This blog was adapted from BrandMaker’s: “Marketing Ops Now” podcast. Each installment discusses valuable ideas for both management and marketing executives. You can listen to this 20-minute podcast here.
More than 87% of marketing teams say they are not able to measure marketing performance properly. They rate their capabilities as poor/inadequate, average, or needs improvement. Apparently, companies have a hard time demonstrating the quantitative impact of their marketing spend.
Marketing performance tracking offers a huge opportunity. Here are some impressive results reported by McKinsey.
Still, marketing performance is a universal pain point of not only marketing but also marketing operations and the stakeholders that surround marketing. And it is not a new challenge. This issue has been on the top of marketers’ minds for decades.
First and foremost, what do we mean by marketing performance? Quick online research shows there are only a few definitions out there. Allocadia defines it as “marketing’s results or output compared against the set objectives”.
Mind you, we are talking marketing performance, not Performance Marketing which is the term given for online marketing campaigns where advertisers pay marketing companies or advertising platforms for results achieved.
In our mind, marketing performance is about tracking return on investment. What does the company invest in marketing and what is the return on that investment (ROI)? We are referring to measuring marketing against revenue, not leads. It is really about measuring budget and spend on the one hand and campaign performance on the other hand. This makes measuring and tracking a very fundamental part of marketing performance.
There are a few hurdles in the way of measuring and tracking performance. The first hurdle is ‘analyzing data across systems’.
Companies struggle with the inability of analyzing data across applications, platforms, and organizational silos. In daily practice there is a struggle between ‘what is it we want to measure?’ and ‘what can we actually measure?’. There are a ton of other variables and numbers we measure already. Yet there are probably some crucial ones we are missing.
We probably already track a range of customer touchpoints. Tracking customer interactions and touchpoints is about collecting all the data on the right touchpoints. It is all about marketing’s effectiveness and the results generated. Then there are internal performance metrics. It is about measuring the performance of people, processes, and systems.
Both sides translate into the classic ROI definition. In essence, we talk about: ”What is the business outcome flowing from marketing, and how much does it cost for the marketing department as a whole to deliver that?”. With the focus on these two sides of the equation, we should define metrics, collect data, and integrate systems.
The second hurdle to measure marketing performance is the lack of resources to perform measurements. This could mean that a dedicated analytics team is missing. It also could point to a lack of analytical training and self-service capabilities for all frontline marketers in the marketing team.
The combination would be ideal. On the one hand, a specialized analytics capability, that sets the framework for the most important and sophisticated overarching analysis. On the other hand, every marketer should have some level of self-service empowerment to run experiments and measurements in their domain.
The complexity of actual marketing operations can result in a variety of metrics. It is tempting to hide behind that variety. However, we should keep it simple and decide on one or two numbers against which marketing is going to deliver.
It is of great help if you have a north star goal as a marketing department. That one goal proves whether the team is doing great or not. Defining the north star goal involves a top-down and bottom-up approach. With the North Star goal as a starting point, it is possible to drill down for every level of the organization.
A north star metric allows the organization to quickly find bottlenecks. The north star goal allows us to ask that one powerful question while executing our marketing plans and campaigns: “what is stopping us from reaching that north star?”.
When doing so we’ll understand better which strategies, campaigns, channels, or content are performing well, or not, and why. It allows us to play with the volume buttons of the results and the investments.
Defining a north star goal is one thing, tracking and measuring it is another. For marketing performance, there are two points of view we need to consider and include.
For the first one, there are tools like ROAS (Return on Advertising Spend) or CAC (Customer Acquisition Costs). Each delivers clarity on both what is spent, as well as the exact stream of value that’s being created. These metrics show what activity is effective and shows at the end of the day how many customers were acquired against which costs.
But there is more. What these metrics do not factor in are the costs of the marketing infrastructure and operations. The costs to run the marketing department itself should be included in this marketing performance overview as well. We are referring to all the operational elements that are part of the infrastructure of marketing like, human resources, agencies, technology license fees, etc.,
Think about Martech investments. It represents 20-25% of the marketing infrastructure costs. It is also the point where many companies do not have clear insights. This is where it gets complicated. It is hard to manage something if you don’t measure it.
How to factor in Martech solutions like a business analytics tool? A business analytics tool helps to slice and dice data and get better customer insights. But what’s the ROI of that business analytics tool?
Or when we purchase a DAM (Digital Asset Management) or Web2Publish solution we can calculate how many documents we create and use in campaign messages. But what is the ROI on that?
In order to measure the ROI of your marketing engine, proper budget tracking and management capabilities should be in place. Solutions to track resources, planning, and budget are a big help here. Traditional ERP solutions do not deliver the required line item granularity for marketing managers to allocate and track investments.
What is required is a crystal-clear view of what budget has been allocated, committed, and spent, at any given moment. This insight brings the agility to quickly and confidently shift budgets from one activity to another when the market requires so. These insights enable marketers to focus on what really matters and say when and where marketing is successful.
BrandMaker’s “Marketing Ops Now” podcast series has officially started. In each podcast industry luminaries and deep thinkers share valuable marketing ops ideas for both management and marketing executives (some worth stealing).
For every podcast in the series, we’ll do a blog post to share the highlights with you. You can listen to this 20-minute podcast here.
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