According to a study performed by the Fournaise Marketing Group in July of 2012, 80 percent of CEOs do not trust marketers and are not impressed by the work done by marketers. In comparison, 91 percent of CEOs do trust their CIOs and CFOs. Ouch! The number one reason given for not trusting marketers is that marketers are too disconnected from the financial realities of the company.
There are two major contributing factors at play.
The first factor is that the C-suite does not understand marketing beyond being on the receiving end of advertising. Only about one in five CEOs has a background in marketing. The leaders who occupy the seats at the leadership table such as the CFO, COO, and CIO rarely have any experience or education in marketing. In many cases, their marketing understanding boils down to how they, as human beings, perceive the marketing they are exposed to. Sadly, in many cases, they like what they like based on their socialization and not because of any practical or analytical reasons. When they like some marketing they are exposed to; they believe it must be good marketing.
The second contributing factor is the marketers themselves and how they present themselves to the leadership and the organization. As marketers, it is our collective fault that most CEOs of manufacturing firms do not understand marketing. If your CEO is a good leader, then he is usually fair and a good listener. He listens to what his head marketer tells him and concludes how the marketing function contributes to the organization. If we, as manufacturing marketers, talk about click-through rates, open rates, downloads, likes, etc., we will not gain respect much less a seat at the leadership table. The language of the C-suite is about moving product, top line, and bottom line.
According to the new way, it is our job to talk to the C-suite about the benefits of the new way. The benefits we discuss must be about the goals and pain points of the executives if the language is to resonate. We must educate the C-suite about marketing in this modern age, where the very people in our target audience, who will one day purchase what we manufacture, are self-educating and making as much as 70 percent of their purchasing decisions before ever contacting our firm. We must educate the C-suite about why we need to help the people in our target audience be better and relieve pain points, even if they never become a customer. We must talk about how TOMA, credibility, and reciprocity combine to grow revenue by taking market share from the competitors.
Use the data from your pilot program to talk about how marketing has contributed to the sales pipeline. Do not, under any circumstances, talk about marketing metrics such as click-through rates, open rates, likes, shares, retweets, etc. Nobody cares about those metrics except marketers. That is not to say they are not important metrics because they are important, but only to marketers. I guarantee if you tell your CEO that you have 70,000 likes on your company Facebook page, he will dismiss that information immediately. However, if you tell him that marketing campaigns contributed to 35 percent of the new sales opportunities in the pipeline this month, he will take notice and may engage in further conversation. If that happens, you have just taken a step toward advancing the marketing function so that it plays a strategic role within your company. Below are some examples of C-suite terms and Marketing Team language to ensure a clear understanding of the value you wish to portray to each of the different groups.
Net Contribution (Netc): This is the best measure of effectiveness. Do not mistake net contribution for an absolute return on marketing investment (ROMI). Netc is a perfect measure of efficiency because it is a percentage based on the gross profit. The trend tells the C-suite how the overall strategy and tactics are driving revenue.
Netc (%) = [(Sales Revenue-COGS) - (Cost of Sales + Marketing)] / [Sales Revenue
Marketing Contribution to New Opportunities: Expressed as a percentage. Again, not an absolute measure, but useful as a month-to-month benchmark. Good for talking points with the executive team. Be ready to explain how you derive the number.
Marketing Contribution to Closed/Won Opportunities: Expressed as a percentage. A significant benchmark that proves marketing is contributing to revenue. Look for trends. Could also be correlated with other specific marketing metrics such as impressions, emails sent, etc. to indicate the general effectiveness of the marketing activities.
Revenue per Marketing Qualified Lead (MQL): Always couch your stakeholder-facing metrics as revenue as compared to cost. Think about how your CEO or CFO perceives the marketing function based on reporting revenue per lead as compared to the cost per lead.
Number of MQLs: The net number of leads passed to sales is, of course, an important measure of success for the marketing strategy and tactics. Be careful about reporting on the funnel points to the C-suite, as they will be more bottom-of-the-funnel (revenue) oriented and may not care about the leads at the top of the funnel. Whether or not you discuss the sales pipeline or sales funnel depends on how marketing-savvy your conversation partner seems to be.
Although I mentioned this earlier, it is worth mentioning again. Never, never talk about “cost per” anything with the leadership team. Using this phrase cements an idea that is likely already in their minds—that marketing is a cost and not a source of revenue. Always, always talk about “revenue per” or “contribution” with the C-suite, with the objective of creating the perception that the marketing function is a source of revenue.
Marketing Team–Only Language
Cost per Click (CPC): This is the best measure to compare any of the myriad marketing digital activities to each other. You should establish a benchmark for an effective ad spend. After a while, you’ll be able to reject marketing activities that do not meet your benchmark and do more of those that meet or exceed your benchmark.
Cost per Thousand Exposures (CPM): This is a good measure to determine reach. As with CPC, you should establish a benchmark for this metric. Cost per click and cost per thousand exposures should be considered together when evaluating the results of activities and determining if you should continue or discontinue certain tactics.
Click-Through Rate (CTR): Another good benchmark for comparing the effectiveness of materials and venues. The CPC, CPM, and CTR together help the marketer make decisions about effectiveness.
Funnel Conversion Metrics: Marketing qualified leads (MQL) to sales accepted leads (SAL) to sales qualified opportunities (SQO) to closed/won opportunities and other relevant conversions are important to allow you to pinpoint problem areas. These metrics are often discussed with the sales team.
Revenue and Cost per Attendee: These are useful specifics for evaluating the effectiveness of events such as trade shows, conferences, or seminars. Be cautious of making binding decisions based only on these metrics. There are likely to be intangibles that should be considered, such as the salesperson’s opportunity to see multiple customers and prospects in a short span of time at a trade show.
Once again, as a rule of thumb, only use the “cost per” metrics within your marketing team to help evaluate the effectiveness of your marketing activities. Never talk “cost per” with the executive team.
- Define your current KPIs or general reporting metrics. Are they mostly “cost per” metrics and marketing metrics that mean nothing to anyone outside of the marketing team? Determine which metrics are being reported to the C-suite. Are these metrics couched in the C-suite language or marketing speak?
- If your metrics are not defined, define them as presented above with one set for C-suite discussions and one set for internal marketing benchmarking. If you are the marketing leader, teach your team how to speak the C-suite language and encourage them to share the C-suite metrics broadly around the company. Remind them to keep the marketing “cost per” metrics internal to the marketing team. Make a concerted effort to build a perception of the marketing function throughout the company as a revenue generator as opposed to a cost center. We all know which functions get cut first. Cost centers get cut; revenue centers get funding.