Demonstrating marketing ROI is all about proving Marketing’s contribution to revenue.
Last week, PropelGrowth launched our first Marketing Mind Meld Round Tables. We gathered 14 highly experienced marketers together in two sessions to talk shop. Thank you to Fuze for being our first sponsor and providing us with a VERY COOL virtual meeting platform. I’ll be blogging about the events over the course of the next few months, sharing what I’ve learned from this group of marketers.
Our first group began the meeting with these questions:
- What criteria should we be tracking to demonstrate Marketing’s ROI (return on investment)? How do we manage expectations internally?
- How do we use analytics to move from being practitioners to experts?
Reporting on Marketing ROI
We started with the Marketing ROI question and went around the group to find out what metrics each participant is tracking and how they’re reporting. All of the participants are using metrics to help build alignment between Marketing and Sales. This means that their metrics need to be focused on contribution to revenue. Here’s how some of the participants are approaching this.
Develop Internal Personas and Dashboards
Kirsten Jepson’s team developed 3 personas to represent the internal users of the data – Executives, Marketing, and Sales. Then they went to the teams and asked each for the three most important things they wanted to know about the marketing data. Their answers were very different. Executives wanted to know the ROI on marketing – what are we spending and what are we getting in return? Marketing wanted to know trends – what topics are trending in the different verticals and what channels are important? Sales wanted information about deals that are closer to closing. So they created dashboards for each of these groups, providing the 3 specific pieces of information that group requested. The result of this action is that each group can clearly see the information they need immediately.
Stakeholders Need Sales Metrics, not Marketing Metrics
Dan Hubscher, who serves as the Head of Strategy for his firm in addition to overseeing marketing, observed that teams outside the marketing department don’t really understand the meaning of common marketing metrics. But they do understand revenue. So he focuses all of his metrics on where they are with new inquiries, qualified leads, and open opportunities influenced by marketing. He reports this in a waterfall so they know where they are at each pipeline stage. Then his stakeholders can focus on the right questions, like “We have plenty of leads at this stage, but not enough in the next stage. What do we need to progress these leads?”
Tracking Contribution to Revenue by Segment
Bill Hobbib breaks his reporting into segments. They’re looking for marketing’s impact on pipeline for each vertical industry, channel and market segment (SMB vs. enterprise). They have metrics on what percentage of pipeline marketing is expected to contribute for each segment, which is adjusted quarterly. They track their contribution to pipeline compared to their goals and also track metrics about each campaign, so they know which campaigns are influencing or initiating that pipeline.
Marketing Infrastructure is Essential
This kind of reporting is only possible if the marketer has the technology to enable the tracking and reporting and the expertise to pull meaningful insights from the data. The round table participants were at different stages in developing this level of maturity. Some had recently joined companies with limited technology and/or content, so they’re working on implementing the systems and campaigns necessary to get the metrics.
Report on Activities First, Then Revenue Performance
Dan Hubscher pointed out that when he first got started in his current company, he had to build the marketing program from scratch. In the early days, it would have been silly to report on contribution to revenue, because it was too early for marketing to have a measurable impact. So he focused on developing a clear marketing strategy and plan. Then for the first 18 months, he reported on performance against the plan from the perspective of activity and content production so the executive team would know what they were spending money on. Today, his job is measured primarily on contribution to revenue, and his reporting focuses on marketing’s impact to pipeline and sales.
Build a Marketing Infrastructure
Amanda Maksymiw gave a great overview of how this needs to happen. Their marketing team grew from 5 people to 20 in the past year. In the past 6 months or so, they have deployed Eloqua and several other marketing technologies to build their automation and reporting infrastructure. Everyone on the team is experienced, and they know what “good” looks like. So they’re building the foundation necessary to achieve that. She said they’re now starting to set up reporting – tracking first and last touch attribution, campaigns performance, and attributing campaigns to pipeline. She’s begun meeting with sales to get feedback on leads and how metrics are reported. Her team is working true integration with Sales, but it takes some time to get everything in place.
This process of building up the foundation so that Marketing can start taking responsibility for contribution to revenue takes time and expertise. But all agreed that contribution to revenue is ultimately where the Marketing team should focus to demonstrate marketing ROI.
Limited Technology Budgets Limit Insights
Some marketers, particularly those with smaller firms, are hampered by limited technology budgets. So they work with what they have. For example, Faith Donaldson was working with a small Psychology practice. She had limited technology and had to rely primarily on Google Analytics, email reads/clicks, and leads coming in from a lead form on the website. She uses Analytics to figure out what content is attracting attention. In her case, analytics and numbers were not a priority because the practice is small, and their capacity to take on new patients is limited to what existing therapists are able to handle. As long as Marketing is attracting business, metrics aren’t important.
Getting a Seat at the Strategy Table
As we discussed ROI and metrics, Dan Hubscher observed, “So far, no one has said that analytics and data is the answer to sales/marketing alignment.” Everyone agreed. It’s not about the data. It’s about the strategy.
Amanda Batista posed an interesting question. Her company offers a lot of products, and they’re acquiring new companies and developing new products all the time. Her team has the challenging job of understanding the new offerings, figuring out an integrated message, and building content. It’s a challenge to properly position the products and the business and consistently generate demand for the full suite. She asked how others are approaching this.
Marketing Strategy Must Align with Business Strategy
Ellen Steinlauf pointed out “If you’re not hearing the strategy and what the business is doing, you can’t support the strategy with marketing.” Getting an in-depth understanding of the business strategy is a marketer’s most important responsibility.
Marketers Must Be Attending Strategic Planning Sessions
Other participants agreed. They attend strategic planning sessions with executive and sales teams, sales meetings, and product strategy planning sessions to ensure that they understand the business strategy. Only then can Marketing align the marketing strategy and messaging with the business strategy.
Kirsten Jepson pointed out how important these meetings are to getting a deep understanding of the value proposition. She can only learn this at the necessary depth by being in those strategy meetings. “Yes, we need to understand the tactics and technology.” Kirsten said, “But at the end of the day, without being able to connect the dots, we lose the strategic value that earns us a seat at the table.” So members of her team attend client meetings, strategy meetings, and quarterly business reviews. “I spend a lot of time listening, and a little time contributing. But when I do contribute, I’ve learned enough to make it valuable.”
To move from being a practitioner to an expert, Marketers must focus on strategy and demonstrate to the executive team that we can offer value.
Focusing on the Shortest Path to Revenue
We talked about what marketers need to do to make a real contribution to revenue. Bill Hobbib sat down with his team and asked, “What do you think we could do that would move the needle the most in the next 6 months?” His team came up with a great idea – they could sell into the “white space” in existing accounts. His company sells quite a few products, but most of their customers only use one or two. By focusing on existing accounts and building awareness of the other products, they could focus on shorter paths to revenue.
Not only does this help drive real business results, but it’s also a great way to demonstrate a quicker marketing ROI.
Soliciting Input for the Marketing Strategy
Amanda Maksymiw is setting up an editorial board that will meet monthly to help with Marketing’s strategic focus. The board includes people from field and product marketing, content marketing and demand generation; but it also includes key people from the inside and field sales and the sales enablement teams. Their focus will be on understanding what’s needed, educating the team on what materials are available, and deciding together what metrics to report on.
Strategy is the Real Answer to Marketing ROI
At the end of the session, we all realized that while Marketers tend to focus on reporting and metrics, the real way to demonstrate an ROI from a marketing investment is to align very closely with the business and sales strategy. This helps set reasonable and measurable expectations for marketing, but more importantly, it is the key to moving from being a marketing practitioner to an expert and strategist. This is how Marketing earns a seat at the executive table to help influence business strategy.
Don’t Miss the Next Round Table Report!
Stay tuned for my report on another round table with a different group of senior marketers. In this event, we we focused more on execution. I’ll cover that discussion in my next post in this series. We’ll be hosting these round tables twice a month going forward, and I’ll continue to share what we’re learning from this diverse group of marketers. Subscribe to our blog so you don’t miss the next article!
Also, as marketers, we need to be aware of sales opportunities that don’t close. Research find that at least 60% of deals fail to close due to “no decision.” In fact, NO DECISION is actually your #1 competitor. Check out our new video on how to solve the “no decision” problem.
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