Five or six years ago I was frequently asked the question “What is the one key metric to track the impact of our marketing investment?” Without even breaching the open-ended topic of what is ROI, I typically responded with my own question of “Do you even know how much you’re spending on marketing, let alone what the return is?” In most cases the response would be a simple “no”. After working with 100s of companies on analyzing their investment as well as seeing the progress that marketing operations and marketing finance people have made, I can comfortably say that as an industry we have matured significantly in our ability to track marketing investment . . . at least at a high level. (e.g., Marketing Budget Ratio (mktg. spend/revenue), Program-to-People KPI, etc.) I consider these to be operational metrics as opposed to execution metrics. (refer to past posts for more details re: execution metrics)
Greater sophistication in investment management, which is enabled by better processes and greater availability of MRM applications, may include tracking marketing investment along one or more of the following criteria: (to name a few)
- Customer size (e.g., named accounts, enterprise, large, medium, small, consumer);
- Product and/or solution;
- Existing, more mature business areas or product lines vs. newer, higher growth business areas or product lines; and/or
- Low growth vs. high growth regions and/or countries.
About 60% to 70% of technology companies manage their marketing investment along one or more of these areas. [IDC CMO Advisory Practice Tech Mktg. Benchmarks Database] For example:
- tech companies invest on average 60% of their marketing budget on existing, more mature business areas or product lines with the remaining budget allocated to newer, higher growth business areas or product lines; and
- tech companies invest on average 52% of their marketing budget to low growth regions and/or countries with the remainder to high growth areas.
Yes, we’ve made some progress in tracking our marketing investment. This has certainly put us in a better position to manage our investment and improve our credibility with the CEO, CFO and sales peers. But we still have quite a distance to go; especially in making the connection between this investment and the subsequent return. (e.g., increased awareness, greater engagement, increased number of leads, high velocity through the pipeline)