CMO budgets are decreasing, as marketers struggle with fiscal maturity, according to Gartner. With greater scrutiny over their investment than ever before, CMOs have to understand what is working, what is not, and where to spend their next dollar to continue to optimize their impact on the business. Enter Marketing Performance Management (MPM).
What is Marketing Performance Management?
MPM is a combination of processes, technologies, and actions used by marketing organizations to plan marketing activities, evaluate results against established goals, and make more impactful decisions.
However, today, only 21% of companies have the capability to fully understand Marketing’s contribution to revenue, according to Allocadia’s 2017 Marketing Performance Maturity Benchmark Study. This research dug deep into the problem in qualitative conversations with leading CMOs as well as a broad quantitative survey.
Four Success Factors of High-Performing Marketers
Overall, while the industry still has much work to do to improve the adoption and maturity of MPM, there are leading organizations who are setting a standard for their peers.
We found a number of shared success factors for these high-performing marketers:
- A strong focus on core operational data; investments, returns, and strategic views of data such as ROI.
- Consistent use of technologies globally, and integration between all parts of their tech stack.
- Meticulously clean data sources.
- Measurement that proves their value to the business and its goals.
The study also uncovered seven key mistakes organizations are making as it relates to MPM:
- Severely outdated technology – Sales teams rely on the innovation of modern CRM systems. Finance has been managed by ERP systems for years. However, the 80% of organizations are still using Excel in some way to track Marketing’s impact on the business. Our study found that 47% of organizations are not using any purpose-built technology at all when it comes to planning or investment management (core activities of Marketing Performance Management).In contrast, high-growth organizations leverage Marketing Performance Management software 3.5X more often than those with flat or negative growth.
- Marketing measurements that are simply not actionable – Our study found that only 6% of marketers feel that their measurements help determine the next best marketing action. That leaves 94% of those in our study without prescriptive guidance on where to spend their limited budget and resources.The attributes of MPM sharply contrast to those of marketing measurement. If B2B marketing measurement represents what a driver sees in a car’s rearview mirror, then MPM serves as the headlights and the steering wheel of the car itself that improve both visibility and control for the driver. Allison Snow, Senior Research Analyst, Forrester
- Misalignment between Marketing and the business – Companies expecting more than 25% revenue growth are twice as likely to have CMO-level reports showing Marketing’s contribution to the business. These high-growth businesses are nearly 2.5X more likely than underperforming organizations to see both marketing and sales data always or often aligned to the company’s overall objectives. That means leaders in MPM have revenue functions of the business working in lock-step with company objectives.
- CFO and CMO relationship troubles – The best organizations in our study were 3X more likely to align the functions of Marketing and Finance. However, only 14% of marketing organizations overall saw Finance as a trusted strategic partner, and 28% either have no relationship with finance or speak only when forced to. This is immensely dangerous as Marketing works to secure appropriate budgets, and it limits the perception of Marketing as a strategic part of the business. The trust of a CFO is critical to today’s CMOs.In contrast to low-performers, our study found that high-growth organizations work with Finance to track investments and measurements (57% compared to 20% of companies with flat/negative growth). They are also more apt to align with Finance on the measurements of budgets and returns (61% compared to only 27% of companies experiencing flat or negative growth.)
- Poor investment, budgeting, and planning data quality – Data quality (related to investments, budgets, and planning) is a common challenge among organizations, which limits reporting and the ability to make better marketing decisions.Only 8% of organizations have marketing, sales and finance data in one data warehouse that acts as a “single source of truth.” and only 28% feel marketing’s data is accounted for and well formatted (this includes that initial 8%).
- Lack of visibility into baseline metrics – Only 50% of organizations report having full visibility, or better, into baseline marketing metrics. 13% of those reported that they don’t even know where all their data lives and can’t run any reports. Ouch.
- Inconsistent use of MarTech – Companies who consistently integrate technology across their entire marketing organization are 5X as likely to see 25%+ revenue growth than those with flat or negative growth (57% vs. 13%).What’s more, consistent use of marketing technology (e.g. the same marketing automation platform rather than three different vendors across the organization) makes a difference. About 60% of companies who expect budget increases over 10% report their use of marketing technology across the organizations to be always or often consistent, compared to 36% of those with flat to negative growth.Finally, 70% of companies that expect revenue increases have good or excellent clarity of their marketing technology roadmap, versus 27% of those with flat to negative growth expectations.
MPM Matters To Every CMO
Marketing must now look at their organization more like a business, not simply a function. They must make every dollar count to maximize their team’s performance and prove their impact.
CEOs expect that CMOs can easily analyze exactly how marketing is contributing to the bottom line. When CMOs have access to data, everything changes. Looker CMO Jen Grant, in a recent interview with CMO.com