Marketing Performance Management is the most important undertaking for marketers today, but the reality is that organizations still have a lot of work to to do before reaching peak performance. Often, it can be a challenge just identifying which areas need improvement, let alone reaching the elusive state of “marketing nirvana.” This is why Allocadia has developed The Essential Framework for Optimizing Marketing Performance, a comprehensive report that gives marketers a clear path and guidelines for improving their team’s capabilities and results.

The Essential Framework for Optimizing Marketing Performance helps marketers understand Marketing Performance and how it can be used to create a stellar marketing department. Within the document you will find key components to help identify the big breakthroughs that lead to improved achievements. Our study also sheds light on the biggest challenges in reaching optimized Marketing Performance.

Most importantly, by putting together this report, Allocadia has defined what the marketing industry is trying to achieve at a macro level.

Our study was led by an award winning IDC analyst who interviewed more than 15 marketers over a five-week period. Additionally, to pull it all together we discussed and debated Marketing Performance with industry analysts and leveraged Allocadia’s 6+ years of experience working with leading enterprise marketing organizations.

When reviewing the responses, three main themes surfaced again and again:

1. Marketing Performance has two main drivers: Marketing Execution and Marketing Performance Management.
2. There is no “opting in” when it comes to Marketing Performance; the marketing organization is always responsible here.
3. It is up to the CMO and their executives to define what success looks like and to create a plan on how to get there—without that, the marketing organization will falter.

The other apparent truth we uncovered was that the best marketers in the world are facing the Marketing Performance challenge head on. They may not be making all the correct decisions, but they are moving in the right direction by taking the actions needed to create high-performing departments.

We decided to make the web version of this report available to everyone so that you and your team can benefit from the findings without submitting your name or email. Read through it to learn the following:

1. An exact definition of Marketing Performance.
2. The 5 maturity stages and which one your department lands in.
3. Specific guidance on how to progress towards optimized Marketing Performance.

The marketing team keeps evolving, with many organizations adding emerging roles like Marketing Technologist or Data Scientist. Ready to meet the newest member of the team? Enter the Marketing Performance Management (MPM) Specialist.

MPM responsibilities like planning, budgeting, performance analysis and reporting, and marketing performance optimization have been part of the marketer’s repertoire for years. What’s new is that leading marketing-driven organizations have started hiring dedicated people to handle these MPM responsibilities.

There isn’t a consistent Marketing Performance Management job title yet, but forward-thinking organizations like Kimberly-Clark, Snapchat and UnitedHealth Group are hiring specifically for marketing budgeting, planning and ROI insights. This hiring trend signals an acknowledgement of the importance of ongoing budgeting, planning and measurement within performance-driven organizations.

At Allocadia, we see a dedicated MPM role evolving into an essential member of the CMO’s core team.

Three Key MPM Talents

From our perspective, there are three main skills critical to any MPM role:

• Technical know-how
• Financial competence
• Data analysis experience

During my tenure at IDC, I began seeing many large organizations hire marketing team members with finance, data analyst or technology backgrounds. In my experience, MPM players don’t come from a traditional marketing communications background.

Don’t get me wrong – there are a few “unicorns” who offer a rare combination of marketing expertise, technical savvy and analytical skills. But finding those individuals is challenging. We’ve found it’s more effective to bring in someone with financial knowledge and analytics experience, and surround that individual with people who know marketing really well or provide in-depth marketing training programs.

Given the different kinds and sources of data associated with analyzing Marketing Performance Management, flexibility and adaptability are also critical skills.

Building Relationships Across the Organization

Those with dedicated MPM responsibilities are powerful allies in building relationships across the organization – especially with the C-suite and finance.

Depending on seniority, the MPM position may or may not report directly to the CMO. The most effective MPM roles are centralized – able to expand across the organization while establishing a center of excellence for planning, budgeting and performance measurement.

The MPM position also helps marketers speak the language of finance and the C-suite, helping marketers confidently answer tough questions about investments and results and communicate marketing’s impact.

The Future of MPM Roles

As adoption grows, look for MPM job opportunities to expand across all industries. More job titles will officially include the Marketing Performance Management moniker, and job descriptions will have more uniformity.

Like the companies that began using marketing automation in the early 90s, companies hiring for MPM roles now are early adopters. Their forward-thinking investment in MPM represents what I believe will become an important and elevated role within the marketing organization. To succeed and have a seat at the proverbial table, CMOs will need to have a dedicated MPM role to support them in running marketing more like a business.

But don’t worry if you’re not there quite yet–you’re not alone. Most organizations are just getting started on their path to performance. A single hire won’t get you there in one day. Start by identifying your biggest pain points and fill those gaps first. Look to leading companies who are paving the way and learn from them.

If you’re mapping out your path to best-in-class marketing performance, we have tips and milestones for you. Read our Essential Framework for Optimizing Marketing Performance.

Where is your organization on the path to marketing performance?

It’s a question many marketers wonder as they try to find the balance between the customer-facing “do” and the strategic planning, investment and measurement “run” sides of marketing.

World-class marketing consultant Matt Heinz joined me for the latest in our #RunMarketing webinar series, Advancing Through the 5 Stages of Marketing Performance.

Read the recap below to learn about the five essential stages, plus get practical advice to advance through each stage to run marketing with more confidence and control.

Stage 1: Static Organization

In a static organization:

1. Marketing leadership doesn’t have buy-in from other C-suite executives or only has a portion of the marketing budget/resources.
2. Metrics are focused on tactics – like number of clicks, page views or press releases in the market.
3. There are a bunch of “random acts of marketing technology.”

Advice to Improve from Stage 1 to 2:

To change the perception that marketing is just the “arts and crafts” department, shift from activity-based reporting to metrics focused on business objectives. Understand the metrics your C-suite cares about – like revenue and sales output — and demonstrate, measure and promote how marketing activity is driving those outcomes.

And when it comes to making any marketing decision, don’t let the tail wag the dog. Have a strategy and define your success measures upfront to make decisions based on real results.

Stage 2: Transitional Organization

In this “awakening” stage, organizations acknowledge their shortcomings:

1. Talent levels are below where they need to be to truly progress.
2. Sales and marketing recognize work needs to be done to improve the relationship, but don’t know what to do about it.
3. Different metrics are needed, but marketers don’t know how to get better data.

Advice to Improve from Stage 2 to 3:

Work with sales to define and agree to a common set of objectives and scorecards. Move to a single budget for marketing and sales technology to make it easier for marketing and sales to pinpoint the tools they truly need.

Realize that perfect is never going to happen. As Mike Tyson famously said, “Everyone has a plan until they get punched in the mouth.” Get feedback from your team and the market, and continually make improvements.

Conduct periodic marketing technology audits to determine any redundant tools. Double-down on valuable tools and identify gaps that might require new investment.

Stage 3: Progressive Organization

As the effects of change starts to kick in and marketing gains respect, a progressive organization has:

1. Clean and usable marketing automation, CRM and marketing investment data.
2. Linked technology, including marketing automation, CRM and marketing performance management tech stacks.
3. Marketing metrics that are aligned to corporate objectives.

Advice to Improve from Stage 3 to 4:

Find areas where you’ll have the biggest impact and focus on those first – like a better data management program.

Invest in strategic and dedicated marketing ops and sales enablement functions to make your teams more productive and efficient – and convert more opportunities into closed deals.

Find ways to demonstrate marketing as a revenue-generating profit center for your organization.

Stage 4: Proactive Organization

In proactive organizations, marketing, sales and finance are strongly aligned because:

1. All three organizations agree on pipeline contribution and ultimately how that turns into revenue.
2. An EDW or business intelligence tool is in place and data is relatively clean.
3. The CRM, marketing automation and marketing performance management tech stack are well entrenched.

Advice to Improve from Stage 4 to 5:

At this higher level, companies map out, segment and integrate messaging across multiple channels for multiple audiences in a complex buyer journey orientation. Marketing takes responsibility for assisting across the entire marketing funnel and measures marketing‘s influence on sales.

Organizations also start to tie marketing team bonuses to sales and revenue metrics – just like CEOs and sales. While it isn‘t a comfortable place, it can have a big impact on where marketers focus.

Stage 5: Optimized Organization

Also known as marketing nirvana, in optimized organizations:

• Marketing and sales have the same objectives, tell the same story, and have systems, tools and processes that integrate their efforts together into one buyer-centric process.
• Metrics are based on the revenue and sales impact of marketing activity.
• Marketers think like entrepreneurs and look at ways to continually drive more revenue and sales with a lower cost.
• Marketers focus on outcomes that mean the most to the organization.
• The CMO spends time as a strategic organizational leader.

4 Key Takeaways to Move Forward

Moving from stage 1 to 5 won‘t happen overnight. Move along the path to marketing performance in a meaningful way by following these takeaways:

• Assess where you are, and plot your path to success.
• Clearly think about the metrics you use to define and communicate success to your organization.
• Develop your martech strategy based not on what‘s new and shiny, but on problems you need to solve.
• Focus on the strategic “run“ side of marketing.

Listen to the full webinar recording to learn more about advancing through the stages of marketing performance maturity.

According to a recent study by Russell Reynolds Associates, CMOs think differently than their C-suite colleagues. Senior marketing executives tend to be more “imaginative,” “unconventional” and “willing to test limits” than CFOs, CEOs, CROs and CIOs.

These traits make CMOs great leaders for transformation and growth initiatives, but may also explain some of the relationship challenges they face when working with their peers. As CMOs continue to gain influence within their organizations, it’s vital to establish alignment amongst the C-Suite on the objectives and corporate vision so the entire organization is moving in unison towards one common goal.

1. Plan and budget strategically to predict revenue performance.

When your CMO sits at the boardroom table, they need to answer tough questions about marketing investments and returns, ROI and impact on revenue. Prepare for these questions by aligning your plan to corporate objectives, allocating actuals to campaigns and measuring the ROI and revenue impact of your marketing initiatives.

Marketing Performance Management technology enables this level of visibility, giving your CMO and your marketing team real-time insights into your marketing performance. Doing so could save valuable time searching for investment data, allowing your team to spend more time planning, optimizing and measuring your marketing performance to drive more revenue.

2. Deliver insight to the CFO into investment plans and forecasts.

We’re used to discussing the often turbulent relationship between Marketing and Sales, but there’s another key department Marketing needs to build a better relationship with–Finance. Marketing’s alliance with Finance and the CFO is just as important as its relationship with Sales.

The CMO’s critical role in the organization means the CFO must see Marketing as a strategic lever rather than a cost center. According to Allocadia’s 2017 Marketing Performance Management Maturity Study, only 14% of marketers see Finance as a strategic trusted advisor and 28% said they have no relationship with Finance or speak to them only when they must.

Source: Allocadia

To build trust with the CFO, begin by aligning your actuals to campaigns and objectives so Finance has a breadcrumb trail to follow marketing spend and the impact of those investments. Next, get on the same page about what success looks like and how Marketing Performance will be judged. Finally, loop Finance into the budgeting and planning process.

Finance values predictability over all else. If they have an understanding of how much and where Marketing is spending, they’ll be more comfortable. By managing your spend according to plan, optimizing your investments and evaluating your results through the same lens, you will inspire confidence from Finance that you’re running the business of marketing.

3. Allow visibility and ensure alignment.

Your CEO’s top priority is providing returns to their shareholders. To do that, they need to acutely understand their industry, set corporate-wide objectives, bring a compelling product to the market and ultimately drive revenue. Marketing can help by:

• Showing the CEO that marketing is driving towards the same end goal by speaking the same language (money).

• Aligning your plan to corporate-wide objectives, providing visibility into Marketing’s investments and demonstrating how Marketing is driving revenue.

• Being transparent about what’s working and what’s not, then adapting when necessary to maximize Marketing’s impact on the top line.

4. Own the conversation about how Marketing is driving revenue.

For the modern marketer, it’s important to demonstrate to the C-suite, in particular the Chief Revenue Officer and Head of Sales, how Marketing is helping to drive revenue. Moving past a conversation that hinges solely on leads and MQLs elevates Marketing’s position in the organization as a revenue source rather than a cost center.

First, provide visibility into your plan and revenue forecast, then make sure to track your progress for revenue generated and/or influenced to date. Accountability and proactive actions will position Marketing as a leader in driving revenue.

Susan Vanin, Director, Global Marketing Operations at Juniper Networks says her marketing team is keenly attuned to its contribution to the business. What helps this team are technologies like Allocadia that enable them to make data-driven decisions to maximize their impact.

5. Connect your systems in the cloud.

Among your CIO’s top concerns is how your organization’s customer and financial data sources, such as CRM and ERP, integrate while maintaining security and privacy protection. As your marketing team grows and your output increases, marketing will have a greater need for an official system of record to help you run the department efficiently and securely.

Allocadia’s research also found that 57% of companies who expected 25% revenue growth or higher ensure consistent technology integrations. Only 13% of companies expecting flat or negative growth report the same. By integrating technologies, such as an MPM software for marketing investments, CRM tool for customer and prospect information, and ERP for business process management, you can connect the dots and develop a complete picture of your marketing spend (both investment and return).

A word of caution however, make sure the vendors you work with have the proper security certifications and partner with the CIO to integrate the essential components of your organization’s technologies and data sources.

When your CMO sits at the boardroom table, they need to answer tough questions from leadership about marketing performance. Winning leadership’s buy-in and sponsorship hinges on being able to speak in their language about the things that matter the most to them. Whether that’s revenue, corporate objectives, data integration, budgeting processes or insight into marketing data, effective communication is key to building confidence and winning their support.

Traditionally, Marketing and Finance departments haven’t had the most obvious partnership. Only 14% of Marketing organizations see Finance as a trusted strategic partner, and 28% either have no relationship with finance or speak only when forced to (source).

But when these two groups open a dialogue, great things can happen that benefit both. In fact, Marketing organizations at high-growth companies are 3X more likely to align with Finance, working together to track investments and measurements of marketing budgets and returns (source).

We put together this graphic to show three of the most important topics that can arise out of a meaningful exchange between the CMO and CFO:

Today, marketing investments are under greater scrutiny than ever, and marketing leaders are held accountable to so much more than ever before. Because of this, the relationship between marketing and finance is critical, not only because finance holds the purse strings, but also because the CFO continues to take on a much more strategic role in the organization.

Finance is responsible for understanding business results (and what results will be). If a CMO seeks credit for their team’s contribution to the organization’s revenue, they must form a strong bond with the CFO, set expectations of what marketing success looks like, and work closely with the CFO to gain trust.

Tips for marketers seeking to improve their relationship with the finance team:

• Bring finance into your planning and budgeting process. Finance values predictability over anything else. If they understand where marketing is going to spend, they’ll be more comfortable. With better trust in your projections, you’ll earn additional space to test and try more.
• Get onto the same page about processes and approaches. Marketing organizations that expect larger revenue growth report significantly better alignment – meaning that measurements of budgets and returns are aligned, and consistent.
• Set expectations of what success looks like, and update as progress is made, or changes happen. Your goal is to recast marketing as a strategic partner, rather than as a cost center.

This post originally appeared in The MPM Factor, the Allocadia Blog.

Like no other time in the history of the marketing profession have we faced a constant need to understand what is working, what is not, and how our actions are driving business impact.

Marketing must now look at their organization more like a business and no longer a function. In short, they must make every dollar count to maximize their team’s performance and prove their impact. This discipline is Marketing Performance Management (MPM).

One key component of MPM is the relationship between marketing and finance.

Where do you sit on the maturity spectrum?

Your relationship with Finance is somewhere on the following spectrum of Marketing Performance Maturity.

Note: This model was created from interviews with successful marketers at a variety of industries and company types.

1. Static: Marketing’s collaboration with finance and sales is practically non-existent.

2. Transitional: Departments have publicly acknowledged a gap. Discussions around better processes and alignment are occurring. Joint execution has not begun.

3. Progressive: A joint project is in flight to connect data from marketing investment, sales results, and marketing results. Groups meet on a regular basis.

4. Proactive: A “golden hand- shake” around pipeline delivered exists between marketing, sales, and finance. The groups often collaborate with an end goal of driving revenue.

5. Optimized: Finance is a trusted strategic partner to marketing and sales. Departments are aligned on market expectations and work to create predictable expenses and revenue.

At this final stage of maturity, “optimized” companies tend to expect budget increases (no surprise given the strong relationship between these two teams) and are more likely to experience strong revenue growth. In our study, 57% of organizations that are expecting 25%+ revenue growth report that Marketing and Finance often or always work well together on investment tracking and measurements. In comparison, only 20% of companies expecting at or negative growth report the same.

That means high-performing Marketing teams are 3X more likely to forge a strong alliance with their Financial colleagues.

Work to be done.

But the study showed only 14% of Marketing organizations today see Finance as a trusted strategic partner.

Marketers have much to gain when they align with the Finance organization, but members of the two departments don’t always know how to work together.

To help, our team created this infographic featuring the top 3 things marketers can do to fix their relationship with finance. We hope you put these practices into place at your organization to break down internal walls, and forge new possibilities with your counterparts in Finance.

Back in 2015, chiefmartec.com reported that 91% of marketers felt they didn’t have a complete or fully utilized tech stack. 91%! A year later, that number dropped to 68%, a solid improvement over the previous year but still not a strong vote of confidence in martech adoption and utilization (data for 2017 is not available).

What’s getting in the way?

I have a strong hunch that it’s not simply the proliferation of technologies, it’s more about our own discipline. Maybe we lack a structured approach to deciding what’s really needed. Yes, it’s noisy out there, but we’re a smart bunch — we just need some ground rules.

If you’re on or leading the marketing operations team at your company, it’s critical that you start with the tech that has the biggest impact on your role. That way you’re properly motivated to actually use what you have. Given your role, you should focus on the #RunMarketing side of the shop over the Do Marketing side.

5 cornerstone pieces of a sound MOps tech stack:

1. Planning and Budgeting – if you fail to plan, you plan to fail

It might be tempting to think that good marketing starts with the question “what creative new campaign can we run this year?”, but we all know this puts the cart before the horse. Everything begins with a clear and transparent view of corporate and marketing objectives, the most prominent one being how much pipeline you’re responsible for. You set clear top-down goals and targets, then you build coherent bottom-up plans that align with objectives and conform to spend parameters. Then you can talk about that creative new campaign.

2. Work Management – organize the people and the assets that drive your programs

With targets and budgets set and campaigns identified, next comes the task of building the assets that will power the campaigns. Most modern companies use a project-oriented approach regardless of whether they do the work in-house or through an agency. A work management system is critical for managing your human and digital resources efficiently.

3. Marketing Automation – execute effectively

Although likely not the only channel you’ll be using for campaign execution, email and digital marketing will play a big part. If you want to save time and effort and keep close tabs on what’s going on, you’ll need an automated system for managing and executing these channels. There are a range of solutions available, depending on the size of your database and the complexity of your campaigns.

4. CRM – Campaign performance and sales cycle management (among other things)

From top-of-funnel marketing efforts to late-stage sales cycle management, you need a CRM system to make sure nothing falls through the cracks. At risk of oversimplifying, you can’t possibly gain the visibility you need into the customer journey from a spreadsheet. Not to mention the fact that no serious sales team can run efficiently without one.

5. Measurement & Analytics – figure out what’s working and what’s not, and where to focus future efforts

With all the other building blocks in place, the final task is to connect the dots between objectives, actions, and results. You’ll need a system that helps you track and measure in real time along the way, not just end of quarter. You’ll need to be able to demonstrate the impact of every dollar spent, revealing which campaigns and activities are working and which ones aren’t. And you’ll need to be able to demonstrate to the CMO and the rest of the C suite how well you executed against plan, stuck to your budget, and drove the pipeline and revenue that you were accountable for, if not more.

These essentials give you everything you need to set your goals and targets, manage your money, people, and assets, do digital marketing, and measure impact and results. If you start here, you’ll serve the CMO office well, establishing the right processes and data points to track the business of marketing. From there, your other technology choices will fill in identified gaps or opportunities, and you’ll be assured of having the fundamentals well covered.

Before you do marketing, you have to run marketing. And after all, that’s your marketing operations mandate.

My company recently teamed up with the folks at Workfront to help you get there. Check out the white paper: Marketing Operations Tech Stack Essentials – Five Growth Agents for Better Marketing Performance and Productivity.

There’s just no way around it: measuring ROI is one of the most challenging — and even mysterious — parts of a marketer’s job. Virtually every marketer needs to do it, but far fewer have it fully figured out.

In a recent webinar entitled Solving the Mystery of ROI, my colleague Jocelyn Brown and I attempted to do a little myth-busting and make ROI just a little less mysterious.

In this post, I’ll dive deeper into some of the most common traps I’ve seen marketers fall into when thinking about marketing ROI measurement.

#1: Attempting to arrive at a single ROI number

The number one misconception that marketers have about measuring marketing ROI is that it’s possible to arrive it just one magic ROI number — a single general-purpose measurement that will be appropriate in every situation.

That’s just not the case. To properly measure performance, marketers need multiple flavors of ROI measurements.

This partial list of different types of marketing ROI measurements illustrates how there’s no such thing as a “one size fits all” number:

• Aggregate ROI
• ROI by channel
• Cost-per metrics
• ROI by campaign
• The overall return on marketing investment (ROMI) for the entire marketing department

We recommend that every marketing organization invest the time in defining a suite of ideal ROI measurements that makes sense for your business over the long term.

#2: Forgetting the “i” in ROI

“Cool, but what did it cost us?”

Another very common trap many marketers fall into when measuring performance is focusing exclusively on the results side of the ROI equation.

This might seem obvious — after all, ROI is a simple equation: results divided by investments.

Yet most marketing organizations spend inordinate amounts of time and dollars on measuring the results side of the equation. And most marketing technologies simply can’t measure anything beyond the results side; they don’t have visibility into the investments side.

Measuring results is a worthy pursuit, but a measurement can’t be called ROI unless you consider costs.

#3: Not aligning with Finance

There are lots of reasons why marketers need to maintain a solid working relationship with their counterparts in Finance. ROI measurement is one of them.

Marketers rely on a strong alignment with the Finance side of the house to ensure their investment data is accurate, properly structured, and delivered in a usable way. After all, finance pros are the keepers of the company’s dollars and cents — the all-important “i” in ROI.

If you’re setting out to measure ROI, enlist the help of Finance early, and ensure to get their buy-in every step of the way. Having ROI numbers that are Finance-backed will go a long way towards building and maintaining marketing’s credibility within the company.

#4: Expecting technology to be a magic fix

No marketer can succeed without the right mix of technologies. In my company’s Marketing Performance Maturity benchmark research, one of the clear drivers of growth we identified was the integration of data across marketing technologies.

Still, it can be tempting to over-rely on these technologies. I’ve seen it happen many times: marketing leaders find themselves needing to prove the effectiveness of the money they’re spending, so they reach for a new technology.

This might seem like a logical approach, but the new technology will probably not be the silver bullet they’re hoping for.

That’s because marketing technologies are interdependent. No single platform does it all. Success of the technology you use to measure ROI depends on whether it can properly integrate with the other tech you use.

BI solutions, marketing attribution software, marketing automation and marketing performance management solutions like Allocadia are all examples of non-magical technologies that hinge on integrations with other marketing systems of record in order to be fully effective.

A typical trio of technologies for effective ROI measurement includes a CRM system (to measure results, such as closed deals), an MPM system in which costs are captured, and a marketing automation system (for customer engagement).

Summing up

So, not to fear! ROI measurement isn’t simple, but it definitely is a goal well worth pursuing.