Marketing budgets are not a private affair. With internal stakeholders often requiring daily insights to understand where to spend their next dollar (and the impact to-date of that spend), sharing and reporting are integral parts of daily marketing budget operations.
Far too often, the onus to deliver effective reports falls on a single team member. This person spends considerable time compiling disparate budgets and plans across multiple spreadsheets (or one monster spreadsheet), and then attempts to conduct meaningful analysis based on partial and unreliable data. In this environment, how could a marketing team report efficiently and accurately on marketing budgets by team member, region, or business unit?
If you struggle to acquire accurate spend insights, you’re definitely not alone. In a recent industry benchmarking study, the majority of respondents reported no common tools were used for budgeting and planning in their organizations.
Source: Allocadia 2017 Marketing Performance Management Maturity Study
In contrast, high-growth organizations (those expecting 25% revenue growth or more) were found to use Marketing Performance Management software 3.5 times more often than those with stalled or negative growth. High-growth organizations have addressed the problem of chaotic, disparate budgeting and planning data, and understand the value of connecting their CRM and ERP systems with a cloud-based marketing planning and budget tool. Doing so creates a single source of truth for marketing teams.
In 'Measuring Isn't Managing: The New Rules of Marketing Performance Orchestration', Forrester Research recommends all organizations invest in an MPM tool. “Rather than viewing any of these tools as another addition to the stack, consider a Marketing Performance Management tool as a required layer of management that connects marketing technology applications.”
Companies can expect 3 benefits to having a single source of truth for marketing:
1. The CMO can improve their confidence
CMOs of global marketing organizations are accountable for managing millions of marketing dollars, tracking investments, recording spend and analyzing ROI.
Traditionally, CMOs have attempted to manage their spend in spreadsheets, often distributed across global teams and relying on guesswork and assumptions. Because of this, they’ve faced a lack of trust by their counterparts in Finance and on the executive team.
Given the increasing level of responsibility for marketers to demonstrate stewardship over their investment and report on its intended impact, it’s no surprise that the best marketing leaders are moving their budgets out of spreadsheets and into a cloud-based platform. Doing so ties real investment data to real return data, allowing a CMO to report–with confidence–how they are managing their spend.
2. Collect metrics that matter to performance
Three types of metrics matter in the quest to understand marketing performance:
- Quantitative metrics: To show this, you’ll need to compare planned investment amounts with actual dollars spent (over/under).
- Qualitative metrics: It’s critical to demonstrate that your investments are aligned to top-level business priorities.
One way to achieve this is to tag each of your marketing activities in relation to company-wide strategic objectives (for example, new logo acquisition or cross-sell). Qualitative metrics also come in handy in specific situations. For example, a new competitor might emerge in your industry. Are you spending enough on market intelligence this quarter? For a query like this, you’ll need to report on marketing spend according to activity type, strategic objective or program family.
- Revenue Impact: This is the most elusive question for many marketers: “What is the return on our investment?” Getting an answer requires linking marketing investments to returns.
3. Create a culture of accountability
The discipline of Marketing Performance Management comes with a culture shift, from chaos and mistrust to alignment and accountability. There are three common steps to achieving this kind of culture:
- Marketers in high-growth environments are no strangers to tough questions from the CMO and C-suite, especially when it comes to marketing budgets and ROI. Proactively provide insight into planned vs. actual marketing spend, either with dashboards or reports to demonstrate Marketing as a strategic, data-driven department to foster a culture of accountability.
- Identify from the start how Marketing is spending against corporate objectives so you have data at your fingertips when answering questions about return on marketing investment (ROMI).
- Communicate “the why” behind marketing programs. Not only will this inquisitive, analytical mind-set increase accountability, but it can also solidify buy-in. Demonstrating that you’ve been able to gather data in support of your decisions will quickly show your stewardship of marketing results, and boost your credibility in the process.
Implementing an internal system of record is no longer a question of why, but when. For modern marketers, the time is now. With a single source of truth for your plans, investments and results, Marketing can step onto centre stage and prove their business impact with hard facts and reliable data.