CMOs
losing influence
at the executive table
CMO
Council report
outlines how
to use metrics to
bolster
credibility
BtoB, October 11, 2004 By Sean Callahan
In the wake of the branding fiascoes of the dot-com bubble, marketing departments
at technology companies
are losing their
place at the "executive table," according to a report released Friday by the CMO Council.
"Marketing has a PR problem in the executive suite," writes Bill Glazier, a venture partner at Redwood Ventures, who is editor in
chief of the report "Measures + Metrics: Assessing Marketing Value + Impact." Glazier, who wrote the 227-page report with Robert Nelson and Don O'Sullivan,
also states that "accountability—not brand or eyeballs—is the new watchword for the chief marketing
officer."
The
report takes an
exhaustive look
at marketing performance
measurement, or
MPM. It presents
MPM as a systematic
way for technology
or other b-to-b
companies to track
the effectiveness
and return on investment
of their marketing
efforts.
The
report grew out
of a previous study
by the CMO Council,
a peer group of
marketing executives
representing almost
1,000 technology
companies, including
such heavyweights
as Oracle, SAP
and Xerox. Fewer
than 20% of the
marketing executives
surveyed for the
earlier report
said their companies
employed comprehensive
and meaningful
metrics to measure
the effectiveness
of their marketing
efforts. More than
80% said they were
dissatisfied with
their ability to
measure marketing
ROI.
"Measures
+ Metrics" positions itself as a road map for CMOs, whether in technology or general b-to-b,
for implementing
MPM and finding
a pathway to that
Holy Grail of marketing:
tabulating genuine
return on investment.
The report contains
three main sections:
- The
CMO Council/BusinessWeek
MPM Survey is the
distillation of
about 1,000 interviews
with CMOs and other
marketing executives
about the state
of MPM at their
companies.
- The CMO Council
MPM Model discusses
the key metrics
that should be
part of an MPM
program.
- The implementation
guide explores
the challenges
of the 12-to-18
month process of
creating an MPM
program.
- While the study
found that most
companies did not
have an MPM program
worth mentioning,
those marketing
departments that
did have established
MPM programs had
more respect from
the CEO.
"The typical CMO—according
to our research—is
able to neither
measure nor systematically
communicate on
the fundamental
business processes
in the marketing
function and their
results. This can
set the stage for
a CMO's failure," the
report said.
In its discussion
of the MPM model,
the report states: "MPM at its simplest is about the mindset that marketing can and should be measured
with an eye to
justifying its
activities and
programs."
The
report argues that
what should be
measured is not
simply the amount
of leads, but how
those leads contribute
to the business
as a whole in terms
of requests-for-proposals,
business in the
pipeline or overall
revenue. "It's not about measurement for the sake of measurement," Glazier writes. "Many marketers measure a lot—too much, in fact."
Glazier
added in an interview
with BtoB , "MPM is not about data but about outcomes. MPM is about business performance,
not theoretical
statistics."
In
a phrase that should
be in the marketing
ROI hall of fame
of quotations—alongside
John Wanamaker's
chestnut, "I know half the money I spend on advertising is wasted, but I can never find
out which half—the
report quotes Albert
Einstein: "Not everything that can be counted counts, and not everything that counts can
be counted."
Four
suggested metrics
The CMO Council
suggests that
marketers measure
activity
in four main
areas:
- Business
acquisition/demand
generation, which
can include such
metrics as market
share gains, lead
acquisition and
deal flow.
- Product innovation/acceptance,
which can include
market adoption
rates, user attachment
and affinity, loyalty
and word-of-mouth.
- Corporate image
and brand identity,
which can include
growth in brand
value and financial
equity, awareness
and retention of
employees.
- Corporate vision
and leadership,
which can include
share of voice
and discussion,
retention and relevance
of messaging, and
tonality of coverage.
- The report suggests
that not all
these categories
are
of equal importance.
A typical breakdown
might weight
the relative
importance
of the categories:
business acquisition
(50%); product
innovation/acceptance
(20%); corporate brand
(20%) and corporate
vision
(10%).
The
report's implementation
guide explores
how a company might
go about selecting
the metrics that
are most important
to driving bottom-line
results. "It is the business outcomes associated with the program and activities [that
matter to the CEO]," Glazier writes. He also takes pains to say that an MPM program needn't be expensive
or involve the
installation of
a software application.
None
of this will be
without its challenges.
A key hurdle is
measuring what
many believe to
be unmeasurable:
the art of persuasion.
Glazier said in
an interview that
marketing has enough
science in it and
buyers are rational
enough agents that
genuine measurement
can be applied
to the discipline
of marketing.
"A
technology buyer
is far more analytical
than a consumer
who's buying a
Coke," he said. "But if consumer packaged goods can analyze their customers and predict market
share to a few
percentage points
based on their
marketing metrics,
then technology
b-to-b buyers can
be analyzed in
that way, too."
Changes
effect others
Another
difficult hurdle
in implementing
an MPM program
is that it involves
a change not only
in the marketing
department but
also in other units
of the company,
such as finance
and sales. "MPM
is about a process,
a culture and mindset,
and a series of
outcomes," Glazier writes. In
the interview,
he scoffed at the
notion that the
sales and marketing
departments at
many companies
were not on speaking
terms. "Sales and marketing do talk to each other when marketing has something useful
to say to sales," he said.
And
to those who suspect
that MPM is an
admission of sorts
that marketing
is a weak department,
the report argues
that genuine marketing
professionals shouldn't
bridle at proving
their discipline
is effective.
As
You Mon Tsang,
CMO of Biz360,
put it in the report, "Strong marketers want to be measured. They are not afraid because they know marketing
works."
Biz360
was one of the
underwriters of
the CMO Council's
report. Other underwriters
included Cognos,
Google, Unica and
WebTrends.
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