“What’s the ROI on that?”
If that question makes you panic, you’re not the only one. A startling 65% of marketers don’t have confidence in their ability to measure the impact of their marketing investments.
This is because marketers get distracted in the hunt for that elusive “right” ROI number and miss what’s right in front of them. ROI isn’t a calculation you rush through at the end of a marketing campaign or to wrap up quarter-end reporting. It’s more than a math problem. It’s your North Star.
When ROI is baked into your marketing planning process, marketers are confident where to spend their next dollar to drive the most impact. Here are three tips to master performance-based marketing planning.
Tip 1: Align with Finance on Marketing’s Impact
ROI means a lot of different things to a lot of different people. Your first big hurdle in mastering performance-based marketing planning is to agree with finance what “success” and “return” mean to your organization.
As soon as marketing collaborates with other department stakeholders on metrics, they stop being marketing metrics and become company metrics. After everyone’s agreed on the specific KPIs, then get alignment on which data sets can support these measurements. Now when marketing speaks to their impact, and how they support overall business growth, everyone is on the same page.
Beyond trust in marketing’s data, this move will put your marketing organization in a better place to receive budget increases. 89% of marketing teams with budget increases post-COVID agreed on quarterly budget targets with finance. When marketing’s investment strategy is clearly working to achieve corporate goals, it becomes a clear path from marketing investments to business impact.
Tip 2: Use ROI to Shape Your Marketing Plans
The agreed-upon metrics help keep marketing plans and activities anchored to business objectives. The next step is using those metrics to lay the foundation for your marketing plans.
Your baseline for an ROI target should be established by two sources:
- Industry Benchmarks
Never forget about your peers. Understanding where you fall against industry benchmarks can help affirm your marketing strategy or can indicate where you’re lagging behind.
- Historic Results
You need to know what’s possible before reaching further. Your own historic bests validate previous decisions and can help build a model for future investments.
Once you have a baseline for past success, look ahead to the business goals to map your plan of action. You’ll need to take into account all of your resources – budget, people, and time – to assess what’s realistic and set expectations for ROI. The next step is meeting and exceeding those expectations.
According to Gartner, 73% of CMOs will be focused on existing customers in 2021. But depending on your market, industry, company size, and business goals, how marketers allocate and utilize resources to hit their ROI targets will vary greatly. A B2B marketer will spend less dollars on a customer loyalty program, but will pour their time and people resources into supporting customers. On the other hand, a B2C marketer running a referral program will be spending significantly more of their budget than their time on customer programs.
Perfection is the enemy of progress – don’t get hung up on delivering perfection on your first attempt. Understand what your minimum viable program is and focus your marketing team on delivering that. Then measure and iterate until you achieve perfection.
Tip 3: Meet ROI Expectations with Marketing Operations
When ROI is built into your marketing plans, you can measure against it as you execute. Planned ROI becomes an optimizing metric that will eliminate any nasty surprises at the end of a project and show you when you need to adjust plans.
Ideally your results are improving over time. Trending ROI data can be a significant impact metric to validate if results are heading in the right direction or indicate if activities aren’t hitting their mark. When looking at trends, SiriusDecision advises that it’s most critical to keep a consistent formula for meaningful data.
But you won’t get far with planned ROI unless you have:
- Budget visibility
- Clean data
A strong operational foundation is critical to providing both. To execute on new marketing plans and pivots, you need full visibility into your marketing budget and the flexibility to move funds around as scenarios shift. And clean data will ensure the equations to calculate ROI are trusted.
If there are any gaps between what you need to measure and current capabilities, this needs to be immediately flagged with marketing operations. They can advise on what needs to happen to get your system of measurements ready for the task.
Being asked to report on ROI makes most marketers cringe. By incorporating ROI into your marketing plans, teams are empowered to be proactive about what they’re trying to achieve, with the resources they’ve been given. When marketers embrace ROI as part of their strategy instead of an end-result, they’re confident that every action they take is moving the needle forward.