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The Numbers Game: Showing Marketing ROI in Today's Digital, Data-Driven Economy

By Ken Ramoutar, Vice President, Global Solutions and Industry Marketing, Avanade

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Ken Ramoutar, Vice President, Global Solutions and Industry Marketing, Avanade

Today’s digital reality has created huge potential for marketers to find new creative ways to engage customers and bring them closer to the brand. However, according to McKinsey, the opportunity will be wasted if the CMO cannot articulate growth and ROI clearly.

While the value of marketing – such as brand equity and customer experience – might be inherent to many, it’s still an imprecise measurement. And, McKinsey reports that this imprecision often forms a barrier between marketing and the rest of the C-suite. In fact, the report goes on to say that almost three-quarters of CEOs agreed that “marketers are always asking for more money, but can rarely explain how much incremental business this money will generate.”

The reality is that the corporate mechanisms for determining project funding still rely on traditional measures of return on investment. This is not a new challenge for marketing organizations. While the sales department can easily measure its impact through sales and revenue, marketers continue to struggle to show the direct impact of marketing investments to their peers and senior leaders. In addition, there are a number of key challenges compounding our ability to do so:

The Rise of the Digital Customer: The customer relationship has reached new levels of complexity, thanks to the rise of digital technologies. The blurring of digital and physical interactions with customers is skewing more concrete measures such as leads, the marketing pipeline and conversions.

Fragmented Customer Journey: The proliferation of digital touch points has also made it difficult for businesses to control and track the customer path to purchase. At the same time, customers have more options and higher expectations – putting them firmly in control of the relationship. 

Big Data:Our turbocharged online, mobile and social world is generating more data from more channels than ever before. However, more data does not equal more knowledge. Marketers still have to separate the wheat from the chaff when it comes to uncovering business insights.

Skills Gap: Many marketing organizations are rich in the skills you would expect – communications, branding and design. However, many marketing organizations are short on expertise and skills to effectively manage the onslaught of digital technology and big data, as well as gain a quantitative perspective on marketing’s impact.

With these challenges in mind, solving the “old” view of ROI doesn’t make sense anymore. The good news is that marketers now have the data and the analytical tools to make better decisions, drive real growth and prove their worth. For instance, working with Aberdeen Group, Avanade has developed what it calls an “experience equity” calculator that shows the value of digital customer experience efforts. “Experience equity” is the value that is unlocked when organizations add up sales, marketing, customer service and technology, and approach customer experience with a consistent digital mind-set. This customer impact metric assesses the platforms, strategies, business processes and technologies the business has chosen to adopt, as well as overall performance.

This type of approach can bring enormous returns. McKinsey believes that the thoughtful use of analytical tools to improve marketing return on investment – what they call “smart analytics” – can boost return on spend by 10 to 20 percent. That’s up to $200 billion worldwide that can be reinvested in the company or go to the bottom line.

To make this kind of smart analytics approach a reality, here are a few things to consider:

Invest in your marketing digital infrastructure. Data is only as good as the organization’s ability to leverage it to gain insights. Marketers need to invest in intuitive, dynamic tools to facilitate insights and action. This includes leveraging resources like data lakes – a large repository that holds data in its native format until it is needed – to aggregate and manipulate marketing data. It also means leveraging visualization tools (including mobile ones) to help marketers better make sense of data. And, this means creating automated reporting and employee portals to enable better access to data to inform decision making.

Rethink and invest in the marketing skills needed. Marketing organizations need to find the right mix of data skills and talent within their workforce. This may mean recruiting different types of marketers (what many refer to as “marketing technologists”) as well as teaching existing marketers new skills. It may also mean borrowing someone from the analytics or IT team who has an understanding of marketing to help jump-start a data-driven approach – because the best tools on the market can’t make a difference for organizations that don’t have the right talent in place to make sense of the data. Marketing staff with quantitative and technology skills are needed to deliver on the data insight need to guide and course correct marketing investments.

Open the lines of communication to the IT department. Avanade’s own research shows that 37 percent of technology spending is now controlled by departments other than IT – and one of those departments is marketing. The worlds of technology and marketing are continually coming closer together, and changing the role of IT and marketing leaders. As CMOs manage their brand, they also have to coordinate multiple interactions with today’s “always on” customer. At the same time, CIOs must manage technology that is capable of customer-centric innovation. CMOs and CIOs must work ever close together to harness the combined power of marketing and IT to deliver better digitally-enabled experiences for their customers and other key audiences.

There’s no question about it, digital technology has changed the marketing game forever. Smart analytics can help digital enterprises leverage every asset, resource and opportunity to accelerate growth, drive new levels of productivity, remain flexible in a constantly changing business climate and better serve their customers. Let’s embrace this new “golden age” of marketing to finally answer the age-old question: what am I getting from my marketing spend?

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