Forrester: B2B marketing measurement must matureby
B2B marketers who continue to rely on traditional metrics such as brand awareness or website stats to demonstrate ROI will be swept aside if they not use more sophisticated methods, Forrester has warned.
Analyst Laura Ramos explains that marketing has long battled with a reputation of being unaccountable to the rest of the business in terms of demonstrating ROI, despite advances such as marketing automation and lead-to-revenue management practices. And, according to Ramos, this is stopping many CMOs from taking a seat at the leadership table.
To gain further insight, Forrester partnered with the IT Services Marketing Association (ITSMA) and VisionEdge Marketing (VEM) and surveyed 174 marketing leaders across 10 industries about marketing’s impact on business.
The results, outlined in the report B2B Marketing Measurement Needs An MBA, showed that CMOs are continuing to use metrics to report on performance and justify budgets with 86% claiming that the connection between marketing activities and business goals at their firms is well defined.
But just 45% feel confident that they know which metrics and business outcomes matter most to stakeholders, the research showed. In a recent blog post about the research, Ramos said: “The bottom line here is that marketing's impact doesn't matter if CMOs fail to link what they do to business goals.”
However, the relationship between reported marketing activity and business results is strengthening with 61% of those surveyed believing that their ability to measure and report marketing’s contribution to the rest of the business has improved since 2012.
So what measurements should marketers be using to prove their returns to the CEO and the board? The report revealed that data is the key in shifting marketers’ role from brand awareness to customer insight – an important metric as more and more companies increasingly focus on experience to differentiate.
Nearly two thirds (60%) of those surveyed said that marketing has become more adept at using data and analytics to make mid-course corrections or more strategic recommendations.
To help CMOs shift their measurement perspective from outputs to outcomes and to put a sharper focus on business agility, Ramos outlined four key actions to take:
Clarify which outcomes the business wants: CMOs should answer three key questions about every activity or program that marketing reports to executive management: i) Which business outcome(s) will it affect? ii) How exactly will it affect the business? iii) How will we know we have achieved the objectives? Answering these questions keeps marketing performance management focused on improving the value of marketing, not just proving it.
Go beyond ROMI to expose the full scope of marketing's influence: Marketing automation systems make it easy to collect data but B2B CMOs need look beyond leads to include preference, loyalty, market share, and brand sentiment to show marketing's full impact on the direction and health of the business.
Model and monitor customer lifetime value: Think through the processes and tools you need to help your firm understand what makes customers valuable in the long run. Then shift some 2014 marketing budget to focus on communicating targeted messages and offers to prospects that closely fit this profile.
Measure existing customer value as well: Take a look at what happens in buyers' journeys after the deal closes and focus account-specific communications on onboarding success, getting up to speed quickly, and upsell opportunities to demonstrate how marketing can improve renewals, share of wallet, and penetration.
Figures out earlier this week from The CMO Survey revealed that half of marketers are unable to show the impacts of their campaigns on social channels. The survey of over 400 CMOs showed that just 15% could quantitatively show the ROI of their social media marketing campaigns whilst 36% of those surveyed said they have ‘a good sense’ of the qualitative impact, but not the quantitative impact.
Christine Moorman, director of The CMO Survey and senior professor of business administration at the Duke University, said: “Marketing leadership requires that CMOs offer strong evidence that strategic marketing investments are paying off for their firms in the short and long run. CMOs will only earn a ‘seat at the table’ if they can demonstrate the effect of their marketing spend.”