One of the major challenges marketing leaders can face is making a clear financial case for initiatives and budget. In fact, a recent Forrester® survey found that “only 28% of B2C marketing decision-makers are confident in their ability to accurately measure and attribute the incremental business value of their marketing efforts”. So, how can CMOs and other marketing leaders successfully build a better relationship with the Finance team? This question and more are covered in the Forrester report The CMO And CFO Alliance, The Key To Unlocking Marketing-To-Business Alignment Is An Embedded Partnership.
Along with best practices for transforming the cross-functional relationship, understanding how to accurately measure marketing activities in relation to business goals is critical. Yet despite its importance, accurate measurement can still be a challenge. To overcome that challenge, we’re outlining a few key principles that all business leaders should keep in mind.
Balance a focus on short-term and long-term
Identify multiple KPIs that represent both short-term and long-term success. Focusing only on immediate short-term conversion metrics and downplaying lasting impacts may lead to longer-term sales losses. This is particularly true when measuring the impact of advertising, which behaves differently than other forms of marketing like promotions, coupons and emails, which have more immediate and lesser delayed impacts.
Ignore Misleading Performance Metrics
While it may be tempting to make budget decisions based on performance metrics, the truth is that those metrics can be misleading and represent only a small piece of the full impact puzzle. Marketing does not work in siloes, so comprehensive measurement that includes online and offline business drivers, direct and indirect impacts, and synergies is the best way to gain clarity for data-driven decisioning.
Test and Learn in Order to Evolve
The marketing ecosystem is constantly evolving, which means that testing is key to the sustained success of any program. New forms of marketing are often highly efficient with low demand and costs, and testing can help create speed-to-insight. In fact, our ROI Genome found that brands that adopt measurement programs and test-and-learn achieve 25-70% ROI gains. And ultimately, when the ROI is crystal clear, marketing can more easily move from the defensive position to a true team dynamic when it comes to budgeting with finance.
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