There are a lot of things that marketers today could measure. But that doesn’t mean they should be measuring all of these. Marketing metrics should provide insight into how marketing is supporting business objectives and answer key questions from the CEO and sales leaders.
In this month’s virtual panel, we interviewed Authentic Brand Fractional CMOs John Ryan, Tracy Steeno, and Peter Zaballos for advice on how to implement a strategic approach to marketing measurement. The fractional CMOs shared which metrics are most important to track, how data can help build strong relationships between cross-functional teams, and advice on how to add more discipline to marketing measurement.
- With so much data and digital technology now available, there are a lot of metrics that marketers could track. How do businesses determine which marketing they should track?
Peter: To me, this is pretty straightforward. Track the metrics that map directly to how the company generates revenue. So the most important metric for a marketing organization is the revenue plan. Is it being hit or not? Answering that question leads almost directly to understanding the conversion rates of every funnel stage. Staying laser-focused on revenue and conversion rates is really all there is to marketing performance.
Tracy: The highest level goal in most businesses is to grow annual revenue. Therefore, it’s important to capture and report on the most meaningful marketing metrics that ladder up to the revenue goals. In a B2B company, these metrics revolve around the sales pipeline or path to purchase. Both marketing and sales own these metrics.
Some of the most essential B2B metrics include:
- Number of new leads (whether generated organically or through paid campaigns)
- Number of qualified leads
- Number of new deals created
- Number of deals won, expressed as a win rate percentage
- Number of net new customers
- Average net new deal size
- Average deal cycle in days
- Total sales and revenue
The good news is that most, if not all of these metrics, are important to leadership. Marketing should also track the ROI and results of campaigns and key initiatives.
John: My colleagues have provided some excellent feedback. We can invert from the board-level meetings. What are they reviewing in regards to marketing as it relates to revenue? What information can marketing provide to increase the insight around those priorities? We can give metrics to the board and ELT, but what does it mean? How does it affect decisions and investments?
One thing to consider is whether there are too many metrics that look in the rearview mirror. We can balance metrics that demonstrate what we did with metrics that look forward toward the pipeline and planned investments. One thing I believe gets missed is what web analytics, search terms, and general behavior tell us about what’s coming.
- An important aspect of marketing is demonstrating its impact on business objectives and sales. How can marketers use data and reporting to build strategic relationships with the executive team and sales?
Tracy: Keep in mind that executives need to know how the business is tracking against its objectives. Is revenue on-track or off-track? If it’s off-track, what are the plans to course-correct and get it back on plan? For marketing, this means generating the right demand/leads that elicit responses from the intended target market and ultimately result in sales conversions. For sales, they need to know if there’s an ample pipeline of qualified leads so that the sales team can be most efficient and effective at closing business and hitting the revenue objectives.
An executive dashboard is a useful tool to convey the story you’re communicating. Beyond reporting results, bringing leaders into your plan and soliciting feedback generates trust and deeper strategic conversations. That’s where the magic happens.
John: There is usually a lag between a B2B company’s marketing campaign and when the results come in; this natural lag often troubles inexperienced leadership. To be successful in category-leading marketing, you will need resources and time. Not all revenue is the same, and the company should want sustainable revenue. Companies can end up paying too much for sales in the short term and then be underinvested in the long term.
In B2B, connecting marketing activities to your CRM is usually a straightforward approach to tying marketing sourcing and influence to revenue. Revenue doesn’t happen because salespeople are heroes or the marketing creative was breathtaking. That doesn’t scale. Sustainable revenue occurs when a team works together to prove a market fit and help the customer make a good decision.
Peter: Tying into my earlier answer, marketing exists to ensure sales hits their revenue plan. It’s that simple. I always believed that the two most important roles I needed to have the best relationships with were the CRO and CFO. These relationships are built entirely on trust. The business needs to be able to trust the demand generation forecast from marketing, marketing has to trust the data it’s collecting, and finance has to have 100% trust in marketing’s ability to measure demand and the conversion of that demand to revenue. With the cost and complexity of marketing operations and sales operations today, the CFO tends to be the linchpin connecting the two processes (and budgets).
- What practical recommendations do you have for businesses that want to add more rigor and discipline to their tracking and reporting?
John: Measurement rigor is a transformational move that requires a particular culture and investment. CMOs and VPs of marketing must be comfortable measuring the metrics needed for senior-level conversation. But what happens far too often is they get little support and end up having to chase and compute those numbers themselves.
One of the unintended consequences of so much marketing technology is lots of metrics but no narrative. The CFO or COO should agree with the marketing lead that there are 3-5 numbers we need to understand marketing’s contribution. Sure, the head of marketing can track 20 things, but what is relevant to the board? That’s where the CFO or COO can help.
Peter: There absolutely needs to be a shared understanding between marketing, sales, and finance on the definition of the stages that a prospect progresses through during the buyer’s journey to a completed sale (and satisfied customer). It is super critical that these stages are well documented, automated, and shared.
Marketing’s obligation does not end after transitioning a marketing qualified lead (MQL) to a sales qualified lead (SQL) — it extends all the way to revenue. The automation of this process has to have rigor and be trusted. It almost doesn’t matter what the specific metrics are, but everyone agrees on them and trusts the automation.
Tracy: Tracking and reporting are table stakes, but there’s always room for more rigor and discipline around data aligned to the business objectives. Partnering with finance on shared objectives can be helpful when you need to tell a specific marketing story. If you can automate reporting, do so. If you have a common vernacular understood by all, then you’re one step ahead.
There’s a point when there can be too much data to discern, too many reports to compile, and a lack of focus on what matters most. Get crystal clear on what you’re reporting and why. For smaller companies, emphasize what your existing data is telling you and how you can use your data for deeper strategic insights to inform your marketing recommendations (i.e., campaigns) and then report on those.
Need support from a strategic marketer to bring more rigor and discipline to your marketing measurement? Reach out if you’d like to learn how Authentic Brand’s Fractional CMOs partner with growing businesses to build strong marketing teams and programs that regularly report on meaningful marketing metrics.