Marketing’s true north capability
The CFO says to the CMO, “Let’s boost marketing spend by 1% this month. Where should we spend it?” The ability to answer that question is true north for Marketing departments in B2C industries.
With big data and analytics radically reshaping the marketing function, CMOs now have the power to answer the CFO’s question almost instantly down to the specific market, message, channel, and product. Today’s analytical tools also allow the CMO to state with accuracy the expected incremental sales and profit from that incremental marketing spend.
That level of analytical prowess and business intelligence is true north for marketing departments. From our experience helping B2C firms with marketing strategy and marketing analytics, some marketing departments are already there, but most are somewhere along the journey. When we look at how Marketing departments can create growth and value now, the immediate priority for many companies is to develop a robust Marketing Analytics capability.
For firms we have seen at the beginning of the Marketing Analytics journey, achieving true north by building a best-in-class ROMI (return on marketing investment) tool and acting on the initial insights improved their marketing effectiveness by 10-25%.
Knowing is half the battle
The first step in this journey is the recognition that the old ways of doing things are fading. The old adage that “half of my marketing spend is a waste. I just don’t know which half” doesn’t hold up today when consumers can be tracked through their digital customer journey and digital decision-making process.
The second step is to build out the systems and processes to measure customer acquisition and retention at a detailed level. The entire marketing and sales function, including vendors, agencies, and IT departments must work together to understand and measure the journey; from prospect, through lead and first purchase, and finally repeat business.
With so much data and content out there, building a robust ROMI tool can feel like boiling the ocean. There are countless ways to track marketing spend and its result, and they are not created equal. An analytical, data-driven approach can feel new when the intuition-driven approach is more familiar.
For those reasons, CMOs must employ structured, hypothesis-driven thinking to focus on the essentials, tune out the noise, and quickly build a ROMI tool. To successfully analyze ROMI, a CMO must first understand the consumer decision-making process (from prospect to repeat customer) and how the company’s internal processes parallel the consumer’s decision-making process. From there, it is important to ask which specific numbers and ratios matter, because measuring the right numbers can deliver a 10-25% boost to marketing ROI. Measuring the wrong numbers will deliver much less, or nothing at all.
With a ROMI tool up and running and the insights acted on, the next step for the CMO is to describe the end state of this Marketing Analytics journey. When the CMO is done transforming his or her department, what will it look like? What capabilities are needed to accomplish those objectives? What does marketing make or buy – or make and buy in a joint effort? What are the processes and org structure that best enable marketing’s capabilities to accomplish its mandate? What happens when the emphasis shifts, perhaps from lead volume to lead quality, or from acquisition to retention? How will the Marketing team adjust?
Consumer behaviors and expectations are rapidly evolving. New marketing capabilities are constantly arriving. Marketing Analytics and its impact to growth and value are now easier than ever for your marketing department to leverage. Developing a tool to measure ROMI at a granular level is the first step in the path to Marketing Analytics excellence.