MARKETING METRICS AND ANALYTICS - Marketo Engage

M A RK E TING ME TR I C SAN D A NA LY TIC SC H E AT S HEE TH OW TO P ROVE YOU R WORTH WITH M A RKE TING ANALY TIC S

W H AT ’ S I N S I D E3 -- How to Prove Your Worth with Marketing Analytics4 -- Establishing Marketing Accountability5 -- Planning for Marketing ROI6 -- Marketing ROI Management Process7 -- A Framework for Measurement8 -- Revenue Analytics9 -- Marketing Performance Management10 -- Marketing Forecasting11 -- Dashboards12 -- Implementation13 -- Helpful Resources2

H O W T O P R O V E YO U R W O R T HW I T H M A R K E T I N G A N A LY T I C SThe growing imperative for marketers to provetheir worth has arrived—but many firms haveground to make up in this area. Gartner foundthat only 1/3 of CMOs say ROI of total marketing spend is a strategic key performance indicator, and 77% of global B2B marketing decisionmakers cite their use of data and analytics toguide marketing decisions as one of theirdepartment's top five weaknesses, according toForrester.Done right, marketing metrics and analytics canbe a strategic enabler of trust, greater budget,and increased business impact. Today’s CMO isallocating more time and budget than everbefore to understand marketing’s performanceand influence on growth.3

E S TA B L I S H I N G M A R K E T I N G A C C O U N TA B I L I T YAs a first step, marketing must establish a culture of accountability. If marketing leadersinsist that marketing is an art and not a science, then the department will remain isolated from other groups.This shift can be daunting, especially if current performance is unclear. Accountability isa double-edged sword that can reveal either weak performance or good results, so itcan be tempting to eschew accountability to avoid the truth.To get there, marketing must be able to justify their expenditures as investments inrevenue and growth. This process requires top-level buy-in, investment in the rightsystems and tools, and a potential restructuring of marketing incentives and compensation.The journey may not be easy, but the results—regarding peer respect and impact onprofits—are worth it.4

PLANNING FOR MARKETING ROIMarketing metrics are only as valuable as the outcomes they produce; the most importantreports are the ones enabling us to make data-driven decisions and increase profits. It’s important to plan your programs with ROI in mind. You want to measure ROI to find out not only whatworks, but what works better. First, define your objectives and pick measurable metrics tosupport those goals.Next, design your program to be measurable beforehand, with a clear idea of what, when, andhow you will measure KPIs. Most companies do not do this early enough, and they pay for it later.Lastly, focus on the decisions that improve marketing—this means moving past backward-lookingmeasurement to forward-looking execution. By identifying the channels and campaigns with thehighest revenue impact and ROI, you unlock the ability to optimize your resources towards futureimpact.5

MARKE TING ROI MANAGEMENT PRO CES S1Process begins with ROIscenarios early in theplanning cycle to shapeobjectives, strategies,and tactics.BESTASSUMPTIONSROISCENARIOS2AMeasurements areprioritized first andthen planned concurrentto the campaign plans, sotests and variations canbe incorporated toimprove precision.ObjectivesStrategyMEASUREMENTPLANTest Variations2BMeasurements capturelift, diagnose weaknesses,and generate insight toimprove effectiveness.3ROI results guide changesto strategies and tacticsin the next cycle ofmarketing, based onwhich have the higherROI potential.MEASUREMENTSROIMEASUREMENTSHISTORY TO GUIDENEXT CAMPAIGN6TacticalPlanImpact &Contribution

A FRAME WORK FOR MEASUREMENTYour C-Suite doesn’t care about 99% of the metrics that marketers track—but they docare about revenue and profit growth. There are two primary categories of financialmetrics that directly affect revenue and profits:1) RE V E NUE ME TRIC S2) MAR K E T ING P RO G R AMP E R FO R MANC E ME T R IC SMarketing’s impact onThe incremental contribution ofcompany revenue.individual marketing programs,showing how your marketingcampaigns influence sales at everystage of the customer journey.The worst kinds of metrics to use are cost metrics because they frame marketing as acost center. If you only talk about cost and budgets, then others will associate youractivities with cost as well. Instead, focus your outward reporting on how marketinghelps the company generate revenue and outgrow its competitors.7

REVENUEPerhaps the most critical metrics for building marketing’s credibility areA N A LY T I C Sthe metrics that show marketing’s impact on revenue. Start by definingthe stages of the revenue cycle, from awareness to closed business andbeyond. Then collaborate with sales to formally define each stage andthe rules that determine movement between them to create the foundation for a set of revenue metrics.Once the model is in place, you can begin to explore the four keymetrics that matter:1. FLOWNumber of leads that entered each stage in a given period2 . BAL ANCEHow many active prospects are in each pipeline stage3 . CO NVE RSIO NConversion rate from stage to stage4 . VE LO CIT YAverage revenue cycle timeWhen you focus on how marketing impacts sales productivity, you willgain a much more comprehensive view of your activities’ ROI.8

MARKE TING PERFORMANCE MANAGEMENTMeasuring the contribution that a given marketingactivity has on revenue and profits is the holy grail ofmarketing measurement. Some of the key challengesare timing, extraneous variables, and factoring in multiple touches and influencers. But just because it’s harddoesn’t mean it’s impossible.The most common starting point for tracking the resultsof marketing is to assign the entire value (pipeline orrevenue) to the first or last activity that touched a deal.The next step is moving to an unweighted multi-touchmodel, where attribution is spread evenly.Finally, reaching a weighted multi-touch state allows youto accurately credit activities surrounding first touch,lead conversion, opportunity creation, and customerclose.If you’re looking for another way to measure the effectiveness of a new program, consider testing it against awell-formed control group and comparing the results.9

MARKETINGWhen marketing takes responsibility for the early stages ofFORECASTINGthe revenue cycle, they have better visibility into future revenue. Marketing executives can forecast how many new leads,opportunities, and customers marketing will yield in futureperiods because they know how many prospects are in eachrevenue cycle stage—and how likely they are to movethrough each stage over time.Though the details can get quite sophisticated, the methodology for making accurate marketing forecasts is simple inconcept.1Model the stages of the revenue cycle, and then measurehow each lead type moves through the various stages (conversion percentage and velocity).2Get marketing to enter accurate number of new leads foreach type into the system.3Model the flow of current and new leads through the variousstages over time.4Review the results and apply management judgment tofinalize the forecast.10

DASHBOARDSYour marketing campaigns and programs generate a vastamount of data, most of which is not relevant. As you designyour dashboards, you want to determine what is most useful toyou. This action will translate into the right number of metrics—enough for you to understand what is going on inside yourdata, but not so many that you are overwhelmed with marginallyrelevant information. Focus on the metrics that matter most:engagement, pipeline, and revenue.The best dashboards don’t just serve a reporting function. Theyshould also guide how people within your organization think,acting as catalysts for effective decision making. Start by framing your destination, reminding others about what you want toaccomplish so you can align towards that objective. While youdo need to present your numbers, it is more important is toshare what they mean and spell out CTAs to key stakeholders.Remember, the actions you take based on your data mattermore than the actual numbers themselves.11

I M P L E M E N TAT I O NAs with any business transformation, the success of your marketing measurement programdepends on how well you implement it. Thisrequires you to establish the right team, process,and technology.Hiring or designating the right people is only thefirst step. You also need to establish well-definedworkflows for data analysis. Identify who willown each part of the process and formalizetraining to cultivate the specific skills your marketing team needs, and set a feedback loop inplace for performance reviews.Lastly, while Excel spreadsheets and other adhoc tools can do a lot, automated measurementprocesses provide much more definitive,reliable, and timely insight. Automation savestime on information collection and presentation,allowing analysts to focus on gaining insightsand refining future actions towards betterresults.12

HELPFUL RESOURCESInterested in learning more about how to usedata and analytics to guide marketing decisions?Check out the resources below.The Definitive Guide to Marketing Metrics &AnalyticsWebinar: Find Your Pot of Gold with MarketingMetrics that MatterMarketo Marketing Metrics Blog Posts13

Your C Suite doesn't care about 99% of the metrics that marketers track—but they do care about revenue and pro it growth. There are two primary categories of inancial metrics that directly a ect revenue and pro its: The worst kinds of metrics to use are cost metrics because they frame marketing as a cost center.