MPM Benchmark Results for The Best Marketing Performance

The pressure on Marketing organizations to be able to prove their value, impact and contribution to the business continues. CMOs still struggle to quantify and communicate the value Marketing. In the words of Stephen Diorio, an analyst in Forbes CMO Practice, “Marketing faces a performance credibility gap.” In fact, a survey conducted by the Fournaise Group discovered that 80% of CEOs freely admit that they do not trust or are not very impressed with marketers and the work they accomplish.

Recently Hive9, Valid USA, and VisionEdge Marketing conducted the 16th annual Marketing Performance Benchmark study. Still only 1 in 4 Marketing organizations continue to earn high-marks from the C-Suite for their ability to measure and report on their contribution, value and impact to the business. The research confirms that this group of elite Marketers, designated Value Creators, improve business results, have more influence over business decisions, and more credibility than their counterparts. The Value Creators budgets, tools and data are not statically different and neither is type of industry and size.

Content Summary

Introduction
Generous Helpings of Business Acumen
Metrics Chains as a Binding Agent
Serve Up Quantifiable Performance Targets
Extremely Palate Pleasing Dashboards
Customer Rich Data That is Relevant
Top Notch Marketing Ops
In Summary

Introduction

What distinguishes excellence among Marketing organizations? In many instances, it is a subtle difference. Take the restaurant industry, for example. We all eat out. What enables one restaurant to be singled out for its excellence over another? Typically, there are many factors. In fact, there are entities dedicated to teasing out excellence among restaurants, such as the Michelin Guide and Zagat’s. In the restaurant world Zagat ratings range from 1 to 5, where 4.6-5.0 reflects extraordinary to perfection and 1.0-2.0 reflects poor to fair. Zagat scores are awarded based on criteria such as meal selection, interior design, and quality of service. No matter how beautiful the environment and superior the service, if the food doesn’t measure up, the restaurant won’t achieve excellent results. Food is table stakes. In the culinary arts, both science and artistry play a role. The same science can be found in the discipline of Marketing.

To answer this question, we must first determine what is best-in-class. With that in mind, a key aspect of the Marketing Performance Management (MPM) Benchmark research for the past 16 years has been the grade the C-Suite gives Marketing for its ability to measure

Marketing’s value, impact and contribution to the business. Participants rate their Marketing organizations using a 100-point scale, where 100 is the highest achievable score. The scale is 90-100, 80-89, 70-79, and 69 or lower. Those Marketers who receive 90 and higher are rated an A, those 80-89 are rated a B, those 70-79 a C, and those 69 or lower a D. This year as in past findings the percentage of Marketing organizations earning an A remained at 23%, just slightly more than 1 in 5 Marketing groups. The number of Value Creators or Best-in-Class (BIC) Marketing organizations seems to have stalled out while D-rated Marketing organizations continue to climb.

Based on 16 years of consecutive research, VisionEdge Marketing has been able to classify Marketing organizations based on this grade into three primary personas: Value Creators (A’s), Sales Enablers (B’s), and Campaign Producers (C’s and D’s).

This year’s study is particularly important to Marketing and business leaders in light of four recent dynamics:

1. CEOs are under increasing pressure to achieve growth. Research from KPMG suggests that nearly 9 in 10 organizations “expect their CEO to lead the organization on a strategic growth trajectory.”
2. Growth is Marketing’s first mandate. A study by the CMO Council and Deloitte found that “almost 70% of CEOs now expect CMOs to lead revenue growth.’
3. Yet, a Forbes Insight Study revealed that 7 out 10 CEOs believe their company wastes money on Marketing initiatives. CMOs still struggle to quantify and communicate the value Marketing creates which is resulting in a marketing performance credibility gap with their C-Suite and boards.
4. As result, “2016 witnessed the highest level of marketing-leader appointments and turnover,” according to Russell Reynolds Associates. Forrester too predicts storms ahead with CEOs giving 30% of CMOs their marching papers this year. That means that 3 out of 10 marketers are already tagged for pink slips.

So what do the elite marketers, the top 23%, do better and differently to achieve higher-marks from the C-Suite for their ability to measure and report on their contribution to the business? The results suggest that there are six active ingredients employed by the Value Creators are more proficient than their counterparts. This abbreviated report is designed to whet your appetite for the “active ingredients” behind the success of the Value Creators.

Generous Helpings of Business Acumen

The Oxford English Dictionary defines acumen as “the ability to make good judgments and quick decisions.” Business acumen reflects Marketing’s ability to assimilate information from many different sources in order to make good business decisions quickly and to devise appropriate strategies. Value Creators exhibit greater business acumen. Value Creators score 7.1 out of 10 for business acumen; and while still not exceptional, far better than the other two personas.

Business acumen requires understanding and aligning to the business, good data, solid analytics, and the right metrics to exercise good judgment. People perceived to have business acumen are people who perform thoughtful analysis, which entails making connections between and among various data sets. Satisfaction with Marketing’s ability to derive insights from data and improve business and Marketing performance is mediocre at best. Value Creators score better in these areas than their counterparts, but only marginally. Value Creators are better at measuring Marketing’s contribution to achieve business results.

While all the personas use a mix of metrics from across the metrics continuum created by VisionEdge Marketing, the Value Creators demonstrate more confidence and mastery in selecting the right metrics. Metrics that matter to the leadership team.

Metrics Chains as a Binding Agent

There is an almost infinite number of measures and metrics marketers can use today. Knowing which metrics matter and mastery of these metrics are crucial to improving and proving the value of Marketing. It’s imperative to select the right ones and even more important that the ones you select compose a metrics chain. A metrics chain is the sequence of metrics that forms the links between activity, output, operational metrics, and outcome metrics. It seems rather obvious and simple, right? So does making hollandaise sauce. It’s a simple recipe: Beat egg yolks, lemon juice, salt, and cayenne pepper together in a microwave-safe bowl until smooth. Slowly stream melted butter into the egg yolk mixture while whisking to incorporate. Heat in microwave for 15 to 20 seconds; whisk. Yet, those steps require technique and the outcome is all too easy to ruin. The same goes for metrics chains. Yet, for the study population, of the 96 Value Creators, only 58 of the Value Creators use Metrics Chains; only 60 of the 167 Sales Enablers employ Metrics Chains; and only 55 of the 159 Campaign Producers use chains. Since this data is projectable, this means that 41% of all Marketing organizations lack this ingredient.

Value Creators’ are more skilled at crafting metrics chains. Because Value Creators are better at forging the metrics chains, especially when compared to the rest of the pack, they have the critical and often missing link needed to connect Marketing to business results. Metrics chains are a paramount binding agent. Formulate Metrics chains to ensure your mix of metrics work together.

Serve Up Quantifiable Performance Targets

Performance target setting is another distinguishing ingredient of BIC Marketers. A performance target represents a quantifiable commitment to achieve a specific and better quality or level of performance over a specified time frame. It is used to evaluate expected versus achieved levels of performance. Nearly 80% of the Value Creators ensure that most if not all of their Marketing objectives and programs have quantifiable outcome-based performance targets at the outset. Only 52% of Campaign Producers objectives and programs have quantifiable performance-targets before programs commence.

The lack of performance target setting is one of the most common problems encountered on the Marketing Performance journey. Marketers that utilize performance management best practices intelligently set performance targets that are relevant to the organization’s objectives and outcomes. Establish quantifiable outcome-based performance targets for Marketing objectives and programs at the outset.

Extremely Palate Pleasing Dashboards

Accountability encompasses reporting and that’s no exception for Marketing. Marketing organizations have for the most part figured out they need a dashboard. Some Marketing organizations produce custom dashboards; others rely on CRM and Marketing Dashboard Tools. Think of it like cooking from scratch versus using storebought ingredients. Both can produce good results, but have varying degrees of flexibility. But not any kind of dashboard will suffice. What distinguishes the Value Creators’ Marketing dashboards from their colleagues is what the dashboard empowers them to do. The dashboards of the Value Creators are superior compared to their counterparts in three areas:

1. Monitor/measure Marketing objectives aligned to business outcomes
2. Analyze performance of campaigns or other Marketing activities
3. Track Marketing metrics in real-time

The dashboards of Campaign Producers on the other hand fail to do these. They also tend to fall short when it comes to tracking performance of core Marketing strategies and processes, analyzing campaign and activity performance, and communicating Marketing’s Value to the C-Suite. Develop an actionable dashboard that guides your strategy development, helps you mitigate risk, understand what is and isn’t working, and determine whether what Marketing is doing is moving the needle, and if so, how far and how fast.

Customer Rich Data That is Relevant

Selecting metrics, deriving insights, and measuring performance all take data and analytics capabilities. Despite the recent emphasis on data in Marketing, many marketers continue to struggle with using data, especially to make course adjustments, strategic decisions, and improve efficiency. A third of all Marketing organizations need to improve their ability to use data.

Even the Value Creators have a long road ahead when it comes to using data. Even so, Value Creators are more adept than their counterparts in using data to support strategic decisions. Only a quarter of Sales Enablers are good at using data to make strategic decisions and just a little over 10% of Campaign Producers can deliver on this skill.

Data is only meaningful if it is relevant and can be used to facilitate business decisions. While all of the personas need to work on making their data more relevant; Value Creators are better than their colleagues at providing data the C-Suite can use to make decisions. There is a strong relationship between the relevancy of Marketing’s data and the usage of this data to make decisions. Until Marketing’s data is more relevant and business leaders use the data to make decisions, it will be difficult for Marketing to earn a seat at the table.

Top Notch Marketing Ops

Knowing these indispensable ingredients used by the Value Creators is one thing; knowing how they apply them is another. Organizational development experts suggest that the difference between good and excellent is action.

Value Creators apply action quite differently. These differences become apparent when you peel back the layers of the Marketing Operations organization. The Marketing Operations (Marketing Ops) function integrates processes, technology and metrics to help run the Marketing organization as a fully-accountable business.

The breadth of the function distinguishes the Marketing Ops of the Value Creators from the other two personas. The study finds that Marketing Ops among Value Creators have double the responsibilities of the Sales Enablers.

There is a 40% performance gap or greater between the Marketing Ops of Value Creators and the function within the rest of the pack in 5 areas (in order of greatest gap):

1. Strategic Planning
2. Campaign Analysis and Reporting
3. Analytics and Predictive Modeling
4. Benchmarking
5. MPM Measurement and Reporting

For best-in-class organizations, Marketing Operations serves to facilitate the planning, performance management, resource management, systems/tools and workflow to support the entire customer experience. Marketing Operations focuses on how Marketing should support the business. How? It develops and implements the processes, systems, tools, and skills necessary to link Marketing to business outcomes. It also tracks and reports results, and suggests improvement.

In short, Marketing Operations helps run the Marketing function as a fully-accountable business by building the processes and managing the systems needed to implement MPM. Adding dedicated Marketing Operations resources helps improve the effectiveness and efficiency of Marketing.

In Summary

Each year we’ve conducted this study, we’ve tried to understand the business value of the Value Creators. As in previous years, once again Value Creators come out on top when it comes to their impact on key business results such as revenue growth, customer retention and generating new opportunities.

While the investment of becoming a Value Creator pays off for the business, there are also two payoffs for marketers. First, if you want a seat at the table strive to be a Value Creator. Value Creators exert more influence over business decisions. Second, influence comes when you have credibility. If your credibility matters take the steps to become a Value Creator. The overall credibility of Marketing organizations is a disappointing 6.25 out of 10 on average. Value Creators on the other hand, earn a 7.1.

Subtle nuances distinguish the good from the great for what might appear to be very equivalent Marketing organizations. For those who aspire to be great, invest your time, talent, and treasure in these six specific competencies:

1. Business acumen
2. Metrics chains for alignment
3. Performance target setting
4. Actionable dashboards
5. Data relevancy
6. Marketing Operations

We encourage you to take action Now. Why, it’s getting hotter in the kitchen by the minute! 68% of this year’s respondents indicated that the pressure for Marketing to be able to prove its value, contribution and impact is on the rise.

Source: Hive9