“The Path to Performance” Series Part 1: Setting the foundation for ROI

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Clik here to view.This is the first post in a two-part series. Here, I map out a framework for understanding marketing investments. In The Path to Performance Part 2, I explore how to use that framework to arrive at the ultimate goal: a full, global view of your marketing performance that will allow you to become a revenue-driven marketing organization.

Quantifying marketing’s contribution to the business is not always an easy task. There are numerous factors that come into play and need to be considered from CMO priorities and go-to-market plans at the highest level, down to specific details such as funnel conversion rates and average sales cycles.

How do marketers make sense of all this to successfully determine marketing ROI and establish their value? We believe this can be answered by focusing on two important steps in the marketing cycle: the Investment Framework and the Results Framework.

As Allocadia Co-founder and CEO Kristine Steuart mentioned in a recent blog post, to solve the ROI problem that concerns all marketers, you need to establish a solid foundational framework on which to approach measuring marketing performance. The first step is to set the foundation for an “Investment Framework“ — establishing where and how much you are investing in marketing (that’s the “I” in ROI). Once this foundation has been set, it can be leveraged to build a “Results Framework” (that’s the “R” or return on this investment). (I’ll talk more about the “Results Framework” in Part Two of this series.) So how do we go about building an Investment Framework?

The Investment Framework

Most organizations struggle with tracking their marketing investment data consistently across their marketing organization (which is why they come to us for help). Teams often track in silos and are left to their own devices as to how they want to track, requiring operations teams to manually (and painfully) aggregate data across their organization. Building an Investment Framework (shown here) consists of three components:

• Standardizing on Key Data Points
  The first aspect of our framework is standardizing on what marketing teams track in terms of “the numbers”. We’ve standardized on five key data points that organizations should have as part of their marketing budgeting foundation:

1. Target – the top down number allocated from finance to marketing (often called budget), it also includes split or layers of targets. For example, a region is allocated a lump sum, which can be further distributed (or split) among teams underneath. Target serves as the initial benchmark for the plan.
2. Plan – the bottoms-up number that marketing puts together to meet the target (budget). The plan is typically locked down after the planning stage to serve as a benchmark to track actuals against. (It is useful to note that Finance will continue to use target as their benchmark to track actuals against). Locking down the plan ensures teams are accountable to their original plan. Plan can be inputted at an aggregated or detailed activity level.
3. Revised Plan –the revised or changing plan updated with the status of spend (e.g. still forecasted, committed, occurred or optional). This allows Image may be NSFW.
   Clik here to view.organizations to capture the changing nature of marketing spend without sacrificing visibility into the original plan.
4. Actuals – the finance system data that captures and logs all actual spend as recognized by the business (sometimes called expenses or General Ledger entries). Actuals data is mapped to the previous data points (target, plan and revised plan) in order to get a view of how marketing is tracking compared to the overall plan.
5. Forecast – a view of “what marketing is on track or spend” by taking past actuals plus future revised plan. This is dynamically generated in analytics based on the current day, month or year.

• Standardizing on your investment strategy
  The second part of the Investment Framework is standardizing on how marketing teams track their investments, such as by Objectives, Audience, Product, Campaign Type, Start and End Date. These fields should correlate with what marketing needs to deliver to best align with overall company objectives. These fields will be different for every organization; however, we recommend keeping this list concise and making key fields required. There are also best practice taxonomies from IDC and Sirius Decisions that customers can choose to get started quickly and stay aligned as you grow.

• The investment hierarchy
  The third part of the investment framework is the investment hierarchy which shows how people access the data they are tracking. It is layered across all the above data points from the marketing organizational structure down to the individual plan line item level. The data points in the hierarchy are customized to each organization and vary from regions to teams, programs and tactics to brands, and functional units to campaigns. Ultimately this hierarchy maps to how your users should be given access to your marketing investment data, what default rollups you want to view and how investment data is strategically allocated in your organization.Here is an example of an investment hierarchy of a typical global marketing Image may be NSFW.
  Clik here to view.organization. Our data model allows us to report on this hierarchy plus tag it to view it any other way (such as Cost Center or Owner).

The Outcome

With your key investment data points, strategy and hierarchy, you now have your foundational operational investment data in a centralized system of record for your marketing organization. You can start to leverage the relationships among these data sets to answer key questions on the business of marketing, such as are we on track to meet our investment target and what have we committed to? (To help answer these, we offer a series of out-of-the-box reports as a starting point that can be fully customized). You have now established your Investment Framework.

In my next post we will explore how we directly leverage this framework in order to get you to the ultimate end goal, which is a full global view of your marketing performance, helping you become that revenue driven marketing organization.

Image may be NSFW.
Clik here to view.Allocadia Co-founder and Chief Product Officer Katherine Berry shares her insights about designing software for marketers. Katherine shares the product vision and progress about the Allocadia product and how her team is working to provide customers with the best user experience an enterprise marketing solution can offer. Want to stay on top of Allocadia Product News? Follow Katherine on Twitter @katherineberry and connect with her on LinkedIn.