A recent Harvard Business Review article called Making the Business Case for Your Marketing Budget hit on a topic that we get asked about all of the time. How do we measure the success and prove the impact of our marketing spend?
The article cited an August 2021 CMO survey where marketing leaders shared an increasing pressure to prove that marketing is creating a real impact. 59% of these CMOs reported increasing pressure from CEOs, and 45% experienced it from CFOs. ROI matters, and like everything else in our businesses, marketing’s influence is under a microscope.
To stop here for a moment, it’s fair for businesses to expect ROI on their marketing spend. In fact, beyond being fair, it’s essential to the growth and prosperity of the organization. Frankly, it’s a must.
Here’s the twist… From that HBR article and the survey, more than 50% of CMOs we surveyed said they faced pressure from non-marketing leaders who “tend to focus on the short-run effect of marketing spending” and are “not patient for the long-run effects of marketing spending.”
Focusing on short-term results without long-term thinking is where things get dangerous, and reality begins to shift. With that in mind, here are some takeaways from this article…
Marketing’s role in the business is to support the company’s goals and future objectives. From the HBR article, we need to be asking, “How does marketing spending marry up with what is most important to the future of the company? What are our strategic goals and how does what we are doing from a marketing perspective get us to that goal?” Creating alignment between all of these areas, from spending to strategy to messaging, creates a strong foundation to build from. As well, it allows you to create a collaborative team of marketing resources that are all working together from the same playbook.
Hypotheses, Experimenting, and Metrics
The HBR article goes deeper into these three categories than we will here, but here’s the Cliff Notes version. Marketing strategies all begin with three things: logic, experience, and data. Combining these three, we create hypotheses on what strategies will drive the best ROI. Being able to articulate these strategies clearly is essential. Then, based on our hypotheses, we use controlled, small-scale experiments to test our strategies. By measuring those results consistently with metrics and data, we can start backing up what’s working and make pivots to change what’s not. This “hypothesize/experiment/measure” model builds confidence.
Know Your Funnel
Creating a non-fuzzy, clear understanding of the marketing funnel is essential. We need to understand the customer journey, from how we’re saying hello to them to how we’re presenting them with an offer… and just as important, how we’re staying connected to them AFTER a sale is made. Knowing your funnel inside-out is key, from awareness-building and filling the top of the funnel to cultivating long-term relationships once a prospect becomes a customer.
It’s An Investment
Your marketing is like putting money into the market… it’s an investment. And, like any sound investment, patience is part of creating a return. That’s right, the P-word… Patience. Too often, when it comes to analyzing marketing success and ROI, we want to see immediate results. Patience isn’t something we want to lean into. However, the reality is that filling the funnel and walking through the customer journey requires time, diligence, and long-term work. That’s why viewing marketing as an investment, backed by patience, is so important.
When all of these areas come together, from focusing on alignment and knowing your funnel to experimenting and leveraging data, you create an environment where you can measure the success and prove the impact of your marketing spend. As much as it is a set of strategies and tools, marketing is a mindset. It needs to include patience, a view of the long game, and seeing your spending as an investment, not just another expense.
Ready for more?
OrangeBall Insights has always been a place to share ideas, explore our purpose and leadership, and chat a little bit about marketing. If this resonated and you’d like to receive weekly ways to bounce higher every day, subscribe here.