How to Report on The Value Marketing Generates
We suspect your CEO, CFO, COO, or president has a cadence for each function to report on performance.
NB: This is an article from VisionEdge Marketing
If this is the case, as the Marketing leader you provide some type of report to help your leadership team understand the value of Marketing. We have found, as a part of our dashboard review process, that many of the dashboards created by Marketing primarily fall into one of these two types (or a combination of them both): activity reports and financial reports.
If your dashboard primarily communicates the work of Marketing and related results (time to delivery, number of campaigns, amount of content created, number of events, click-through rate, number of downloads, event participants) you’re in the realm of Activity reporting. These reports only answer the questions “Was there activity? What kind?” Trust us, your leadership is less concerned about whether Marketing is busy and more concerned with making sure your team is focused on the right things. Activity-oriented reporting only confirms the idea that “as long as I’m producing stuff, I’m doing my job.”
If your dashboard primarily communicates the cost of Marketing (expense to budget, program/headcount, cost/lead, cost/rep, cost per program), you’re in the realm of Financial reporting. Of course, Marketing needs to be accountable for the money it invests. Marketers understand how to budget and manage a budget. Finance-oriented reporting is less about value being created and more about being under budget and finding efficiencies. This type of reporting perpetuates the cycle of “doing more with less.” However, we would posit that this is not a financial management question – it is a question about how to determine value.
From our perspective, determining value is more about performance management and measurement than financial management. The goal of Marketing is to move the needle for the business by finding, keeping and growing the value of customers. It is this path and not the underlying activity that matters. The best dashboard helps your leadership team, your team, and you to quickly determine how to help accelerate achieving the outcomes and the value Marketing is generating for the organization.
What Happens to Marketing When the Focus Shifts to Performance Reporting
To determine the value of your Marketing investment you need both performance measurement and performance management. Performance measurement is what enables you to track the progress of performance to the strategy. Performance management addresses how well you’re managing the strategy you’ve implemented – it is what links strategy to plans and execution. Performance management includes the entire process: from establishing performance targets, to developing and implementing the plan, to reporting performance to the plan and the financial targets. It enables you to act on the performance measurement information.
Performance management improves planning and decision-making, including financial accountability. For Marketing to be successful at performance management, it must strengthen its alignment to the business and truly “run the business” of Marketing’s day-to-day operations. A primary part of alignment includes establishing an agreed-upon set of key performance indicators (KPIs) that define the success of the organization and all of its functions, including Marketing.
The KPIs you select need to be relevant. It’s not possible to measure everything, nor should you want to. The key is to focus on the metrics and KPIs essential for achieving your company’s business strategy. Once you have defined these metrics, accountability to performance beyond the budget can really occur.
This step serves to highlight the data most critical to your business. These metrics and KPIs become the foundation for the Marketing dashboard that reports on Marketing’s value, contribution, impact, and progress against performance targets and reflects potential opportunities and risks.
A performance management dashboard, compared to a dashboard primarily about money and productivity, encourages a richer business conversation about what the data mean, the implications of performance to the business, and what if anything can be done to change or improve the trendline. This level of performance management supports effective decision-making on all fronts, not just financially.
Your Marketing organization must be able to collect, analyze, and derive insights from customer, market, and business data to succeed with performance management. It takes deriving actionable insights from data for all of this to work. It is this aspect of performance management that sets the stage for a more forward-looking organization. Performance management leads to scenario planning, which helps identify opportunities for innovation and growth, as well as potential risks.
How One Small Step Improves Your Reporting
How do you get from an activity or financial report to a performance management report? If you’re primarily producing an activity report, take this one small step. Tie your activity to a result that is relevant to the outcomes. For example, number of appointments scheduled or number of inquiries created and qualified. If you’re primarily producing a financial report, take this step: Connect the funds invested to value created. For example, number of and value of quotes or RFPs generated. At the very least you are moving discussions about the quantity of work and amount of money spent to a discussion about the value created.
Steps such as these will move your reporting closer to performance management as you learn what the work and money produced. This will enable the Marketing organization to move from focusing on budget and productivity to focusing on results and accountability.
Once you’ve made the initial movement to performance management, you can then move on to the next steps necessary to fully tackle performance management:
- Establish a Marketing performance management leader (perhaps someone from the Marketing Operations or Marketing Analytics functions) and a cross-functional team (Marketing, Finance, Sales, Business Unit leaders, etc.).
- Develop a plan to create a performance report and identify incremental milestones.
- Schedule your first meeting to create a plan and begin the alignment process. Alignment is the starting point because it sets the stage for the metrics, KPIs, and data conversation.
Establishing a performance management initiative for your Marketing takes time. We have found that it takes about six months to implement the basic building blocks: alignment, accountability, the data inventory, and first iterations of the dashboard.