For CMOs around the country, the arrival of 2015 means a renewed sense of purpose and an increased determination to fix those lingering, stubborn problems plaguing your marketing team.
You have a carefully crafted plan and a well-thought through deck of slides to present at the 2015 kick-off meeting. Yet despite your most persuasive words, the result always seems the same: ‘Sorry. Times are uncertain, we won’t be able to increase your marketing budget in fact we’ll be asking you to cut spending by 5 per cent this year’.
It’s frustrating; the world of marketing is rapidly shifting to a digital, online, inbound-centric world, using persuasive content to attract and engage with your audience. You know you have to transform your approach to marketing, build a different strategy, upskill the team and invest in marketing technology. How are you supposed to do this and at the same time keep the campaigns running and the leads coming in?
The answer is data. Specifically, analysing data to facilitate a business not a marketing conversation with your boss. Just as you speak to the problems and challenges of your target buyers in your marketing messaging, you should speak to the priorities and concerns of your boss when you pitch for funds to invest in marketing.
Data is everywhere these days. With the shift to digital we can measure almost everything. Of course, this is highly advantageous as it allows for better decision-making and provable ROI.
But data for data's sake is equally as unhelpful. Many of our B2B clients are creating data from their marketing, they know how many website visitors they have, they know their email click-through rates, their social shares, but they don't know how this impacts the business and specifically, the cost of driving revenue.
Worse still, it seems the boss doesn't trust marketing to give him the information needed. Up to 70 per cent of executives simply don't believe marketers are focused enough on results to truly drive incremental customer demand.
So how can you tackle this issue and reposition marketing’s approach?
The Fab 5 – Key metrics for successful conversations with your boss
1. Customer Acquisition Cost (CAC)
The total average cost a company spends to acquire a new customer. Simply, sales and marketing costs including all campaign spending, salaries, bonuses, commissions and overheads divided by the number of new customers.
2. Ratio of Customer Lifetime Value (LTV) to CAC
This is a great way to understand the total value of your customers on average, as a proportion of the cost of acquiring them in the first place. A higher LTV:CAC means greater ROI from your sales and marketing team. Some care needs to be taken here though, as driving down your spending on sales and marketing too much could actually slow overall company growth. So looking at this ratio in conjunction with the other statistics and factors will give you a balanced view.
3. Marketing's percentage of CAC
What's marketing's share of the overall customer acquisition cost? Tracking this over time gives you an indication of potential problems in either your sales team’s performance (their commission costs are falling) or that marketing overhead is increasing without seeing a matching increase in customers.
4. Marketing Originated Customer Percentage
This shows you the percentage of new business driven by marketing. Obviously this is an important metric to track the effectiveness of your marketing team. There is no ‘right’ answer for this percentage as the structure of different businesses and industry sectors mean the ratios varies widely. But measuring this over time gives you a leading indicator of improvements your team is making.
5. Marketing influenced customer percentage
A looser definition than the previous ratio – and therefore should be much higher. Marketing influenced customer percentage measures all new customers who marketing has interacted with along the way while they were leads. Like measuring an ‘assist’ in scoring a goal in football, this is useful as it gives the boss a clearer view of the bigger picture and how marketing is making an impact across the sales process.
While other data measures can be usefully linked to your team’s performance by focusing the whole marketing team on these core measures, they will make better decisions that materially affect revenue and the growth of your business. Better still, team members will plan, build and execute in a way that naturally aligns around the sales process and this in itself creates greater efficiency.
Having a regular monthly dialogue with the boss around these core metrics will align marketing to the business in a relevant, measureable way. Requests for additional investment should refer back to these core metrics. For example, how will an investment in a marketing automation platform improve our CAC? (The answer for those of you interested is about 60 per cent, according to Hubspot.)
What’s more, as marketing proves its contribution to revenue your counsel will be sought increasingly frequently and you will be able to position yourself as a key member of the management team. Which, let’s face it, is about time.
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