In the past, marketers might point to a series of funny TV commercials as a big accomplishment; today they might celebrate 10,000 likes on Facebook. In either case, CEOs and CFOs are increasingly likely to react: “so what?!”
In my conversations with Fortune 500 executives, they reveal their expectations of marketing are changing rapidly and forever, and focusing more on this: “what’s my financial return on my marketing investment?”
Here are 8 essential tips on this topics – and what you need to do:
1. The Rise of Fiscally-Minded CEOs
There’s an increasing emphasis on marketing ROI because CEOs and CFOs are making it increasingly important. That’s because today’s business leaders differ from those of yesterday because they’re increasingly fiscally oriented. Today’s typical Fortune 500 CEOs come from finance or operations backgrounds, and thus they think and act around finances – and focus on ROI.
2. Deliver What CEOs Want
When speaking with CEOs, the most common complaint I hear is that marketers typically doesn’t think, act, and report through the lens of what keeps CEOs up at night: the financial bottom line. The five or six key health metrics of any business don’t vary much over time or from industry to industry. And the primary metric is profit and less. Marketing needs to focus on delivering what CEOs want: the financial bottom line.
3. Less Tactical, More Financial
A mistake that marketing makes is spending excessive time and energy reporting on tactical outcome such as social engagement and click-through rates. Again, this is not what keeps CEOs up at night. Take a manufacturing example: a widget plant might trumpet that it’s producing widgets 1 second faster per unit. The CEO will want to know – does that make us more profitable? It’s the same in marketing: how does 10,000 likes on Facebook affect the financial bottom line?
4. A Universal Business Metric
When an executive does a scorecard for various business departments, it doesn’t change much from unit to unit. It focuses on all-around financials. Therefore marketing needs to report with those same metrics, rather than using a plethora of other metrics to try to persuade executives that they’re performing. Keep it easy, make it simple: report the same way other business departments do. And when you’re reconciling your financials the CEO or CFO, it needs to be to the penny.
5. Technology Solves Everything
Another growing issue for marketing is C Suite’s increasing belief that technology can solve everything. Because there are computers, technology tools, and big data, we can track everything. If marketing doesn’t provide ROI, the department is increasingly likely to be asked “What do you mean, you can’t measure marketing?” Blank stare, unhappy CEO. Happily, new software technology facilitates this process.
6. Partner with CEO and CFO
To better report on your ROI, it’s essential to partner with those who are consuming your reports: the CEO, CFO and others. Discuss their requirements and expectations for measuring, monitoring, and reporting ROI. Assess what’s possible – and identify where there are gaps. Also find out whether there’s information that you can report, but they don’t want or care about.
7. Partner with Data Owners
You’ll need to consider whose input is needed from departments outside of marketing. This could be finance, the executive office, and other data owners, which may or may not be in IT. Ensure you have access to the data, that the information is hygienic, and that you’re collating it into your ROI reporting.
8. Close the Gaps
After you’ve identified any gaps, educate your executives about shortcomings to manage their expectations. At this point, you’re on the same team, and you have choices to make together. Then outline action steps needed to close those gaps. This could include improving technology, systems, data management, collections, and more.
Going back to the manufacturing analogy, manufacturing today is highly automated. At any moment, it can report how many widgets have been built, shipped, are defective, etc. While this wasn’t possible just a few decades ago, manufacturing has embraced information technology and standardized its performance. It’s now possible to measure performance in real time, in real financial terms.
Marketing is catching up. In the coming years, it will be standard operating procedure that an executive – at any time – can ask “what’s marketing’s financial contribution to the enterprise bottom line, to the penny, year to date?” And marketing will be expected to answer that question instantly. The wiser marketer will begin that evolution today.