Jim Lenskold, a renowned author and marketing thought leader, and I were recently discussing marketing ROI.
While there is considerable banter regarding various marketing ROI models, predictive analytics, what is right, and what to avoid, we both agreed that far too many CMOs overcomplicate the process. In Jim’s view, “Marketing ROI simply understands making more than you spend.” And to that I say, “Find out how to make more without having to spend as much.”
I get the sense that some marketers are under the impression that marketing ROI is some sort of cover-your-rear-end exercise, i.e., justifying decision after past decision. “I’ll justify my past behaviors, and if you don’t like it, my CYA will end up being ‘see ya’ at my next job.”
This couldn’t be any further from the truth. Marketing ROI tactics need to be employed at the front end to help companies move forward and help drive net new revenue, improve marketing performance management, and provide learning feedback loops for all to think through the next best action and investment required.
I have been seeing an interesting trend over the past few months. It seems as if the conversation regarding enterprise marketing ROI is making it into the C-suite. For some marketers, this is nirvana because they finally have a chance to talk about process, policy, and technology strategies to drive incremental revenue/profit for shareholders. On the other hand, this may scare the heck out of many marketers as they feel this may be used by the C-suite as some sort of management weapon, putting marketers on their justification heels.
For many large businesses ($500 million and up), there has been a movement by the C-suite to hire leaders from outside their organizations, to go figure this enterprise marketing ROI thing out. What a classic move from the top! Get some sort of marketing ROI czar and have them report the answers back up the food chain.
I find this interesting on a few different levels. First, the topic of enterprise marketing ROI is becoming an agenda item for CEOs, which, in turn, makes it an agenda item for the leadership team. For those that know what this means, they also know what they need to do to get moving and to be proactive and prepared.
The second observation is the C-suite is seeking outside consultants or hiring full-time employees from outside the company to try and solve the marketing ROI conundrum. This could very well mean that the leadership has a lack of confidence in its internal resources to deliver on the marketing ROI request, or rather it could mean that the organization is interested in someone with tangible experience that can provide expert counsel on marketing.
The last and most important point is that conducting ROI analysis is a means to the end, not the end itself. It will help all parties to understand what enterprise marketing ROI is, when we need it, who can benefit from it, and how it can ultimately be applied. Once you have an understanding how to use the marketing ROI framework in a positive and productive manner, it provides a very powerful decision framework, allowing markers to make more sound decisions on a daily basis to reach their maximum return.