January 11, 2018 - By Anto Chittilappilly, Co-Founder, President & CTO, Visual IQ
Business is constantly changing -- new competitors, new products, new technologies, new people. But one thing doesn’t change: the signs of a healthy company. Every year, the top marketing objectives (according to eMarketer) are to increase sales, increase customer engagement, and increase brand awareness, followed closely by lead generation and customer retention.
Not surprising, right? Everyone knows that to thrive, you need revenue, engaged customers and prospects who know your brand. These goals are the basis of every healthy organization.
But what’s not as widely reported is how each of these goals depend on a different set of metrics that measures progress. And how few companies are equipped to handle the daunting task of properly tracking, measuring, and optimizing the results of their marketing efforts across the enterprise, particularly in the face of ongoing change.
But there is a solution to the challenges of both goal alignment and change management: marketing attribution.
It’s rare that a company will prioritize all of the goals listed here at the same time. Organizations tend to focus on specific objectives, depending on how mature their company is, how competitive their industry or marketplace is, and how profitable they are. When and if the company’s position changes, the goals also change.
For example, the common aim of startups is to grab market share at the expense of profitability. (See: Airbnb, Uber, and Snapchat). Companies that are in more mature industries tend to focus on gross margin and Customer Acquisition Cost.
Strategies for top-line and bottom-line growth are often different. When it’s your job to grow the company, it is important to know what type of growth you are after. How you achieve that growth depends on knowing what’s working, and what’s not.
For example, if your goal is to grow revenue, you want to drive sales and revenue per sale. You can do this by boosting advertising, and offering discounts and promotions, new pricing, or loyalty programs that encourage repeat sales.
If your goal is to improve profit margins, you have to focus on reducing costs along with increased revenue. You could optimize your marketing budget to lower the amount you spend to drive each sale, eliminating unprofitable spend or reallocating dollars from one channel to another.
Every company follows its own playbook for growth, with the C-suite setting top-level goals and each team delivering on the KPIs needed to reach those goals. Depending on the goal, you may measure top of the funnel brand engagement metrics (video views, site visits, content downloads, landing page visits) or bottom of the funnel response metrics (conversions, revenue).
No matter which goal you’re focused on, you have to make sure your metrics align so that you’re tracking the right indicators. From a marketing perspective, this is critical. Marketing teams and management need to align on objectives and the KPIs that track progress toward achieving them.
Companies in which marketers have both clearly defined goals and executive-level support thrive. When the target changes, the entire organization must re-aim their arrows to hit the bullseye.
Whether goals change or remain consistent year over year, you need an actionable understanding of what’s influencing consumers across the entire consumer journey. Knowing what initiatives are important and how they work together to drive desired KPIs is the foundation of marketing attribution.
Marketing attribution integrates disparate marketing performance data to establish a single source of truth. By collecting, consolidating and normalizing performance data into common measures and taxonomy, marketing attribution supplies the insights you need on a consistent, holistic basis.
If your goal is to increase revenue, marketing attribution can help you identify the creative messages, offers and content that resonate with your target audience. Or if your objective is to increase profit margins, marketing attribution can help you uncover the most cost-efficient channels and tactics.
Here's a use case that shows how you can use marketing attribution to drive KPIs.
Windstream, a leading provider of advanced network communications, and its agency partner, The Media Kitchen, have consolidated and integrated all of Windstream’s digital performance data into Visual IQ’s Marketing Intelligence Platform.
Using marketing attribution enabled the agency to discover the tactics that were most effective at driving conversions and predict the optimal combination of tactics for future marketing efforts. Changes to Windstream’s digital campaigns produced a 31% decrease in cost per sale and a 45% increase in sales volume.
Aligning your organization toward common goals is challenging, especially when the goal changes. This is because it’s common for marketing teams to operate in silos. An isolated approach often leads to each team working toward independent KPIs and incentives, leading to fragmented, ineffective optimization -- by channel instead of across channels.
But with marketing attribution, when goals change, realignment happens at the core instead of within each channel. Because everyone has access to the same metrics at the same time, teams do not have to adjust independently. For example, if the goal changes from revenue to customer acquisition, channel managers can immediately begin to work off of centrally defined conversion metrics instead of revenue metrics.
Your marketing portfolio will change, sometimes dramatically, as your goals change. But what if you can’t align around a single goal? If you are measuring using competing metrics, how do you reconcile top line and bottom line growth?
Many companies want all five goals simultaneously, pulling CMOs in multiple directions. VPs may try to allocate budget to support all KPIs, but they won’t get the results they would if their budgets were properly allocated and their team oriented toward a single goal. It’s like being on a flight from Boston to Los Angeles that tries to change its destination to San Francisco mid-flight, and instead of landing in either city, you end up in Fresno.
As I described above, marketing simply can’t optimize when facing siloed metrics and disparate goals. We recommend that companies pick a single metric -- a composite that includes constraints or dependencies that allow the CMO to optimize spend. One example of this is revenue with a CPA cap that seeks the highest revenue at the lowest cost. Other dependencies could include geography, cost per customer, gross margin or other factors.
Using composite metrics changes the budget process from an effort to meet conflicting objectives into a dialog with other C-suite executives about how to play with constraint levels to achieve goals. You then can propose a realistic and actionable marketing portfolio based on those constraints.
In this competitive economy, brands in all industries need to consider moving to marketing attribution to manage change and tackle the daunting task of properly measuring and optimizing the results of their marketing efforts. Marketing attribution will provide you with the insight you need to keep your organization on track to achieve its goals, this year and beyond.
Download our newest ebrief "Understanding Every Touchpoint" to learn more about advanced measurement solutions and the steps marketers can take to meet their attribution goals.