According to the IT Services Marketing Association, marketing budgets as a percentage of revenues are at an all-time low. Until we marketers can demonstrate marketing's contribution to business results, we will continue to struggle with inadequate budgets.
Unfortunately, we're in a Catch-22: We need to make investments in order to measure and improve marketing performance, but we can't secure the necessary funding until we can demonstrate marketing's value.
According to a spring 2010 study by the analytics firm Lynchpin, over half of the responding companies indicated that the biggest barrier to an effective measurement strategy is a lack of budget and other resources; fewer than one-third selected any other issue.
How can we break out of the vicious circle and improve our effectiveness and accountability?
- First we need to synchronize marketing activities and costs with business outcomes. That alignment effort should be incorporated into the marketing planning and budgeting process.
- Next we have to make sure we have the right skills, infrastructure, and performance management systems in place. This step often takes investing in three key areas: training, infrastructure, and benchmarking.
Invest in training your people
A recent study by Omniture confirmed what we found in our annual marketing performance and measurement (MPM) study: Although marketers said it is important to measure marketing cost, orders, average order size, and conversion rate, they tend to track the metrics they have the greatest ability to measure.
Why are marketers struggling to move from measuring metrics to measuring performance? According to the Omniture study, the biggest challenge is talent. Many marketing organizations lack staff with adequate analytics expertise.
Why? Budget constraints.