Planful

A CMO’s Metrics Framework for Winning Marketing Plans

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.

Goals, metrics, and targets…what’s the difference?

Let’s start with some definitions – and clear up some common misconceptions about the terminology related to metrics.

  • Goals (or OKRs). In this context, a goal is a structured description of a business objective with clear and objective definitions for success. For example, you may have a goal to “Drive Growth”, but that goal needs a lot more definition to make sure everyone understands what it means for your business.
  • Metrics. The set of measurement types that are used to define progress toward and achievement of a goal. In the case of our “Drive Growth” goal, the metrics might include revenue (or ARR), pipeline, opportunities, leads, etc.
  • Targets. The target is the specific level of marketing measurement you expect to achieve with each metric. For example, for my “Drive Growth” goal, I may have a metric for pipeline. The target for that metric could be $10 million by the end of the measurement period for the goal.
  • Milestones. Did you notice what I did at the end of the definition for the target? The “measurement period for the goal” is an important concept. For most marketing teams, that measurement is a fiscal year. Milestones are the waypoints of expected performance along the line to success. For example, if you expect to achieve $10 million in pipeline, you may set a milestone of $2 million by Q1, $4.5 million by Q2, $7 million by Q3, and ultimately $10 million by Q4. Those milestones are an important mechanism for “shaping the curve of performance” for marketers. Milestones allow you to account for growth, seasonality, and other factors like product launches.
  • Results. Your actual results are the achieved outcomes that you measure against the targets and milestones. In the example above, if you achieved $2.5 million in Q1, you would be ahead of plan.

How do you choose the right 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.

How do you pick the right targets?

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:

  • Budget availability. How much budget is allocated to achieve your targets?
  • Cost per outcome. What is the implied cost per outcome and how does it relate to past performance? For example, if you need to create 1,000 opportunities and you have $500,000 of your budget available, is it possible to create opportunities for $500 each? Have you ever achieved that performance in the past?
  • ROI targets. Do you have targets for return on marketing investment?
  • Customer acquisition cost (CAC) targets. Make sure you keep in mind the overall CAC targets (total cost of marketing and sales related to acquiring customers).

Choosing milestones for your targets.

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.

The benefits of a strong metrics framework

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:

  • A plan to succeed. By building a structured plan, you identify in advance what needs to happen to create a successful plan.
  • Months of advance warning. By tracking your progress against your milestones, you can identify variances in your plan with enough time to correct your course.
  • Efficient outcomes. The discipline to benchmark your cost per outcome will discourage inefficient campaigns before they start.

Introducing the Planful Metrics framework

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.

metrics detail

 

Learn more about how our marketing budget software helps CMOs and marketers manage marketing plans and campaigns.

 

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