The CMO Screams: Marketing Metrics for the Corner Office!
ADOTAS — Sometimes I think we marketing people are deaf.
When CMOs and top marketing decision-makers speak, what has become their loudest and most common refrain? They want to know which marketing and advertising programs are most effective. The CEO and the CFO are nagging endlessly about cutting the marketing budget without killing sales, and the CMO is squirming in his seat.
What do we in the marketing and advertising industry offer him? We give him clicks and calls and impressions and open rates and survey results. No wonder the poor guy sits there with that pinched look on his face. It’s like a customer who is dying for some chocolate ice cream, and we hand them raspberry because, well, it’s what we’ve got. It’s not our fault. Hey, raspberry is good, right? I mean, we like it.
Well, I say STOP! Just stop. Think about what we’re doing here.
We are becoming our own worst enemy. If we’re an interactive shop, we pitch the CMO interactive ideas. If we’re an advertising agency, all we talk about is advertising. If we do direct mail, then the USPS is the gateway to success. How many times do we see marketers (and even their clients) get caught up in a channel and the metric for that channel? As if that’s all they need to know. As if that alone is enough to keep the top line from collapsing.
It’s time we pull our heads out of the sand — permanently this time. All that CMO cares about (read: bonus is tied to) is sales. All the CEO and CFO and even the client’s shareholders care about is sales (and cutting redundant and overlapping expenses). You can argue until you’re raspberry-red in the face that what your metric measures is a precursor to sales, or builds relationships that result in sales, or softens resistance to sales.
While all that may be true (and probably is, to a degree), the CMO is not impressed. Until you can say, with confidence and a track record of proof, how many dollars of sales come from each dollar of marketing, you are missing the opportunity to make that CMO smile and, more importantly, solidify your place in his budget for years to come.
Your Silo or Mine?
You know what it feels like when you come out of a basement restaurant or bar and it’s still daylight? You blink and blink and realize the world is a big, bright, shiny place. You’d forgotten because you got used to the cave you were in. It’s the same thing that happens to us in marketing. When we sit around all day thinking up super-cool interactive ideas, we tend to be aware only of interactive customers. Well, let me tell you, there ain’t no such thing.
Real-world customers live in a hearty soup of out-of-home ads, email, direct TV, word of mouth, direct mail, radio, viral — everything all mixed together. The last thing they notice before they take action may be any one of these, but without the total effect of the whole communication mash-up, maybe they wouldn’t have taken any action at all.
All of us know this because we’re consumers too. But we forget that everything a customer is exposed to is what builds to the crescendo that actually makes them buy something. We get stuck in our constructed worlds of measuring clicks and calls and impressions and so forth rather than doing the hard work of figuring out how much we really contribute to making that ultimate sale.
Transformer Power: Single Comparable Metric
So how do we get out of this mess? Conceptually, it’s easy (yeah, I know, everything is easy in concept) — we must create a single comparable metric that will show, with proven certainty, how many dollars of sales are generated by each dollar of marketing spend. Think about it. No really, think about it! This will transform what you do and the way you sell it to the CMO. (For more insight, see the iMedia Connection blog, One Metric to Measure Them All, by my colleague Satnam Singh.)
Do I have to spell it out for you? Never mind, I will anyway. Think about these (they are just examples, so don’t get caught up in the actual numbers here):
- 1MM banner impressions … is transformed into a 3.5 Comparable Metric (CM), which means that $3.50 is earned in sales for each $1.00 in marketing spend.
- 35k clicks from an email … is transformed into a 2.1 CM.
- A 2.3MM reach for a radio spot … is transformed into a 1.7 CM.
- A minute-and-a-half viewing time for a viral video … is transformed into a 1.1 CM.
This transformation applies to the entire marketing spectrum. The single comparable metric will give the CEO and CMO exactly what they wanted, and needed, all along. And if the CEO and CMO are happy, then everyone is happy.
Is it risky for you? You bet, but only if what you sell consistently has a CM of less than 1.0, meaning more is spent on your program than it generates in sales. As long as you generate more sales dollars than dollars spent, you’ll almost certainly be welcomed to the party. But before you blast me with hate email, understand that any good CM system must be sophisticated enough to recognize the value contributed by almost every marketing activity.
The larger goal is to find what value your particular expertise really brings, and then monitor and improve it. Because even if you have a low CM, by showing the true value and then learning to improve your growth curve, you’ll still be allowed in the marketing-mix club.
Really, though, we have no choice. The CMO is an 800-pound gorilla who is screaming for chocolate ice cream. So stop plugging your ears, hide that raspberry and start scooping chocolate as fast as you can.
– Express your opinion, comment below.
Reader Comments.
This isn’t new. It’s called ROMI, or return on marketing investment. And you’re right – profit is the only thing that matters in business, so only measurable marketing efforts can win the day.
Unfortunately, it is one thing to talk about it and something quite different to do it. I’ve been fortunate enough to have the backing to implement ROMI reporting at three companies, and in all cases it was a major effort. At large companies it can take years of work to build the infrastructure and process needed to tie spend to results. But if marketers want to reach their full potential there is no workaround.
I would like to hear more on this topic, including case studies and discussion of the challenges others have encountered and solutions others have implemented.
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