Marketing Performance Management is the process of tracking marketing campaigns to evaluate performance, and then using that performance data to inform future budget decisions. The practice brings transparency to marketing and gives the company the ability to quantify the benefits of each marketing activity, while improving the overall success of the business.
The difficulty comes in the ability to accurately forecast and set a budget that’s high enough for your team to reach its goals, but not so high that you achieve less ROI.
During the beginning of the year forecast, the marketing team sets its goals and then states how much spend they think it’ll take to get there. But how do you decide on those goals? How do you determine the necessary budget?
Marketing performance goals fall into three categories: production, numerical and monetary.
Production refers to output metrics. For example, how many blog posts you want to publish, how many events you want to sponsor, or how many webinars you want to produce.
Numerical refers to the tallied results of outputs. For example, how many social followers you want to gain, the amount of traffic you want to draw to your website, or the number of leads you want to drive.
Monetary refers to the financial result of outputs. For example, cost per lead (CPL), cost per customer (CPC), and revenue.
To budget, start at the end goal for each category and work backward.
If your end-of-year goal is X, what number do you need to hit in Nov. to make the Dec. goal attainable, what do you need to hit in Oct. to make the Nov. goal possible, and so on.
Now, what do you have to spend each month to hit those goals? At this point, if you’re a startup and have no historical data, budgeting is just a guessing game. As the business matures and marketing performance is tracked, that data can be used to inform future budget decisions. More on that, below.
The most important process in marketing performance management is measurement and tracking. Without this, it’s difficult to know the benefits that marketing efforts are providing and how to optimize those efforts to drive even more value.
You’ve invested money where you think it’s best for business, now you need to track the effectiveness of those investments.
Website traffic and content downloads are important metrics, but without revenue attribution, the full benefit they provide is overlooked. This means determining the success of marketing performance comes down to how much revenue each campaign is driving.
Say CPL, for example, was high on a certain campaign. Looking at this number alone could lead the team to switch gears because cost was high. However, tracking further down the funnel may show that that campaign has a high sales conversion rate and it is actually producing positive ROI.
Without attribution, marketing performance management is missing the big picture. In stronger words, marketing performance management is incomplete without multi-touch marketing attribution.
Marketing dashboards can be created to provide role-based views, showing how paid search, content, events, and more, affect the bottom-line. With these capabilities and views, CMOs are able to obtain the true ROI of each channel, making the performance of marketing visible in a single view.
At Bizible, we use W-shaped attribution reporting to highlight marketing’s influence on a prospect’s decision to click, convert and engage with the sales team. When you are measuring performance at every stage of the funnel you get a full view of the customer journey and can provide a great experience every step of the way.
Now that measurement includes the tracking of each campaign to revenue, the data obtained along the way can be used to inform budgeting and improve forecasting.
Which campaigns drove the most clicks, opportunities and revenue? Which drove a lot of clicks, but few opportunities and no revenue? These are the types of questions that marketing performance management investigates. Once you have the answers, you can begin to forecast and re-evaluate budgets.
Having this historical lead data, along with the granular view of channels and campaigns, makes it possible to optimize the wins and cut the losses. This performance and measurement data can then be put back into marketing to improve budgeting and forecasting.
Also known as media mix modeling, this process can occur in real time.
Say the paid search channel isn’t performing like expected, but paid social is outpacing its goals. Or tracking shows that ebooks have a high sales conversion rate, while webinars do not. Budgets and goals can be shifted to account for these real-time performance metrics.
Additionally, marketing performance can be predicted with the help of historical data, which allows marketers to determine the optimal spend across channels and campaigns, prepare for seasonal changes and optimize budgets for forecasted performance.
Marketing performance management is an essential part of any good marketing team. Without tracking and evaluating results, and then using those learnings to inform future decisions, marketing is seen as a cash center instead of a profit center.
With the use of multi-touch attribution, Marketing can prove its worth to the organization by reporting on revenue metrics. Every campaign and channel can be tracked to the bottom line, improving the performance of marketing efforts and increasing the ROI for organization as a whole.