Tomorrow night sees the November gathering of the ever-slinky S&M Forum.
Our topic couldn’t be more timely – the need to justify the business value of marketing is perhaps more pressing than ever. Why, so the boardroom argument may go, should we invest in marketing when propping up our sales team would surely get more money in? When such a claim is levelled, marketing needs the numbers at its fingertips to respond. Why then, are they often so far from reach?
How can the marketer quantify what he or she does in terms of boardroom-friendly raw numbers? How can ‘marketing success’ be measured? What activities are generating a good return on marketing investment? Is answering any of these questions actually possible? In researching tomorrow’s event, we dug up a number of useful articles and interesting commentators on the B2B marketing measurement debate…
Starting with the basics, Jim Lenskold’s recent study (2008 Marketing ROI and Measurements Study) showed that many marketers are struggling with the fundamental measurements required to manage and improve marketing’s contribution to an organisation’s business plan.
Thus those who do measure are already ahead – the study showed that simply the act of measuring marketing in the first place has a direct effect on performance.
Respondents who described their marketing as highly effective all showed better measurement and ROI practices than those lower down the table, and they are using business information that ranges from sales reports, financial data, lead gen data, marketing spend and sales pipeline details to furnish their measurements. Perhaps most revealingly, these ‘highly effective’ companies comprised only 9% of study respondents.
Arguably, the main reason for this paucity of highly effective marketing measurement lies in collecting this data and presenting it in an actionable way to those in the marketing department, and an understandable way to those outside it. There are certainly tools that can be deployed to assist in this process, for example marketing dashboards, but the key is to have not just the short-term, but also the long-term view driving all analysis.
This long-term view was touched upon in a recent series on B2B marketing measurement in which Forrester’s Laura Ramos urged for customer-centric metrics to be employed to measure the impact of marketing over the entirety of the customer life-cycle. Ramos recommended that marketing measurement should move away from focusing on the basic lead-gen approach and towards building and maintaining brand loyalty by measuring how prospects buy, using demand management to build further customer dialogue and align marketing and sales around common objectives.
This latter point, the disconnect between marketing and sales, is often the shadowy figure lurking at the back of this measurement debate. So much so, in fact, that one article in the Harvard Business Review from a couple of years ago, set about ending the war between sales and marketing once and for all by tackling the economic and cultural differences that usually cause the tension. But what relevance would such a sales and marketing peace treaty have to effective marketing measurement?
Unsurprisingly, it is value. With an aligned sales and marketing team communicating with the market in a consistent and timely fashion, the ROMI is not muddied by conflicting sales activity – the marketing effort put in at the beginning of the sales cycle will have a direct effect right through to the end.
Indeed, Laura Patterson develops this point when she states that marketing isn’t an island. Pulling the lens out so the focus is on sales, product, customer service and finance as well as marketing can really add value to the measurement process by placing all campaign activity into its real-world business context.
Brian Carroll’s call for a marketing funnel is another case in point. Carroll takes the view that most companies use only sales funnels to collect all their leads, qualified or not. The result is less a funnel and more a bucket riddled with holes out of which the less-qualified leads leak. By creating a marketing funnel, leads can accurately be filtered through to sales only when they are sales-ready. And Carroll agrees with Patterson when he says that measuring the effectiveness of this sales-marketing interaction is central to its success.
Generating actionable leads rather than just leads is important here too, and certainly something that should be the focus of any measurement. Lead quality is vital in the context of marketing value. For example, if a lead is measured purely as a cost-per-click (CPC), does this mean that each resulting sales opportunity is treated as equally valuable? CPC certainly has its place – if the average sales opportunity return isn’t expected to be high compared to the number of click-throughs, a decision would be made about using such a model. But if a relatively few click-throughs (with a higher-than-normal CPC) results in one or two significant sales opportunities, the value of this kind of marketing must be properly measured.
The damn lies inherent in such measurement statistics are ably demonstrated by email marketing. As Stephanie Miller points out, a study conducted by the DMA for marketing activity throughout 2007 showed that email marketing had 150% more ROI than non-email online marketing. Great, but behind these bare figures lurks the spectre of spam and the Gatling gun approach to some email marketing. Because there is simply so much of it out there, hitting thousands of potential targets with a broad email sweep usually has a negative effect of alienating potential sales leads. With a smaller but more targeted email campaign approach, the opposite can be true. Miller urges us not to be blinded by the glittering promise of gold with email marketing but to measure emails in exactly the same way, using customer take-up across different styles and sizes of email campaign to guide future success.
So, is there a danger of measuring too much? Perhaps not, if the right activities are measured in the right context. And, no matter how difficult the economic climate is, marketing value will always come down to money: the sales that are generated directly from a campaign.
As Paul Dunay suggests, in the grand scheme of things, sales is the only metric that really counts. This is, he argues is the ‘right context’ for measuring marketing value, based on three tiers of marketing metrics, with the first two tiers feeding into the most important third tier:
1. Reach metrics: the straightforward campaign hits – e.g. webpage click-throughs
2. Efficiency metrics: how cost-effective each form of reach activity was and whether it achieved the desired result – e.g. cost-per-clicks and the number of downloads of a whitepaper
3. Value: the contribution to the sales pipeline – e.g. the ROI for the number of attendees at an event
Of course, saying that marketing reach and campaign efficiency impact on and drive the overall value of the campaign is nothing new, nor is it astounding. But this is a very tidy way if thinking about it.
Measure what you’re doing to make sure you’re doing enough of it. Measure how you’re doing it, to make sure you are learning and getting better. Finally, measure if it’s working for the business. So, in the end, it’s all very simple.
(Although setting up the lean, mean marketing operation that can get hold of those figures and track them is a whole new blog post!)
