Why Marketers Are Still Struggling to Prove ROI

The Three Most Common Types of Characteristics That May Make the Task Harder

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In an environment of ever-increasingly available data, proving marketing ROI should be easy. Furthermore, the advancement of marketing science offers proven methods to understand marketing impact on not only long-term brand building, but also short-term sales performance.

So why are many chief marketing officers still struggling with proving value? At Deloitte's 2012 CMO Summit, we learned that more than half of the participating CMOs felt insufficiently prepared to provide hard numbers.

What we have observed is that the same characteristics that make some CMOs so successful may unintentionally make the task at hand harder. Here are the three most common types:

The data perfectionists
Data perfectionists seek data completeness and purity. When their operating realities hamper their pursuit of data happiness, they may feel these limitations preclude meaningful insight.

Another operating reality is "too much data." The exponential rise of new and unstructured data such as social text creates gaps in IT and data infrastructure. Instead of establishing a marketing-measurement system based on available data, the perfectionists wait for the next big IT investment.

The fighter pilot
"Sales have been declining. I need more budget to hit the goals." This concern is particularly pronounced for CMOs in industries going through life-stage changes such as telecom, life science and automotive. A marketing-ROI discussion often triggers concerns of budget cuts.

This singular focus on budget is like a "top gun" fighter pilot being so fixated on a single target that he fails to anticipate other bogeys in the area.

During life-stage changes, an industry's go-to-market structure alters, and consumer responses to demand stimulus shift. An example is marketing in wireless. Ten years ago, new subscribers were mostly acquired through carrier-branded stores. A key role of marketing was to drive traffic to stores. Today, more than 40% of new subs are gained through comparative-shopping retailers, such as Walmart, Amazon and Best Buy. Channel marketing and point- of -sale incentives become new battlegrounds.

Perhaps instead of asking "How much should my marketing budget be?" we should ask "Where are the new battlegrounds for marketing dollars?"

The innovators
Will a data-driven approach based on historical inferences optimize out new and unproven marketing tactics? Left unattended, there is a real risk of past data choking future stars.

Yet great marketing is all about innovation. Similarly, innovation should be core to designing marketing-measurement systems. The key is to apply techniques to balance the known and unknown.

Practical steps to ascend
Business success and career growth are built upon a CMO's ability to deliver and prove value. As a Spencer Stuart survey showed, a CEO's top expectation of the CMO is showing bottom-line results.

Recognizing which persona type is slowing you down is the first step. Several practical steps may follow:

1. Ask the right questions, then define data needs; when in doubt, check if the marginal cost of new or better data exceeds their marginal value.

2. Examine how market change has affected the role of marketing along the consumer path to purchase, and account for all touch point impact.

3. Always set aside budgets for new and innovative tactics, which can be "exempt" from ROI comparison against established tactics; test and learn.

Marketing ROI, at its core, is a fact-based way to approach marketing portfolio planning and investing. So take smaller steps get quick wins, and make your dollars work harder for you!

ABOUT THE AUTHOR
Frances Yu is director of demand-driven growth, Deloitte Consulting.

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