Guest Post by James Thomas, CMO, Allocadia
These days, we focus a lot on the “do” side of marketing – emails, campaigns, events, ads, and more. But, as Gartner expects marketing budgets to rise this year, the investments behind these efforts have never been under greater scrutiny.
It’s now an expectation of the CMO to “run” marketing – that is, manage the performance of marketing investments, plan the right activities with data-driven guidelines, and measure results in the context of the rest of the organization. This is Marketing Performance Management (MPM).
My team at Allocadia recently conducted an empirical study into the state of MPM – surveying over 200 marketers to determine the industry’s maturity level around running the business of marketing. Read the full report here, the accompanying Maturity Model Report, and see where you stand with a Maturity Assessment Survey.
The good news? It’s clear what the best marketers in world are doing differently. These leaders are stewards of their investments, and confident in what move to make next with their marketing plans. 55% of the companies with mature MPM practices expect revenue growth exceeding 10% year-over-year, whereas only 30% of the least mature companies expect the same growth.
The bad news? We have a lot of work to do as an industry to evolve with the rising expectations of our businesses. Here are four habits of CMOs who run marketing like a business.
1. Their reports are in lock-step with company objectives
Strong visibility and reporting of data is critical for global marketing organizations. Consistent and targeted measurements are how the CMO and marketing leadership communicate their intentions to the rest of the department. These are also the mechanisms used to report back success (or failure) to their superiors.
Our study found that high-growth companies can prove Marketing’s contribution to the business, with leaders ensuring that Marketing is in lock-step with company objectives.
Companies expecting more than 25% revenue growth are 2X as likely to have CMO-level reports showing marketing contribution to the business as those companies expecting flat to negative growth.
These leaders have a common definition and approach to measurement. When surveyed on this topic, 80% of organizations expecting flat to negative growth report they either have no agreed-upon approach or are only capable of baseline measurements.
Steps to take: Think about different layers of measurement, CMOs don’t need reports on clicks, page views, and likes. Those are more appropriate for specialists or field marketers. Work to roll metrics up to align with company objectives and/or marketing contribution to the business, and create a consistent approach to measurement across distributed teams.
2. They integrate technologies globally, sync data, and use software where it matters
Organizations who expect budget and revenue increases have a much stronger approach to their overall marketing technology stack and tech strategy. We found three trends:
- Our study found high-performing CMOs to be highly consistent in how they sync data and connect technologies across the marketing organization (for example, synching their marketing automation and CRM systems.)
- There is also a clear trend between companies who expect revenue to increase at greater amounts and their entire marketing organization, all geographies and business units, using the same technologies.
- For planning, investment management, and measurement — the core parts of MPM — less mature marketing organizations rely heavily on Excel. 80% of companies expecting flat to negative revenue growth report they use tools like Excel, PowerPoint and CRM that weren’t meant for planning and budgeting, or do not use any tools at all.This, however, is not an excuse to keep with the status quo. Across the spectrum, companies that expect revenue increases show a tendency to use more advanced technology, specifically, attribution, Marketing Performance Management software and even Automation and CRM.In fact, high-growth organizations leverage marketing performance management software 3.5X more often than static or negative-growth organizations.
Steps to take: Audit your current technologies, focus on integrating tools, and build a clear roadmap to set priorities around what technology matters.
3. They ensure data sources (e.g. CRM, MAP, budgets) are clean and formatted
Throughout in-depth interviews for our study, it became clear that data cleanliness acts as an integral cog within a well- functioning marketing organization. Companies expecting revenue increases are 2-2.5X more likely than underperforming organizations to have marketing and sales data that is always or often consistent and aligned to the company’s overall objectives.
While strong capabilities in Executive Vision are important to setting a target for the entire department, and clear Measurements and Visibility into data is necessary to communicate priorities and results, none of this can be done successfully without quality data.
Only 8% of organizations can confidently say they keep marketing, sales and finance data in one data warehouse that acts as a “single source of truth.” Only 29% of marketing organizations have data such as MAP and CRM information in a single BI tool, warehouse, or data lake. Conversely, almost 50% of organizations report not having control of their data.
Steps to take: Gain consensus that data quality matters. Work to understand the state of your data, where it lives, and what steps can be taken immediately to format and clean it. Work with sales and finance to align marketing’s data to their view of the world, and have a strategy for how you want to leverage this information.
4. They align with the Finance team
For years, the marketing industry has talked about the importance of the relationship between Marketing and Sales. This relationship is important. However, the Finance and Marketing alliance is just as important as CMOs command more responsibility within their organizations.
Leading Marketing organizations are 3X more likely to align with Finance, but only 14% of Marketing organizations overall see Finance as a trusted strategic partner, and 28% either have no relationship with finance or speak only when forced to.
Finance holds the purse strings: any budget increase, major budget change, or overall investment strategy must go through finance. In addition, the CFO continues to take on a much more strategic role in the organization as a whole and thus is more influential.
If the CFO sees marketing as a strategic lever, Marketing will have more power, more flexibility, and a stronger voice. If the CFO sees marketing as a cost center, expect to be fighting against budget cuts rather than for budget increases.
Steps to take: Find a strong relationship with a finance counterpart, bring them into your planning and budgeting process, and discuss how marketing performance will be judged. Hint: finance likes predictability, to setting expectations of what success looks like is important.
Overall, companies who excel in each of these four areas are expecting budget increases, significant revenue growth, and are highly confident in their return on marketing investment.
In short, these successful marketing organizations are embracing Marketing Performance Management. They know marketing must look at their organization more like a business, and no longer a function. It’s time to make every dollar count to maximize your team’s performance, and prove your impact.
James Thomas is the CMO of Allocadia, the leader in Marketing Performance Management software, managing over $20B in marketing spend to-date. He is hyper-focused on achieving Allocadia’s aggressive growth targets through developing and executing customer-focused marketing strategies. As an experienced marketing executive and former customer, James has a unique understanding of how to help CMOs solve key challenges in Marketing Performance Management.
James brings more than a decade of experience leading enterprise marketing teams in product management, product marketing, analyst and investor relations, and marketing operations. He led marketing functions at SAP and most recently at Talemetry, a high-growth cloud software company. He is focused on helping marketers gain new insight into marketing performance to make better business decisions.