The art of marketing has been essentially characterized as intuitive decisions based on experience whereas, in contrast, the science prefers data driven marketing. It involves decision-making such as buying search words for the top of the funnel or the bottom of the funnel or whether at a particular point in time, retargeting is useful or annoying. The creativity vs. the logic. The marketing department is, at many a times, seen as an expense center where the manager submits budgets for the quarters spend and the finance and operations haggle with them to bargain and push down that expense. With the changing times and evolving technologies the responsibility of the marketing team towards an organization has increased five-fold and in this post, that is what we are going to explore.
As marketers we are committed to engaging our customers and to also make our peers understand the investment we’ve made in the marketing campaigns. Now, for these to be effective a constant review of results and metrics must be carried out in order to be able to take actions to improve for a better effect. From website visits, leads generation, conversion rates, social media engagement to blog post visits and shares and the click through rates for emails – we have a vast number of metrics and a sea of data to measure those from. But are these all metrics useful when it comes to showing the value created by your marketing efforts and campaigns? Wouldn’t you rather pick the ones that boast of the success of your campaigns? Typically, the CMOs are expected to report on data depicting the total cost of marketing, overhead, growth in revenue and customer acquisitions.
All of these questions and expectation lead to - ROI: Return on Investment. These are the three magical words that a CMO can say to his CEO and sweep him off his feet with a good one too. Results! Numbers! Retention of old customers and acquisition of new ones! This is what the CEO expects the CMOs marketing campaigns and strategies to do. Measuring the extent to which the company has been able to achieve its goals and grow, measuring the ROI for the marketing campaigns and revisit the budgets depending on the results that they get: these are the few principal activities that a CEO expects from his CMO. For them, the answers lie in the sales revenue growth of their company and marketing has to play its part in boosting the same. With so many key metrics allowing us to measure everything from the visitor traffic on our websites to the customers’ on-site behavior and the cost to acquire new customers through these channels, it is very easy to lose sight of what is important. So let’s take a closer look at a few metrics that help the CMOs talk the language that the CEOs and the CFOs understand.
1. Sales and Marketing Cost
The most primary metric to keep a check on is the cost for these activities. It shall not only give the CMO and the CEOs a perspective of how the funds are being utilized but also provide a strong point of view for the CFO to measure the results against.
2. Customer Acquisition Cost
This metric gives an idea as to how much the company had to spend per new customer. The lower the value, happier is your CEO! It essentially reflects on the efficiency of the marketing and sales teams.
3. Marketing percentage of Customer Acquisition Cost
This metric gives an idea of the marketing part of the sales and marketing cost of customer acquisition so as to be able to break down the cost and also determine individual efficiency of the both these teams.
4. Time to Payback Customer Cost Acquisition
It shows us the time taken for the company to earn back the customer acquisition cost it spent acquiring new customers which gives the CEOs and the CFOs an insight into the quality of the acquired customers and also as to how soon you can start earning from them.
5. Marketing Originated Customers
It is the perfect metric that determines which new business for the company is motivated by marketing by showing the portion of customers that originated purely from marketing efforts in turn representing the impact of marketing team’s lead generation efforts on customer acquisition.
These metrics give the CMOs a strong basis to make a better case for budget and strategy for the upcoming year and also helps him deliver a real picture of what the RoI of marketing efforts look like.
“Strategically, marketing has become like cutting water.” says Anita Newton, VP of Marketing at Adknowledge, describing the challenge of marketing measurement. The CEOs expect their CMOs to be more than just the brand custodian and manage digital. They expect the CMOs to be a constant innovator, a crisis manager, a damage controller and a brand advocate all at once. Owing to the fickle consumer behavior and consumer habits, companies need to stay 2 steps ahead at all times. In arrears to that, the teams and budgets have grown exponentially and online marketing campaign “soft” metrics are too over-whelming and hinder marketers from seeing the bigger picture at hand. The web is not just a channel for generating leads and engaging audience, it is more like an online market place where your company needs to have a competitive edge.
Would you like to read further to know how to bridge the gap between these two areas and roles to be able to work more collaboratively?
Watch this space for the third installment of our Art vs. Science of marketing blog posts series! We shall be back soon!