Are You Rich in Activity Metrics But Poor in Proving Value?

— May 16, 2017

In an environment where the CMO is being asked to prove Marketing’s value every day, what can a CMO do to not merely survive, but to thrive? To survive and thrive, CMOs need to see themselves as champions of growth who can anticipate customers, develop their organizations’ Marketing capabilities, and measure Marketing’s impact on the business in terms that matter to their CEOs, CFOs, and leadership teams.


While surviving CMOs will focus on lead generation, pipeline management, branding, and customer acquisition, the most important ingredient for thriving CMOs is their ability to connect the dots between all Marketing activities and the corresponding investments and business results.


If you’re like most Marketing leaders, you work for CEOs and CFOs whose performance is evaluated based on financial and strategic measures. That means that you’re going to have to support your CEO in their endeavors with the relevant numbers. Research suggests that nearly 9 in 10 organizations “expect their CEO to lead the organization on a strategic growth trajectory.” Market penetration, market expansion, product expansion, diversification, and acquisition are among the most common growth strategies. Four of these strategies – market penetration, market expansion, product/market development, and diversification – all require effective Marketing. So, it is reasonable for your leadership team to expect Marketing to play a primary role in developing and implementing these strategies to support the business’s growth initiatives.


Research published in AdAge at the end of 2016 helped decode today’s five CMO priorities. Two of those priorities fell squarely into the domain of marketing performance management (MPM). The first priority was measurement. However, the study revealed that not just any kind of measurement is sufficient. To be effective, you need to be able to measure Marketing’s impact on the business. The second priority was the need to do a better job of justifying Marketing investments.



AdAge was not alone in shining a light on those CMO priorities. The trend towards more compelling measurements of value was also reflected in a Chief Marketer article that identified six trends for 2017, three of which included some type of measurement: cross-channel measurement, more sophisticated marketing measurement, and real-time attribution. Additionally, a Forbes article predicted that 2017 would be the year Agile Marketing will be taken more seriously. Why? Because “agile marketing results in a measurable improvement in marketing performance.”


Thriving CMOs Know How to Connect the Dots


It is Marketing’s job to connect the dots between the work of Marketing and the business results. Yet far too often Marketing’s metrics measure activity that does not impact the business. How can you change that? Marketers making headway on measuring their value to the business take an outcome-based approach to their metrics. Operating in this fashion allows Marketers to effectively tether their measurement data to key business outcomes. When done well, the links between activities and outcomes form a metrics chain, which enables Marketing to measure value and impact.


Considering that Marketing’s purpose is finding, keeping, and growing the value of customer, the work of Marketing—i.e., marketing activity—should focus on creating customer value. Therefore, every Marketing metric must in some way positively affect customer value. Achieving that objective requires knowing the following:



  1. The value drivers for your organization. Market share is an example of a common value driver that Marketing can influence.
  2. The way customer value is calculated. One of the most accepted methods of calculating customer value is customer lifetime value (CLV), which measures how valuable a particular customer (or customer segment) is to the company over his or her lifetime.
  3. The current customer value.
  4. The desired customer value.
  5. The way Marketing’s contribution will be tied to customer value. This is the most critical step. Once the connection between Marketing and the organization’s business values (such as customer value) are made, you can then choose a means to measure Marketing’s performance within the context of business value.
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Author: Laura Patterson


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