C-Suite’s Top 5 Marketing ROI Metrics
Earlier this year, I conducted a research study on Boardroom views regarding effective marketing ROI reporting. In order to find out which metrics are most effective in linking marketing performance to company profit, 108 Board members answered the following question:
How much do the following KPI’s tell you about marketing’s profitability or ROI?
Note: Marketing’s profitability means profits that are DIRECTLY and EXCLUSIVELY attributable to marketing!
To answer this question, the respondents had to consider 13 metrics that are (commonly) used by marketers to report on their performance. The table below shows how the Board members evaluate these 13 marketing metrics.
The responses are grouped by the Board member’s reporting requirements – i.e. whether they require their marketing ROI reporting to be value-based or performance-based. Value-based reporting presents marketing ROI in tems of monetary value. Performance-based reporting tracks and presents non-monetary marketing outputs.
In the above table, we also make a distinction between B2B and other (B2C / Both) respondents to see whether there are significant differences in how these groups evaluate the surveyed marketing metrics. Based on these results, we can rank these metrics by relevance in their ability to link marketing performance to company profits:
From the table above, we can also conclude in general that board members, that require value-based marketing reporting, tend to focus on less metrics than those that require performance-based reporting. The value-based group seems to say: “Less (KPIs) is more!”
Of the metrics highlighted in green, the measured profitability can be more easily and directly attributed to marketing contributions. As a result, when applied correctly, they are great marketing profit indicators. Although the metrics highlighted in yellow are great profit indicators, they are next to impossible to be exclusively or directly attributed to marketing. Customer satisfaction, for instance, is as much – if not more – the result of Operations (product / service delivery) than it is of Marketing (product / service management & development). To a large extent, the same applies to Loyalty.
Although the ROI metric evaluation differs among the four response groups, there are five metrics that all groups consider to be valuable:
- Increased Sales/Profit
- Customer Lifetime Value
- Faster Time-to-Sell
- Customer Satisfaction
Consequently, it is safe to say that any report that includes these five metrics has a high chance of meeting the C-Suite’s requirements for marketing ROI reporting.
In one of my following blogs, I will elaborate more on what the C-Suite considers to be reliable sources of marketing income in terms of increased sales and profit.
CALCULATED MARKETING SUCCESS!