Inbound Marketing + Sales Blog

June 4, 2013

The Key Marketing Metrics Your CEO Cares About

Written by: Patrick Biddiscombe  |  Share:

Patrick Biddiscombe

 

Seventy-six percent (76%) of B2B marketing professionals agree or strongly agree that their “ability to track marketing ROI gives marketing more respect.”

 

Source: Forrester Research

Are you your organization’s champion?

We’re not referring to the big winner, a champion in the traditional sense of the word. No, we’re referring to our marketing champion, the person that advocates for innovation and creativity, that pushes their department forward, that introduces new and exciting opportunities and that shows their boss that each of these things can, and will be good moves for the company.

So, we’ll ask again. Are you a champion? The role comes with some pretty nice perks. For one, you get to work with organizations like us which is always fun. For another, working with a company like us makes you look like a hero to your boss. Because it is our goal to get you raises and promotions! How do we do that? By helping you to get the data and results that your CEO really cares about.

With the right marketing automation platform in place, you’ll be armed with all of the data that you need to make real-time decisions that optimize things at the campaign level, such as open rates, conversion rates, long-tail keyword traffic growth, etc. This is all essential information to drive results at a tactical level. However, to be noticed by the C-Suite, you have to be able to prove that marketing is an investment in growth and profits and not a necessary expense.

In order to have this conversation, you’ll need a Unified Marketing + Sales BI (business intelligence) platform in place that enables you to track marketing inputs to sales (revenue) results. While you are getting the right technology and people platform in place, you can start by asking questions that might seem ‘above your pay-grade’ (which is a great way to start to get on the promotion radar!).

A good place to turn first is the Finance organization, preferably the CFO. Your marketing organization needs to know the Customer Lifetime Value (CLV). This can be a tricky metric to measure. For one thing, there may be different types of customers that buy different things at different times for different reasons. Partnering with Finance, they can help you to break down your customers into segments that can be analyzed. From here, you can take estimates of future revenue and profits by tranche and do an NPV (Net Present Value) analysis. If you aren’t familiar with this, your finance folks should be able to help you. The idea is that if you think of a profit stream as a potential set of loan payments, what would the principal amount be today that would generate that stream? That’s what your new customer is worth to your organization today.

This information empowers you with your organization’s best guess at what adding a new customer of a given type is worth. Next you need to be able to calculate what your marketing investments mean in relation to this new revenue.

The data in your Unified Marketing + Sales (UM+S) platform will enable you to track new revenue (new customers) from Marketing Initiated and Marketing Influenced customers. Marketing Initiated customers are those relationships that began as a marketing lead. Marketing Influenced customers are those that were possibly initiated by marketing but were definitely influenced along the way by nurturing activities.

Using the UM+S model, you’ll want an established SLA (Service Level Agreement) between marketing and sales, that allocates responsibility and credit for new customers. Using the formula that you’ve agreed is reasonably fair, you can allocate Marketing Initiated customer value and Marketing Influenced value to determine a NPV of marketing generated revenue for a given time period.

With this number in hand, you can look at your marketing budget, subtract those line items that went to activities other than new revenue generation (customer loyalty for example) and get to a true ROI for your company’s marketing investment. Most importantly, with your marketing automation system in place, you can begin to build a business case for continuing or increasing investments in some activities and decreasing or eliminating investments in others in order to maximize ROI.

These are the marketing metrics that your CEO cares about.

Once you can reliably report ROI at an aggregated level, your finance team will A – be really excited that someone in marketing is thinking in terms of ROI and B – want you to break down your ROI into analyzable components (customer type, product line, geography, etc.).

In addition to your Finance team, you can also partner with Sales to determine your company’s Customer Acquisition Cost (CAC), meaning the total investment made in marketing and sales to generate a given customer. But with a solid UM+S platform in place, you should be able to optimize your joint spends to minimize CAC while still increasing revenue.

With this approach, it’s no longer about how much an organization can spend in total. It’s more focused on honing your ability to measure and maximize percentages at each key point in the game (or in our language, the buyers’ journey). This even provides smaller organizations with the opportunity to out-market their larger peers and generate higher marketing ROI over time, which is a significant competitive advantage that you can tout in your next review!

It’s natural for marketers to want to report exciting tactical developments (killer open rate on that last e-mail!), or be proud of their sophisticated positioning, messaging and creative programs. However, if you want to move up in your organization, then you need to start thinking in terms of driving larger business goals and speaking the language of those that you aspire to work with. Focus on the ROI your company is getting on their marketing investment.

Free Whitepaper: Unifying Your Marketing + Sales Teams [from New Breed Marketing]

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Patrick Biddiscombe

About The Author

Patrick Biddiscombe is the CEO of New Breed. He also spearheads our inbound best practices, and his background and skills in sales and inbound strategy has contributed immensely to the success of New Breed and our customers' growth.

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