Thanks to the Center For Media Research for sharing new data, and updated report findings from Forrester by Laura Ramos showing that B2B marketers must do more than measure activities like click-through rates and event attendees. They need to show how their activity directly affects business results, providing insight on the things that matter most to their executive peers and the board: growth in revenue, profit, and customers.
As marketing budgets and spending return to pre-recession levels, says the report, B2B marketers feel increasing pressure to justify their activities and results. In the 2016 budget survey, 56% revealed that attributing program spending to revenue results is their top challenge, up from 45% in 2015. When B2B marketing executives can’t definitively quantify what their company gets in exchange for the budget dollars spent on in-person events, sponsorships, advertising, and sales support, CFOs see marketing as a cost center, sales execs see marketing as a resource diversion, and CEOs don’t consider marketing a strategic part of the management team. Marketing execs might have great motivation, but several factors make measuring marketing’s impact a constant struggle, points out the report:
- Marketers face a deluge of data. The number of channels that B2B marketers use to reach and collect information about customers has grown rapidly in the past decade. The most recent budget survey respondents report using an average of 9.4 tactics out of the 17 considered. Channel-centric marketing tools generate unique sets of metrics that are difficult to integrate into a cohesive view of customer information and engagement. The tons of social, mobile, and digital data that buyers throw off as they investigate purchase options only increase the scale of the problem
- Messy internal data is difficult to manage. To make matters worse, says the report, mergers, acquisitions, and technology investments have turned the systems used to collect and analyze the resulting data into a hodgepodge of disconnected tools. This makes it a huge challenge to collect, aggregate, and house data, while raising questions and concerns about the reliability and validity of that data. Without the services of a B2B data management specialist, the process of merging, unduplicating, standardizing, and augmenting data spins out of control and can cost a large enterprise hundreds of thousands of dollars to get it back on track
- Many marketing teams remain deficient in analytical skills. Analytics is not a historical skill set of B2B marketing departments, notes the report. Many marketers lack an analytics background, especially those who rose through the ranks of marketing communications and branding. In research conducted on how marketers manage performance, only 10% of respondents felt that their marketing teams were effective at using data analytics to make decisions
- The role of marketing continues to change. Long sales cycles in which buyers take nonlinear paths to explore solutions and need to engage multiple decision-makers further complicate how marketing must attract and engage buyers. “Every organization has a vision for how marketing should help the firm achieve its goals, but it is not often articulated very clearly,”
Pat LaPointe, former managing partner at MarketingNPV and executive vice president at MarketShare, says “… too much subjectivity comes into play… without clarity on the role of marketing… can’t break marketing activity down into component pieces… (that can be) measured and connected to the right business outcomes…
But, says the report, marketers don’t measure the right things. Most get stuck measuring activity, not value. 61% of the marketers surveyed admitted that most of their data work went into reporting on how they did, not showing how marketing drives better business results. This tendency, and the challenges described, constrain marketers from measuring the things that really matter to the company. Instead, says the report, they:
Measure only what’s easy. Marketers gravitate to measuring the things for which they know they can get data. They rely on the individual metrics and reports generated by each tool they use, such as web analytics to measure visitors or page views and email systems to measure email open rates and click-throughs on offers
- Focus too narrowly on funnel metrics. Most B2B marketers surveyed try to prove marketing’s value by reporting short-term operational trends like sales pipeline (72%), marketing spend (58%), and return on program investments (51%). Fewer than 20% of respondents include metrics that take a longer term view, such as marketing’s contribution to retention, market share, or category ownership, to track the forward-looking health of the business
- Track quantity over quality. Marketers commonly use quantitative measures like inbound traffic, attendees at events, social media followers, and marketing-qualified leads, to benchmark the results of their marketing activities. However, says the report, lead conversion rates, customer retention, and account penetration measures better prioritize programs that result in strong sales opportunities among both prospects and current customers
- Fail to measure factors that lead to improved performance. Monitoring awareness, preference, consideration, market sentiment, and customer satisfaction and loyalty are conventional performance management tasks that help marketing execs understand brand impact. However, this activity falls short among the marketers surveyed, as it fails to measure and report the results that matter more to CEOs and board members, like increases in customer lifetime value (15%) and cross-sell/upsell opportunities (25%).
Laura Patterson, of Visionedge Marketing, sums this up by saying that too many marketers “manage to metrics rather than performance.”
Concluding, the report effectively details many suggested alternates and improvements gained from the study, suggesting that predictive marketing analytics will enable marketers to demonstrate its value is by predicting the amount of revenue it can generate in future periods. The summary paragraphs highlight the “metrics that matter” to help marketers forecast what makes a qualified lead, which characteristics best predict propensity to buy, and how much revenue will result from customer activity at any stage in the life cycle. As marketers gain this ability, they will:
- See revenue forecasting shift from sales to marketing
- Be able to ramp up demand generation activities or dial them down
- Optimize engagement patterns
- Use models to enhance lifetime engagement
For more information and details from Forrester, please visit here.