Why Business Leaders Don't Have a Better Understanding of Marketing ROI?

From The Desk of Drew Dinkelacker

Author: You Can't Lead What You Don't Understand
Host: The Marketing Accelerator Podcast
Facilitator: Marketing Accelerator Round Table
CMO: Two Decades of Fractional Chief Marketing Officer Leadership

The 5 Conundrums of Marketing ROI

Conundrum #1

Elements of marketing such as branding are difficult to measure. 

M&Ms launched in 1941.  Is there anyone in America that does not know what an M&M is, has never tried one or has no access to them?  I’d say that M&Ms have successfully penetrated 99% of the US market.  And yet they’ve spent millions on a slightly humorous and distasteful Superbowl commercial that featured clam flavored M&Ms

Building brand awareness can be a waste of time and can also be an overriding factor in success.

• Which is it for your business?
• Is brand building tied to a key business initiative?

Conundrum #2

Marketing KPI does not accurately reflect progress toward an objective.

Your social metrics are up 13% over last month…Great!  Well maybe? What is the benchmark?  Where should it be?  Where do you need it to be in order to be considered impactful? 

Often, marketing KPIs simply show the status of a tactic for a selected period of time. 

• Are the stats that marketing tracks measuring something meaningful?
• Are they future indicators?
• Are they distractions that should simply be ignored otherwise known as Vanity Metrics?

Conundrum #3

Lack of alignment between the business goal and the marketing effort. 

I’ve reviewed and consulted with many business leaders over the last 25 years of marketing consulting. Does this sound familiar?

Business Leadership sets an annual revenue goal with a projected 5-15 % increase over the previous year. This increase may be broken down by product or channel. Marketing is given 1-15% of that projected revenue to achieve the revenue goal.

Punt to Marketing to figure out the rest. 

Punt to sales to do the leg work.  

This common scenario creates a situation where marketing, sales and leadership are all rowing in different directions trying to achieve the same revenue goal.  For example, marketing may be delivering MQLs (marketing qualified leads) that sales don’t want or are not their priority.

There is a middle ground between business and marketing leadership.  These are the agreed upon objectives that are essential to achieving the revenue goal.  Without objectives, it is like you are trying to build a brick wall without mortar. The objectives and strategies are the mortar that tie the daily, weekly and quarterly efforts together to achieve the overall goal. Without clear objectives, your wall will be unstable and quickly tumble after only are few layers and lead to Conundrum #2.

 "There is more to fear from internal inefficiencies than external competition." 

From You Can't Lead What You Don't Understand by Drew Dinkelacker

Conundrum #4

Marketing system, reporting or CRM does not provide meaningful data or analysis. 

The marketplace is dynamic.  It is in a state of constant change.  We rely on our systems to deliver meaningful information in order to make timely business decisions.  Often, the systems fail our needs.  This is commonly due to one of two scenarios:

1.  Lack of sophistication of the current marketing, tracking or CRM systems. The process simply cannot deliver the desired data.  In retail scenarios, getting real time tracking of sales at the store or chain level can cost upwards of $10+K a month.  This is essential data for the marketing effort that eats up the budget leaving less for things that have impact.
2. Complications of sophisticated marketing, tracking or CRM systems. For many CRM options, the selected system requires a dedicated person to understand the intricacies of the software in order to set up, execute and extract meaningful data. I’ve found that business leaders choose more sophistication than they need based on a vendor’s promise of how easy the app is to manage...that is an exaggeration that costs time and money.