Marketing has traditionally been seen as a cost center rather than a revenue-generating function, which has led to CMOs having to justify investments and keep costs in check. This is happening even more now, as CMOs seek to restore their postpandemic marketing budgets.
To position marketing as a value creator, strategies need to be informed by data and the use of consistent measurement frameworks. This prevents the cherry-picking of results, helps connect activities to the business and therefore helps articulate value to others.
However, calculating how marketing creates value can be elusive when trying to make a direct connection between a marketing activity (such as a digital campaign) and a business outcome (such as a sale). To show value, it’s imperative to deliver marketing metrics based on the roles and decisions supported — from the CEO, who needs to know about business outcomes, to campaign managers and analysts, who leverage granular metrics to optimize marketing tactics. Establishing a clear hierarchy of marketing metrics ensures the right people see the right measures at the right time — and are using those metrics for the right purpose.
If ROI cannot be easily measured, CMOs must frame marketing activities by the value they will deliver to business objectives. The key performance metrics for a demand generation program, for example, are more leads, higher-quality leads and an increase in funnel velocity. The value of these metrics collectively can be measured as return on objectives (ROO). ROO is an alternative way of measuring value when marketers are unable to show the return on investment (ROI) either directly or indirectly.
Using the right KPIs with the right people also helps drive more confident decision making, making it easier to evaluate activities, understand when and where to shift direction, and respond to new changes and challenges.