First Things First discussed the first of five key things the CMO must do well*, getting the marketing mandate right. Allies, Agnostics and Antagonists focused on the second, building meaningful relationships with functional and business leaders.
The third is agreeing on how to measure success.
Once you've agreed on the marketing mandate and started the process of building meaningful relationships, it is absolutely imperative that you agree on how success will be measured.
Joe Tripodi, Executive Vice President and Chief Marketing & Commercial Officer of The Coca-Cola Company, advises CMOs to make the CFO a partner in their leadership teams as they develop marketing budgets and metrics. “Unless you have full transparency on everything going in your budget, you’re going to continue to have this marketing-as-a-black-box philosophy. Once you bring people into the tent and then say, ‘Listen, we have nothing to hide here,’ and jointly determine the metrics for measuring marketing effectiveness, you take marketing out of the little black box”
Says Maureen McGuire, CMO of Bloomberg, “every marketer has had this kind of experience: You want to run an advertising campaign to raise awareness and then everybody’s looking for leads and revenue and you say, well, the metric to measure this is whether or not we actually raised awareness. But people are saying, ‘How many leads did it drive and how come my phone wasn't ringing off the hook?’ One of the most difficult things to convince people of is that you should measure your marketing effort according to the objective you’re setting.”*
John Dragoon, CMO of Houghton Mifflin, says “we've rotated (maybe over-rotated) to marketing metrics – I’m fond of the term ‘the ROI of a handshake.’ No one’s written about the softer things – just because you can’t measure it doesn't mean it shouldn't be done.”
So, how do you set meaningful metrics?
Always, always, always start with the business objective, and explain that in terms familiar to your constituents. The easy ones are the ones that are directly measurable, such as leads and revenue. The harder ones are the “the ROI of a handshake,” the value of increasing awareness or how investing in the brand will generate business results.
For example:
Next: Insource or Outsource?
*“What Do You Want From Me? How High-Performing CMOs Exceed Expectations,” SpencerStuart, 2010
The third is agreeing on how to measure success.
Once you've agreed on the marketing mandate and started the process of building meaningful relationships, it is absolutely imperative that you agree on how success will be measured.
Joe Tripodi, Executive Vice President and Chief Marketing & Commercial Officer of The Coca-Cola Company, advises CMOs to make the CFO a partner in their leadership teams as they develop marketing budgets and metrics. “Unless you have full transparency on everything going in your budget, you’re going to continue to have this marketing-as-a-black-box philosophy. Once you bring people into the tent and then say, ‘Listen, we have nothing to hide here,’ and jointly determine the metrics for measuring marketing effectiveness, you take marketing out of the little black box”
Says Maureen McGuire, CMO of Bloomberg, “every marketer has had this kind of experience: You want to run an advertising campaign to raise awareness and then everybody’s looking for leads and revenue and you say, well, the metric to measure this is whether or not we actually raised awareness. But people are saying, ‘How many leads did it drive and how come my phone wasn't ringing off the hook?’ One of the most difficult things to convince people of is that you should measure your marketing effort according to the objective you’re setting.”*
John Dragoon, CMO of Houghton Mifflin, says “we've rotated (maybe over-rotated) to marketing metrics – I’m fond of the term ‘the ROI of a handshake.’ No one’s written about the softer things – just because you can’t measure it doesn't mean it shouldn't be done.”
So, how do you set meaningful metrics?
Always, always, always start with the business objective, and explain that in terms familiar to your constituents. The easy ones are the ones that are directly measurable, such as leads and revenue. The harder ones are the “the ROI of a handshake,” the value of increasing awareness or how investing in the brand will generate business results.
For example:
- What is the brand premium, in price or volume?
- Which brand attributes most increase customer loyalty and how much repeat business is that worth?
- How much does unaided awareness reduce the buying cycle, how much additional revenue or profits does it generate, and what is the impact on sales force productivity?
- Which events generate the most proposals?
- How many website visits / downloads from social media campaign result in qualified leads or direct website sales?
- How does customer insight influence product design? What are the operations trade-offs?
- How does the strength of the brand improve the ability to negotiate with vendors and buyers?
Next: Insource or Outsource?
*“What Do You Want From Me? How High-Performing CMOs Exceed Expectations,” SpencerStuart, 2010
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