If you have read any of my past articles, you probably know that I am a bit of a zealot when it comes to goal-driven marketing planning. And I am not alone. I have met many smart and successful CMOs over the last several decades, and the vast majority of them have embraced operationally disciplined planning that starts with the definition of their top marketing goals or OKRs.
But it turns out that goals by themselves are not enough to create success. A framework for marketing measurement and performance optimization is essential for providing marketing leaders with an early warning system if they are falling behind their plan.
Let’s start with some definitions – and clear up some common misconceptions about the terminology related to metrics.
A good rule of thumb for choosing key marketing metrics is to find the closest metric to the ultimate business objective that you can directly control within your planning horizon. If your goal is to Drive Growth, but you don’t have control of the sales organization, you might choose a metric of pipeline. Pipeline is the closest metric to revenue that you control and should be your primary measurement of success. That doesn’t mean that it should be the only measurement of success. You should also measure revenue (and even contribution margin) because you should optimize your performance against the end outcome, but your primary accountability should be to the pipeline.
You also should include metrics that are upstream of the ultimate success. For example, if you have a long sales cycle, you should measure qualified leads and opportunities as a leading indicator of success. These leading indicators are an early warning system of the long-term performance of the campaign and are critical to staying on track.
There are several factors that go into determining the appropriate targets for your metrics. First of all, you need to understand the overall business objective. If your goal to Drive Growth is based on the company business plan, you have a good starting point for your target. If your metric is a leading indicator, you need to make some assumptions about the conversion rates to achieve the overall business objective.
Some other factors to consider when defining your targets include:
There are two general approaches to defining your milestones: top-down and bottom-up. To define your milestones from the top down, you need to consider your growth trajectory, seasonality, and other factors like product launches or major industry events.
To create a bottom-up plan, you need to assemble your overall campaign plan, define the expected outcomes from those campaigns and add them up.
By now, you probably realize that there is a lot of detail that goes into the metrics framework for a goal-driven plan. But is it worth the effort? Yes, there are a number of benefits to this approach including:
We just made it a lot easier to manage the metrics framework for your marketing plan with some new enhancements to Planful’s marketing planning software platform. You can define your goals, metrics, targets, and milestones and roll up your campaign targets and actual performance to define Marketing ROI and Cost Per Outcome for the top-level goals as well as the individual campaigns.