How Red Hat is Building the Foundation for ROI

June 9, 2017 Sam Melnick

It’s easy to get tangled up in a web of ROI data that promises to solve all marketing woes. However, ROI is a tough beast to wrangle, and few will succeed without a solid underpinning strategy to guide the way. We were fortunate enough to participate in a live case study at SiriusDecisions with Ryan Danner, Director of Global Marketing Planning & Financials at Red Hat. One of the key takeaways from his presentation was that marketers shouldn't just look at ROI as a metric, but also use the investment data to make strategic decisions like:

  • What is an acceptable acquisition cost?
  • Which tactics outperform others in creating new revenue?
  • How should I adjust to better optimize my highest performing assets?
  • If I spend $X on a specific campaign, how much pipeline can I expect to generate?

By figuring out which questions a marketer wants to answer, puts metrics to work for you and not the other way around. 

Core to what we learned about Ryan’s journey at Red Hat is that that they view Investments (the “I” in ROI) as a foundational piece of Return on Investment (ROI). Without effort, data, and organization around where marketing is spending dollars, the marketing organization will never be able to accurately show their contribution to the business. Three other key points we took from Ryan’s presentation are below.

Skills, process, or technology first? 

There are plenty of experts who state that a specific order MUST be followed when prioritizing skilled employees, process or technology. Ryan shared that all three are essential for marketing, but the perfect balance will shift as the organization evolves. At a certain point, the lack of process will become more pressing than acquiring skilled employees, so process must come first. At other times, the technology and process will be solid, but the right people aren’t there so skills become the focus. You need to be able to move fluidly between the three.

For Red Hat specifically, technology-led process was the right decision. This meant Red Hat implemented Allocadia first to create efficiencies and accelerate process. They felt a process without technology would lead to uninspiring results. 

Regardless of the decision Red Hat made, the important takeaway from Ryan is that there isn’t a “right” answer. Instead, leaders must look at the current state of their organization and determine whether skills, process, or technology should lead, and then act.  

 
The value of investment data beyond ROI

Every marketer is interested in ROI measurements. These metrics are a great way to prove marketing’s worth and integral to showing marketers what’s working, what’s not, and what to do about it. 

While the promise of ROI is compelling, in reality it’s not easy to measure. Even once there is data, ROI doesn’t provide a tell all answer. As a result, the end goal of actual ROI measurement can become a distraction. During his presentation, Ryan Danner explained that investment data gained by looking at ROI can be extremely valuable. Red Hat has used investment data to help them answer questions such as:

  • What chips are on the table right now?
  • Where do we have flexibility? 
  • I need to be opportunistic. Can I fit $X into this quarter? 
  • How much confidence do I have in this data? 

 
While they don’t paint a full picture of ROI, the answers to these questions help build a relationship with finance, earn more trust and confidence from leadership, and ultimately allow them to run marketing like a business. 


 


ROI projects can and should offer value before completion

When marketers at large organizations buy new technology or take on projects that will create major change, they expect it to be a long haul before they see value. During his presentation, Ryan emphasized that it doesn’t have to be the case. 
To deliver on this promise, Red Hat made it a core project goal to create incremental value during each phase of the project (like answering some of those core investment data questions), moved quickly through rapid iteration, and focused on enabling the entire organization on the value that could be realized.
 
From our perspective, Red Hat’s ROI project is absolutely looked at as a journey, one that is assessed and reassessed at key junctures. Just because the final result takes time, did not mean that value wasn’t delivered throughout the process of getting there.  

 

 

At Allocadia, we too believe that investments, or the “I”, is foundational to ROI. Customers like Red Hat, Pitney Bowes, and National Instruments are blazing the trail for planning, tracking, and measuring marketing investments in order to tie them back to ROI.  

Previous Article
Death by PowerPoint: Why Most CMOs are Failing to Plan (and Planning to Fail)
Death by PowerPoint: Why Most CMOs are Failing to Plan (and Planning to Fail)

Next Article
The CMO Change Agent
The CMO Change Agent