Measuring The Wrong Things Makes Marketing The First Investment To Go
Any job involves putting yourself out there and taking risks. In marketing, where practitioners move between art and science, this is especially true. The risks are calculated carefully, but the outcome isn’t guaranteed.
After almost 20 years in this field, I have learned that there is a great fear around marketing measurement. This is linked to worries of failure, which, for the subjective side of the business, is a deep sting. If a campaign is not successful, you must be willing to communicate that to your clients.
But telling your client that you failed and potentially wasted their money is difficult — so difficult that many marketers ensure they won’t have to do it by “measuring” subjective nonsense for those campaigns. Communicating frankly with your client takes immense trust and a client who is open to failing fast and pivoting quickly to test another approach.
Instead of focusing on the ultimate measurement — how marketing efforts drive the profitability of a company — many marketers focus on other metrics, such as web traffic and SEO rankings. While these are positive indicators, they are not the bottom line — and the bottom line is what matters to boards, CEOs and investors, who are our clients.
THE MERGE OF MARKETING & SALES
In B2B, marketing is finally getting its due. Whereas before the focus was solely on sales (like, driving around in a truck taking friends to lunch type sales), marketing is now central to the growth formula. One of the biggest examples of this shift is that companies want to hire a Chief Growth Officer (CGO) that leads sales and marketing efforts in tandem.
This trend is important to grasp, because you don’t grow from just revenue — you have expenses, too. Typically, and wrongly, revenue is seen as a simple in and out: Sales makes money, and marketing costs money. But that’s the 1990s growth model (see above, where guys drive around in trucks taking people to lunch).
Growth requires marketing and sales to work in lock step from demand generation to SQL. Marketing versus sales is a tale as old as time — but with the shift to the CGO and digital transformation tools, it’s all teamwork today.
This setup requires constant feedback and, in a best-case scenario, is automated by a CRM platform in a loop: Marketers work on demand gen and give sales the leads, and then sales provides feedback to marketing in real time. This allows marketers to optimize their campaigns based on actual revenue.
THE WAY TO TRULY VALUE MARKETING
When companies don’t work to align sales and marketing, there’s no way to truly value marketing — and the marketing industry hasn’t helped itself, either.
We’ve done a bad job at proving value. There are many ways to measure value, but the best way is standing up and asking to be held accountable for revenue alongside sales, because it takes both teams to make a company successful.
One way to hold yourself to that standard is by taking total revenue and dividing it by your sales and marketing costs (read: Demand gen and staffing) as a ratio to see revenue growth. Unfortunately, marketing almost never wants that accountability, so they get cut first because their CEO can’t quickly articulate marketing’s value.
We’ve seen sales teams looking to pare down costs look at marketing and think, “Well, if we put that money back into a salesperson, then we’d get more sales.”
Sales wants to put all the demand gen into a human being that can sell for only eight hours a day as opposed to putting it in an automated marketing system that creates demand 24/7.
But marketing’s advantage is how effectively we can target. Our tools are on all the time; they are not sleeping when sales is sleeping. They don’t have capacity issues and are incredibly low cost compared to traditional forms of marketing — and even to a salesperson’s salary.
MARKETING EFFICIENCY FEEDS THE GOAL
Marketing departments are often trying to grow at the expense of profitability. We want a bigger budget and we want to grow, as opposed to primarily focusing on an efficient way to feed leads to sales. If marketers can become an adept demand generation machine and get sales to see the value of their efforts, then they won’t be the first go.
Article initially published in Demanding Views on October 21, 2022