Measuring marketing’s value remains a hot topic and challenge for many organizations. You may think measuring marketing’s value is a “no brainer”, but if you can’t prove your value you won’t secure the money. And while the money is important, there really is much more at stake. When you can connect your work to business results you have influence, relevance, and credibility. When you can’t, well, you don’t and you suffer the consequences.
Even though marketers today continue to plug away at measurement, marketing leaders still struggle with how to demonstrate the impact of marketing spending (2014 CMO Survey conducted by Christina Moorman). Demand Metric with VisionEdge Marketing recently completed the 14th annual marketing performance measurement and management study to answer three crucial questions:
- How have marketers progressed in measuring contribution, value and impact?
- Which marketers are making progress?
- What are marketers that excel at MPM doing better and differently?
Let’s examine the answers and their implications.
The State Of Marketing’s MPM Progress
A key component of the annual study is the grade the C-Suite gives marketing for their ability to prove their value. The historical grade distribution is shown in the following graph:
Source: VisionEdge Marketing, VisionEdge Marketing/ITSMA, VisionEdge Marketing/Demand Metric studies
Unfortunately, marketing is not improving. Despite the pressure and increased investment in technology to support performance measurement management, the number of marketers achieving excellence isn’t increasing: the number of marketers earning an “A” has steadily declined over the past three years.
Five things stand out about this group of elite marketers:
- They are nearly twice as likely to have a performance management plan. Do you have one?
- They are two times more likely to have knowledge about the core business. These marketers demonstrate business acumen. How well do you understand your company’s business and market? Do you speak in the language of business or are you more likely to use marketing lingo?
- Elite marketers focus their data on understanding customers.
- They are twice as likely to select marketers that enable them to connect their results to the business. How many of your metrics are measures of activity or output versus outcomes?
- These Best-in-Class (BIC) marketers are five times more likely to operate as a center of excellence compared to their lagging counterparts. They provide leadership, foster best practices, facilitate research, and enhance the skills of Marketing to drive better business results.
Invest In Four Competencies
The research has helped develop three primary MPM marketing performance personas:
- Value Creators: Marketers who earn the “A” operate differently, focusing on creating value for customers and shareholders.
- Sales Enablers: These are the “B” marketers that see themselves in service to the sales team, focusing on demand generation.
- Campaign Producers: The “Cs” and “Ds” that function like an internal agency or on-demand service provider.
The 2015 MPM study reveals that ‘A Level’ Value Creators excel at four competencies:
- Business acumen
- Customer knowledge
- Data and analytics-based strategy
- Performance-based marketing plans
Know Thy Business
The Oxford English Dictionary defines acumen as “the ability to make good judgments and quick decisions.” For the BIC marketers, their business acumen is derived from understanding what outcomes the organization needs to achieve. This group of marketers “begins with the end in mind.” Value Creators realize they need more than marketing skill and proficiency. They recognize the importance of understanding the financial, accounting and operational functions of the business.
Marketers that understand how a business works can contribute to all aspects of how it creates value. They don’t just play in the marketing sandbox, but provide leadership throughout the organization. Their business acumen earns them greater support and credibility, which in turn allows them to perform at a higher level.
Know Thy Customer
A primary marketing mission is owning a deep customer understanding, conveying it to the rest of the organization in ways that drive, satisfaction, loyalty and ultimately revenue. The Value Creators are passionate about gaining this knowledge through data. Value Creators serve as the clearinghouse for insights into a firm’s customers and they are using data much more effectively to gain customer insights related to the buying process, personas, loyalty, purchasing, and experience. Value Creators are customer-centric, focusing on transforming customer data into actionable insights.
Effectively Use Data To Make Decisions
The use of data and analytics for the BIC doesn’t stop here. Value Creators embrace data and apply it to the strategy development and execution process , making availability of accurate and complete data paramount to good strategy development and execution.
The BIC marketers see data and analytics as essential to making decisions, and they are much more competent at doing so.
In addition, they’re committed to making marketing data consumable and relevant to the rest of the organization. Value Creators outpace the rest of the field, leaving no doubt that they are doing a better job of providing relevant data to the C-suite and sales team. This group of marketers is developing strong, quantitative skills so they are able to see the big picture and understand how their organization operates in the market, and what drives profitability and cash flow for the organization.
The Value Creators are integrating analytics into the day-to-day business of marketing and investing in systems and tools to unlock the full potential of their data. They understand that enhancing their analytical capabilities helps to identify problems as well as opportunities to create and innovate, redesign and re-engineer processes and systems, and support the evaluation of strategic and tactical options that will deliver the desired results.
Improvement Takes A Plan
This year’s MPM study established that a marketing organization’s grade strongly correlates to differences in these areas:
- The priority attached to measuring marketing’s value and contribution.
- Having a clear plan for improving performance management and business impact.
- Ensuring alignment of marketing with metrics and business outcomes that matter to the C-suite.
- Addressing the way marketing operates, ideally as a Center-of-Excellence.
Marketing measurement and accountability is extremely important to the BIC marketers , and is a primary reason why Value Creators excel at MPM. This group sees MPM as critical to achieving a healthy marketing “lifestyle,” and as such is willing to make AND take the necessary steps.
When BIC marketers need to improve, they create a plan. Almost three-fourths of Value Creators have documented plans for improving performance management and business impact compared to just a third of the Campaign Producers.
What Goes Into Your Plan
The 2015 MPM study confirms that Best In Class marketers have six “arrows” in their MPM quiver:
- Alignment: So you can establish a direct line-of-sight between marketing activities, investments, and business outcomes.
- Accountability: Which entails selecting the right metrics, integrating performance targets, and producing actionable dashboards
- Analytics: So you can harness the power of data, transform the data into insights, and use the insights to analyze performance and make decisions.
- Automation: As Scott Brinker has helped us all understand, “marketing has unquestionably become a technology-powered discipline.”
- Alliances: With IT, Sales and Finance.
- Assessment: For continuous improvement.
Proof It Works
Mastering MPM takes new skills, new tools, and of course precious time. MPM requires deliberation. Marketers and their business colleagues must see real results for the effort. Value Creators set the bar high when it comes to measuring their contribution to achieving business results. They are better at being helping the organization achieve its goals.
At least 55% of the BIC marketers improved their ability to impact four business performance indicators: win rate, pipeline value, customer retention, and net new customer acquisition.
When marketing aligns with the business, proves its value, and makes its data relevant, it enjoys more credibility. This credibility is an important byproduct of MPM, and with credibility comes the opportunity to sit at the corporate leadership table and help make big decisions.
The reason Value Creators are more successful at MPM has nothing to do with money: they do not have a substantial funding advantage over Campaign Producer laggards, nor are laggards seeing MPM funding taken away for failure to perform. The research clearly shows that success with MPM is not a function of budget. Instead, it is the result of leadership with a vision for marketing as a revenue center, and the will to make it so.
Note: Unless otherwise stated, all statistical graphics sourced from Demand Metric/VisionEdge Marketing, A Diagnosis and Prescription for Marketing Performance Management, MPM Study 2015