VisionEdge Marketing Keynote address for The CMO Council

Measuring Marketing Performance Forum

Good morning, and thank you for having me here.  In my remarks today on measuring marketing, I’m hoping to leave you with three takeaways. 

• First is a framework to help you translate marketing into terms relevant to revenue and profit, the ultimate yardsticks of business success.
• Second, is to provide you with a continuum to take your company fromits current state to its desired state.
• And lastly, some thoughts on what it will take for marketing to improve its ability to measure itself.

I hope that my remarks today will provide you with some practical guidelines to consider as you embark on your journey of creating a performance-driven marketing organization.

I find it’s always helpful to put things in context.  Measuring marketing and market metrics are hot topics today because metrics enable us to serve in a more relevant and strategic role.  So many marketers have been relegated to tactical roles that we’ve lost our seat at the strategic table.  Yet CEOs everywhere are expecting and demanding more accountability from marketing. 

The seminal Advertising Research Foundation conducted in 2000 shot the first real volley on the subject of the importance of enhanced return on Marketing investments as a top priority for CEOs.  Various studies from the Association of National Advertisers to our very gracious hosts, the CMO Council, continue to reveal that measuring marketing effectiveness is a top priority.  Sadly, many marketers and members of the C-Suite remain dissatisfied with Marketing’s metrics capabilities.  So where do we start?

A Framework to Measure Marketing Performance

We need a metrics framework. We call such a framework the Metrics Continuum.  Imagine a continuum that goes from left to right. Along this continuum are five points. In the lower left-hand corner is what we will call Activity-based metrics. The next point along the line we’ll label Output-based metrics.  Then we’ll have Operational Metrics at the mid-point.

Moving further right will be Outcome-based Metrics, and the top two points heading toward the upper right-hand corner are Leading Indicators and Predictive metrics, respectively. This continuum allows us to think of various metrics in a new way and provides a way to categorize or classify our metrics.

What do we mean by activity-metrics?  These are metrics that measure our effort, such as how many events we’ve orchestrated and how many email campaigns we’ve implemented. You get the idea.

What about the things we count? Say, for example, counting the number of cards we collected at an event, the number of new channel partners we’ve added, the number of demo or white paper downloads on our website, the number of press hits? We call these Output-based metrics.  

The challenge is that too many of our marketing metrics are activity and output types of metrics. And often the numbers in one don’t relate to the numbers in the other. When we only have activity and output-based metrics, we put ourselves at risk because it’s nearly impossible to relate these metrics to a business outcome. 

Your leadership team cannot translate these metrics into how you are contributing to the business.  As a result, the next question they ask is are we getting our money’s worth? All of a sudden, you’re in a conversation about justifying your work and rationalizing your budget.  Does that sound familiar to you?

Let’s move up to the next point onthe continuum into the realm of Operational Metrics.  These metrics are about being efficient and calculating ROI.  We’ve begun to look at costs and other financial data, such as cost/lead, cost/support call, channel margin, cost to acquire, etc.  While this may help us become more efficient and maybe even more productive, it doesn’t give us the information we need to make strategic recommendations or decisions.

I’m a triathlete.  You know the sport where the race consists of a swim, bike and run.  Remember, it’s a race, and between each leg, there’s what is known as a transition. This is where you stow your gear and make the equipment changes as you move from one leg to the next.  Operational metrics are like transitions.  It’s very important to be efficient in your transitions. In fact, you can lose a race if your transitions are slow.

In my first race, my total transition time was over 11 minutes. I came in 200th in my age group.  Today, my transitions are under 2 minutes. But there’s the rub: all the other best competitors have around the same transition time. So while you can lose a race if your transitions are slow, you cannot win a race just by having fast transitions. In the end, you have to perform in swimming, biking, and running. And so it is with marketing.  We can lose if we’re inefficient, but once we address our efficiency, we have to perform.  Which takes us to outcome-based metric, and where I hope you are and will strive to be.

Outcome-based metrics focus on metrics that demonstrate how Marketing impacts business results. That is, what have we done to move the needle? Metrics market share/market dominance, customer value, and brand equity fall into this category. These metrics facilitate investment and strategic decisions.

We’ll save the leading indicator and predictive metrics for another time because so few B2B marketers have yet to reach the outcome-based metrics on the continuum that if we can just get to this point, we will have made tremendous progress.

So now you have a framework and a continuum. Very likely, you will need, use, and report on metrics all along the continuum- and that will necessitate that you create a marketing dashboard. The message I hope you take away is that your metrics must be more than activity, output, or operationally focused. You probably have a pretty good idea of where you are on the continuum.

I’m curious, let’s see a show of hands for people who think they are predominantly using activity-based metrics? How about those of you who are also using output-based metrics? And lastly, who here has ventured into outcome-based metrics? I’m not surprised by how few of us are at this point. What will it take for more of us to get there?

Improving Your Marketing Performance Measurement

Our research shows that there are two areas Marketers most often need to address: competency, that is, sufficient ability, and proficiency, that is, the knowledge, experience, and skills.

Using my triathlon example again, I never learned to swim, so you can imagine how difficult those first few races were as I muscled my way across the water. Now, years later and lots of swim lessons, I’m finally competent enough, but if winning a race depends on the swimming portion, I’m sunk.

Metrics competency is about tools, systems, and processes. And most Marketing organizations are lacking in all three. We will have to invest in each if we want to improve our competency.

Proficiency, on the other hand, is another matter. Proficiency comes with experience and practice. Measuring Marketing Performance is more than just tracking numbers; it’s also about having the skills at the right time at the right place. Even the best athletes, whether they’re Kobe Bryant or Jordan Spieth, invest in training and coaches. Yet training in marketing measurement is rare. As CMOs and CEOs, I plead with you to invest in developing your marketing personnel’s metrics skills.

Of course, we can develop the skills, deploy systems and processes, and define and measure. It will all be for naught if we don’t properly communicate our contribution to the team. Lots of companies are in the thick of developing dashboards. It is all the rage right now. Of course, a dashboard is only as good as the data that goes into it. So before you rush off to invest in dashboard software, take a step back and be sure you’ve selected the right metrics, your metrics from Metrics Chain, and have access to the data. It is important to have a dashboard, actually, probably several. Those that are used functionally, those that you use to manage the organization, and those that are shared upward. The purpose of a good dashboard is to focus on the most relevant, essential, and valuable metrics. Be sure whatever dashboard you send up identifies the most important measure of success and illustrates the connection between marketing and the business outcomes.

Marketing Marketing Performance In Practice

Before we close, the Council asked me to briefly share a real company example. A global public videoconferencing customer asked for our help. This company was literally monitoring dozens of activities and reporting on these activities monthly. Most of the metrics were related to digital and content activities. There were very few metrics aligned with business goals. None related to market share, partner development, and up-sell objectives.

They wanted to select a better and smaller set of metrics. Their first two steps on the journey were to conduct an audit and use a mapping process to define the metrics. During the audit, we reviewed all the current metrics and how they were used, and all the data sources. As a result of these two steps, the company selected three metrics to monitor and report: revenue/partner, qualified leads/region, and % of revenue derived from new products.

These outcomes and the marketing efforts related to each were measured and reported. The focus paid off. Their CMO told us that as a result of this work, the group’s systems unit sales increased by 82,% with the average order value for these systems increasing by 11% for one product and 25% for another. More importantly, they understood what contribution marketing made to these outcomes.

You’ve all been so attentive and patient. Thank you. In closing, I’m going to tell you what you probably already know. What gets measured gets done. Be strategic in the things you decide to measure and then apply the discipline to consistently measure these. Changing the C-Suite’s viewpoint of marketing is in our control. It’s been a privilege and an honor to be the keynote for this program. Thank you, and we have just a few minutes for questions.

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