It’s no secret that right now marketing budgets are tight. Even though the economic outlook is not as bleak as first feared, many organisations are still being conservative when it comes to marketing spend.
For marketing leaders, this generates more pressure from the board to ensure existing investments are supporting commercial goals, along with greater scrutiny over any new spend. With digital at the core of all business development activities, it means marketing technology (martech) is now squarely under the spotlight.
Martech has been a significant area of growth over the last few years - with many tech and consulting firms procuring platforms and tools to improve their digital marketing capability. Yet many have fallen into the trap of believing new tech will be the panacea, without really investing in the people and skills needed to maximise these investments. Just 13% of martech budgets are typically set aside for people, according to research from the University of Southampton Business School [1].
Marketing teams are also only using a fraction of the functionality offered by their technology. And many marketers don’t really understand what they’ve got. Part of the problem is that some of the platforms are overly complex. Other issues relate to the fragmentation of these systems, the lack of integration and the existence of customer data silos. But the biggest issue is undoubtedly the underinvestment in people.The rise of the marketing technologist
As Carlos Doughty, CEO of the Martech Alliance puts it, “Great tech doesn’t take care of itself, though it’s not uncommon for organisations to make the assumption it does. CMOs can be guilty of making the necessary investment in great martech tools without fully appreciating the need to upskill, recruit the marketing talent or commission the specialist agency services to make best use of them”.
While this is certainly true, more companies are catching on. The ‘marketing technologist’ - those rare individuals schooled in digital marketing best practices - while possessing a high degree of technical competency - are now more sought after than ever.
But this blog wasn’t written for a marketing technologist. Instead, it’s for anyone looking to understand the best place to start to optimise their existing marketing tools and maximise ROI.
A formula for assessing martech ROI
When it comes to investing in marketing technology in the current climate, the first question a CFO will ask is, ‘what return on investment have we realised from our current marketing technology?’
This is a question that can leave even the most seasoned marketer a little stumped.
How are you supposed to measure and prove ROI, if you don’t have the right skills and don’t know how to set-up your tech fully in the first place?
A good way to look at martech ROI, is to first identify your gains in both efficiency and effectiveness, comparing the periods pre and post the implementation of your tech. As follows:
Improved effectiveness: This includes more performance-based, commercial improvements like more marketing qualified leads (MQLs) and marketing’s greater contribution to weighted pipeline, an increase in revenue, or an uptick in customer lifetime value (LTV).
Improved efficiencies: This includes reduced cost (for example through system consolidation), improved productivity of the marketing function, reduced time to market for campaigns and so on.
You need to try and establish a monetary value for as many of these measures as possible, to help you calculate the total ROI. Not all will be possible, but a combination of top and bottom line pounds and pence will give you a total ROI figure. Then use the calculation below:
Here’s an example, looking at this purely from a booked revenue perspective. If you spent £60,000 on martech, and can prove an additional £120,000 in booked revenue as a result, then you’d have an ROI of 100%.
But, as simple as this may look, calculating ROI can be difficult.
Your main point of failure is going to be data. Through the lack of a fully-tracked journey from initial engagement to a signed contract, it’s hard to determine whether your digital marketing interventions generated the first contact or facilitated a sale. If you can’t rely on the reporting capabilities within your martech stack to achieve this automatically, it might be worth carrying out a one-off manual exercise (yes, with spreadsheets) to at least provide a valid ROI estimate.
Aside from working out your ROI, getting more out of your tech is the much bigger challenge. So here’s some tips to help you get started.
How to improve your martech ROI
1. Data quality
Most of the opportunities to optimise your tech, will rely on the quality of your data. But we’re not just talking about cleansing to improve basic contact record accuracy or improving your email bounce rate. The richer your data set in terms of buyer intelligence, preferences and interest, the more targeted you can be with messaging and personalisation.
Quality data is the key to implementing what many B2B marketers can currently only dream of - providing targeted, hyper-personalised experiences for their target audience. Understanding your buyer journey and the common information needs at each stage is a good starting point. From there you need to think about the datapoints you can capture on your individual buyers that will determine their likely stage, incorporating intent and broader engagement data.
2. Integration
A lack of martech integration is a big problem for many marketers. Often for reasons outside of the marketing team’s control, you will have to work with a variety of different systems to bring the prospect and customer data together that you need to be more effective. The more systems you have, the more islands of data exist. If you can’t move to a single platform for all sales and marketing, then you will always be required to integrate - and how well you do it will have a huge impact on ROI.
Any integration has to effectively replicate what you would get from an all-in-one platform, with a single, up-to-date dataset (single version of the truth). Working with multiple applications and two or more out-of-sync datasets will make ROI virtually impossible to determine accurately (or easily). Integration must therefore be bi-directional and cover as many elements of your sales and marketing processes as possible.
3. Marketing automation
We’re big fans of automation, but also very cautious about how it’s deployed. You should never automate without having a clear understanding of how it will make a certain element of a process more efficient or effective. So this often means mapping out a process before going anywhere near your tech. Then you should apply a fair degree of trial and error.
Automation can help you streamline, automate, and measure your marketing efforts - by implementing workflows to improve internal operations or to scale your external marketing activities. But you have to really stress test whether it is worth it. Too often we see marketers regard automation as email marketing on steroids, or try to be too clever with functionality like lead scoring. The golden rules with automation are to implement it gradually and for a well-thought out reason, keep it simple and always review it to continually seek improvements. Don’t ever ‘set and forget’ - that is a big mistake.
4. Custom reporting using a single data warehouse
Common frustrations with marketing technology often relate to out-of-the-box reporting and its associated limitations. In turn, this results in unreliable dashboards, as well as inaccurate performance analytics.
Make no bones about it, incorrect and false reporting is the quickest way to lose the confidence of leadership, which often means you need a more customised set of reporting analytics.
We’re seeing more and more organisations ditch the standard reports and instead move to a single data warehouse. This enables you to aggregate all the data from your CRM, pipeline management & martech platforms, to help you understand the true impact of marketing on pipeline & revenue. By integrating your data warehouse with a visual dashboard, you’ll then be able to accurately report your performance against KPIs and drill down to gather rich, actionable insights.
The other major benefit of this approach is it gives you the platform to build a 360 degree view of your customer. According to Gartner only 14% of organisations have achieved this [2].
In summary
When it comes to maximising ROI, the four areas we’ve outlined above are by no means exhaustive. Really, they are the prerequisites you need in place before looking at more advanced marketing strategies, such as Account-based Marketing (ABM). Without them, you’ll find it difficult to do anything especially sophisticated.
And this introduces a much bigger problem. Digital marketing is only going to become more complex. We are reaching a plateau with the current generation of martech and the next generation is going to be a whole new ball game.
Martech guru, Scott Brinker, is banging the drum for CMOs to prepare for the cataclysmic change [3] in marketing technology. We can already see signs of how far AI is going to disrupt marketing in the near future. Perhaps not quite so near is the Metaverse, other forms of virtual and augmented reality - and the increased decentralisation of the internet and social platforms, driven by Web3. We’ll also have more APIs and no-code software, morphed with advanced analytics and data sciences - enabling marketing technologists to leverage insights and build digital experiences on the fly.
If short-term drivers weren’t enough, this all further underlines the need for companies to get the most out of the current generation of marketing technology. You’ll want to be ready to take advantage of the next generation to get ahead of your competition.
But arguably the most important shift is to stop thinking only about the technology itself, and instead focus on how you’ll address your digital skills gap, which is only going to get wider as the next generation of martech evolves.
References:
- The State of Martech Report, Clevertouch 2023
- Gartner marketing Survey finds only 14% of organisations have achieved a 360-degree view of their customer, Gartner Press Release 2022
- 2023 will be a chaotic year for martech, yet the start of a massive wave of growth, Scott Brinker via chiefmartec 2023
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