Marketing Performance Versus Business Performance: What to Prioritize?
The alignment of marketing strategies with overarching business objectives is becoming increasingly crucial in a business landscape more obsessed than ever with ROI. Traditionally, marketing performance has been evaluated through channel-specific metrics. However, this approach often overlooks the broader business objectives, leading to a misalignment between marketing efforts and overall business performance. To achieve sustainable growth, marketers need to shift to incorporate both mindsets in their day-to-day decision-making.
The responsibility falls on the C-Suite to align priorities (for example, maximizing short-term profitability versus long-term growth) with every decision made by the marketing department. The marketer needs to continuously be testing and experimenting at the channel level, with Facebook, Google, Amazon, TikTok, etc., to find ways to drive towards overall business objectives like total revenue growth and overall marketing efficiency rather than vanity metrics like channel-level ROAS that doesn't take the full customer journey into account.
Focusing solely on immediate marketing efficiencies can be detrimental in the long run. While short-term gains are important, they should not overshadow the significance of building brand awareness and establishing a connection with new audiences, which are crucial for future growth.
This view often results in missed opportunities for brand building and long-term customer engagement, ultimately impacting on the company's growth potential. Marketers should invest in brand awareness only to the extent they can correlate these investments with overall growth. In other words, they should adopt a performance marketing mindset and apply it to the full consumer decision cycle, from awareness all the way through to advocacy. Creating awareness among new audiences lays the foundation for future market expansion and revenue growth. It is a critical component of a sustainable business strategy.
Client-Oriented Marketing Approaches
Different clients have different priorities. For cash-focused clients, immediate returns might be paramount, whereas high-growth clients may prioritize strategies that foster long-term growth and customer loyalty. Strategies should be tailored to meet the specific needs of each client type, considering their unique business models and growth trajectories.
Customer lifetime value and the right data technology are likewise essential in developing effective growth strategies. They help identify the most profitable customer segments and optimize marketing efforts accordingly.
Performance marketing should be redefined to include a broader range of metrics beyond the lower funnel. It should encompass the entire customer journey, from awareness to loyalty. The expanded definition involves a more comprehensive approach to measurement and attribution, recognizing the contributions of various marketing initiatives throughout the customer journey.
Measurement and Attribution: Following the Customer Journey
Accurate measurement and attribution across the customer journey are critical in understanding the true impact of marketing efforts on business performance. Accurately attributing sales to specific marketing channels remains a challenge, often leading to competition for credit among different marketing initiatives.
For example, you might think Google is outperforming Facebook, so you shift Facebook dollars to Google. What you may not realize is that Facebook is creating awareness from new audiences that, later, end up transacting on Google, so you end up oversimplifying the customer and revenue journey. Many attribution tools say they can solve this, but the attribution tools the marketing channels provide are inherently biased. Marketers should be wary of fancy attribution tools that say they are holistic because they rely on methodologies that are hard to test.
These challenges necessitate sophisticated analytical tools that can accurately assess the impact of various channels on sales and overall business growth. Correlation analysis, for example, can provide insights into how different marketing investments correlate with sales performance, offering a more nuanced understanding of marketing effectiveness.
Strategic Conversations with the C-Suite
Strategic discussions with top executives can likewise help align marketing strategies with the overall business objectives and metrics. These conversations help ensure that marketing strategies are not only aligned with but also contribute to achieving the company's long-term business goals. It involves identifying key performance indicators that are reflective of both marketing effectiveness and business performance.
The strategic alignment between marketing efforts and business performance is essential for true business growth. This alignment necessitates a shift in mindset, strategies, and measurement practices, ensuring that marketing not only drives immediate efficiencies but also contributes to long-term business success. By adopting these approaches, companies can optimize their marketing strategies for sustained growth and profitability. The ones that do will be well-positioned to thrive in an increasingly demanding landscape.
The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.
Scott Smigler is division president and founder of Agital.