When marketing is considered a cost centre, we end up having to fight to keep our budgets intact. But if we can link our activity to the outcomes the business cares most about, we’ll be able to demonstrate the value marketing has for the organisation and justify continued investment.
In order to do this, we need to move beyond what’s easy to measure and start measuring what really matters. This often means using the language of finance. Developing your commercial understanding and financial intelligence as a marketer is one of the best things you can do.
When you build this link and start to see performance in the wider context of the business it can be incredibly motivating for the whole marketing team. It can energise them to do their best work and show them that their activity has a real contribution to the health of the business.
In addition to demonstrating the value of marketing in financial terms, linking marketing to business outcomes can help with decision making, prioritisation and resource allocation. Once you see clearly which activities are driving the best results, you can double down on those and stop doing things which aren’t as successful.
So how can you get started?
Break down your objectives
There are three levels of goals or objectives that we speak to clients about – business goals, marketing objectives and channel objectives.
Clarify your business goals
Business goals often set a direction of travel for an organisation over the next one to three years. These might include:
- Increasing revenue through increased sales or higher average transaction values
- Maximising profitability through operational efficiencies and cost reductions
- Raising brand awareness or positioning the organisation in a certain way
- Increasing market share against a competitor set
- Expanding into new markets or new customer bases or diversifying with new products
- Driving customer retention and loyalty to increase customer lifetime value
- Developing innovations in products or services
- Forming strategic partnerships to access new markets, technologies or resources
- Reducing price sensitivity among a customer base
It’s quite a broad list and while marketing might not be directly responsible for every business goal, it can influence most of the things an organisation wants to achieve. Especially if you’re able to bring the customer’s perspective into these wider conversations.
Translate them into marketing objectives
It’s the marketing team’s job to translate those wider business goals into marketing objectives. We need to say how we will help the business achieve them. For example:
- To increase revenue, marketing can attract new customers from a target segment with a lead generation campaign and a nurture strategy to prime the sales conversation
- To raise brand awareness, marketing might run an advertising campaign or position the company as an industry thought leader through partnerships, events and high-quality content
- To influence retention and loyalty, marketing can deploy marketing automation and quality content or experiences to engage customers online or in person and improve their brand experience
Specify channel objectives
When we work with clients, we take their marketing objectives and further define the channel strategy that will be most effective at helping them achieve their desired outcomes. The channel objectives may set out a long-term shift or they may be specific and tactical for a shorter campaign.
For organic activity, we’ll be looking at things like increasing organic visibility, organic traffic, returning visitors, content downloads, backlinks, press coverage, social media engagement, organic leads or sales.
For paid activity, we’ll be tracking impressions and cost per impression, clicks and cost per click, paid traffic, leads or sales, conversion rates and return on ad spend.
For user experience activity, we’ll be looking at conversions at both the macro and micro level, looking for differences between returning and new customers, measuring form conversions and other CTAs.
Set KPIs, benchmarks and targets
We all know how important it is to set SMART objectives for our activity: specific, measurable, achievable, relevant and time-bound. Stating clearly at the outset what we’ll be measuring means that we’ll know whether we’ve succeeded or not when we get to the end of the year.
Building from the channel strategy, select the KPIs that match what you’re trying to achieve.
But a word of warning: as we move down into channel activity, we can be at risk of reporting vanity metrics – such as followers and likes on social media platforms – because they’re easy to access. To prove the true value of marketing, we need to put in the extra work with our data and insights team as well as with the finance team to identify the metrics that tie back to business goals.
Establish a benchmark for each metric where possible or, if you’re doing or measuring something for the first time, use the activity to get the benchmark. Looking at historical data should help you set targets for your activity, but you can also rely on industry targets if you don’t have your own data.
Taking the time to do this activity before you start your marketing means you can validate that your analytics is set up properly, that you have the right tracking assigned to each channel and that you can see how people move through the purchase journey.
Improve your marketing attribution
This is a hot topic for marketers and for good reason. Without the proper attribution models in place, it will be almost impossible for you to know which activity is driving the most value to the business. There are various models that would require a separate blog piece to explain, but here we can look at the strategic value that marketing attribution provides.
Marketing attribution is about getting a deep understanding of the customer and the wider context of how they interact with your brand as a whole. It’s about looking at your marketing performance in that context so you start to see which channels and what type of interaction impacts their mindset and behaviour.
It’s focused on conversions, but these can be micro-conversions along the way to the macro-conversion of a sale or a lead. You’re looking for the actions that have monetary value to your organisation.
And for the best results, you need to be looking at both online and offline marketing activity. We’re all living hybrid lives where we move fluidly between channels, platforms and devices and our reporting needs to do the same.
Use the data to drive marketing effectiveness
The goal of marketing attribution is to identify the ‘next best action’ that we want customers to take.
Once we have the attribution data, we need to identify the key touchpoints that relate back to the business goals we clarified earlier. We want to look at the customer journey of an audience segment that converts after five touchpoints and asks, ‘how can we get them to convert after four touchpoints?’.
You can then create specific messaging, produce more valuable content or more engaging experiences that will speak to certain audience segments. Then design your channel strategy and user flows that guide people toward the actions we want them to take.
This is data that can change your marketing. It helps you choose what activity to run, what content to create, what channels to use and how often to interact. It’s incredibly powerful.
Test, learn and improve
Try to develop a test-and-learn ethos within your marketing team and agency partners. Market forces, competitor pressures, customer expectations, technology – things are constantly changing and evolving. Our marketing activity needs to adapt too.
Analyse the data and look for patterns and irregularities. Set out a hypothesis and create a test to validate it. Run the test and collate your findings – looking specifically at how business outcomes are being impacted. Then use the data to modify what you’re doing.
Do this regularly, not just once or twice a year.
Communicate regularly with stakeholders
In trying to prove the value of marketing to the organisation by tying it to business goals, we need to communicate with senior stakeholders on a frequent basis.
Create an easy-to-read, visual marketing dashboard that captures the headline metrics that link to the broader business goals. Work with the finance team to embed your marketing report into their wider business reports. You may find our article exploring building bridges between marketing and finance an encouraging place to start.
And work with the rest of the marketing team to develop and improve a narrative around your impact on the business. When you talk about your activity, link it back to the customer experience and how changing their mindset and behaviour can improve brand perceptions and drive sales.
If you’d like to speak with us about your marketing strategy or how to improve your marketing attribution, we’d love to hear from you. Get in touch today.