Three marketing metrics that will make you a hero to your CEO

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11th March 2015, 4 minute read

All marketers want their organisation, or their clients, to see value in what they do – which makes it critical to be able to quantify their contribution in terms that matter the most to decision-makers at the top of the tree.

Measurement builds respect and accountability.

However, as marketers, we know this can be easier said than done. According to a recent study of 478 senior marketers worldwide by The Economist Intelligence Unit, only 21 per cent said they could measure marketing in terms of revenue.

The same study also asked marketers to list the biggest challenges they faced. Result: budget (45 per cent), the shift to digital and engagement (26 per cent) and measurement of marketing (21 per cent).

The advent of online and social media – and the resulting transformation in the way customers now buy their goods through a proliferation of channels – has meant that marketing is now responsible for much more of the revenue cycle than ever before (up to 70 per cent, according to Marketo). In theory, this should represent a golden opportunity for marketing to reinvent itself as an essential part of a company’s revenue generating capability.

However, in order to provide proof that it is central to a company’s success, marketing still has to be able to quantify its impact in terms of revenue – the only yardstick that will impress the CEO and the rest of the Board. But, as we have seen, this is not always easy to demonstrate.

In the past, marketing has been quite good at generating metrics that major on activity and, in some cases, efficiency. Metrics for brand awareness and cost metrics – which measure things like cost per sale, cost per acquisition etc. – are relatively commonplace. The same can be said of measuring the number of leads, followers and ‘likes’. The trouble is, they all measure quantity not quality, and not the revenue that contributes directly to the bottom line.

In fact, cost metrics have the disadvantage that they can actually show marketing as a cost centre rather than one that generates income. To the cost-conscious Finance Director, this is often all the evidence he or she needs to justify trimming back the marketing budget rather than increasing it.

So, what are the metrics that marketers should be showing to the CEO and his boardroom colleagues? The answer, of course, is financial metrics; i.e. anything that talks in the language of revenue, margins, profits, cash flow, ROI (Return on Investment) and shareholder value. Ultimately, they want to see statistics that show how to improve company performance and profitability.

These may be summarised as:

  • Revenue metrics – marketing’s impact on revenue.
  • Marketing programme performance metrics – incremental contribution of each individual programme.
  • Profit per customer – LTV of an incremental customer.

The argument over justifying marketing budgets is not new, but is arguably more important than ever in today’s competitive market place. The measures are there for the marketers who are prepared to adapt and, ifit requires a new take on statistics and marketing analytics tools, so be it.

If you'd like to find out how to create and manage a dashboard of leading and lagging indicators of sales and marketing performance for your business, please contact us.

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