing operations team maps out what can be automated, they should designate between one to three systems as “sources of truth” and focus efforts there first. These systems need to meet data cleanliness standards and must be included in any martech stack integrations.
ROI isn’t a one-size-fits-all approach, but there are clear guidelines that everyone can follow to make it easier to solve their marketing ROI challenges.
When marketing knows exactly where their investments are and can speak to results, they’re in a better position to prove their business impact and how they’re contributing to the company’s growth. With these tips, marketers can be confident where to spend their next dollar to drive the most impact.
If you want to learn which data sets marketing leaders are using to calculate ROI, or where they shifted investments to drive growth in a pandemic, check out our new report How Today’s CMO Can Leverage ROI to Prove Growth.
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