What marketing metrics do you use to run your business? Are they the same as the metrics you report to your CEO?
Long-gone are the days when the only thing marketing discussed with the CEO was the color of the logo and the size of the advertising budget.
It is not the creatives who will delivering reports to the C-Suite. It is the data scientists and the marketing nerds.
While we all want a shiny real-time marketing dashboard running on a wall of flat screens, let’s consider why the metrics themselves are important.
Which metrics you chose to run your business and to report to your CEO is important because this will determine the size of your budget, the stability of your job and the influence your team will have on the strategy of the organization.
Marketing Metrics Keep Marketing Accountable
I have spoken before about the traps of focusing on tactics and activities instead of results and the perils of not having a well-defined business case. But there is no bigger sin in the corporate world than the marketing budget disaster of handing out budgets based on some percentage of what you had the previous year.
This practice simply eliminates accountability, allows bad behaviors to persist year-after-year, stops the natural pruning of what isn’t working and destroys the chance that new ideas can get funded.
In short, only a business case mentality, the marketing metrics to support it and the budgets required to deliver those results are the only way to keep marketing accountable to the business.
Marketing Metrics In A Social Business
If you get just one metric to present to your CEO, it should marketing return on investment (or “ROMI“).
This calculates the financial return of the company’s investment in all marketing activities. The cost side of the equation must include ALL marketing programs, salaries and expenses. The return side of the equation must show direct marketing contribution to revenue.
Your goal: shoot for any positive number! Every executive knows that marketing activities deliver more than revenue in the period under review.
But ROMI does not show something that may be even more important: is your marketing better than your competition? Just like any business doesn’t just look at its own bottom line. It needs to look at whether it is gaining or losing market share in a growing or declining market. To measure this, you need to evaluate your share of conversations!
That’s how marketing influence grows outside the marketing department and involves the entire company, all employees, customers and the full ecosystem.
The New Marketing Metric: Share of Conversations
Share of conversations is the percentage of time your brand shows up in online conversations.
This number is not just a reflection of how well your marketing is responding to the market in your space. It also shows how well your whole ecosystem is engaging the market in conversations.
Another way to describe it: share of conversations is the relative size of your company’s footprint within the interest graph of your potential market. (Read that again!)
You could argue this is an ethereal, top-of-funnel metric. But I believe that over time, social businesses will look at share of conversations to determine how well marketing is engaging potential customers before they are ready to buy.
And I believe there will be a proven correlation between high share of conversations, high conversions and high ROMI.
The Real-Time Marketing Exchange
Recently, Lattice Engines and former Eloqua and Forrester CMO, Brian Kardin posted on this site about his own real-time marketing dashboard. He predicted that soon we will see more marketing departments adding predictive analytics and data scientists to today’s dashboard capabilities.
This is important because what we call big data today, will pale in comparison to the big data sets in just a few short years. The resulting insights will allow more and better decisions, faster. And the winners will be those who react quickly like traders in the floor of the stock exchange.
The Marketing Metrics Your CEO Wants to See
Earlier this month, Hubspot’s CMO, Mike Volpe, published this cheat sheet on The 6 Marketing Metrics Your CEO Wants To See. Now I have always had great respect for what Mike and his team are doing over at Hubspot.
But this really blew me away. Here is a guy who exemplifies what happens when the nerds are in charge (and I mean that in the best possible way). Follow this cheat sheet to show the CEO you really know what you’re talking about.