Proving marketing’s impact and ROI has never been easy. Marketing leaders consistently share with Gartner their struggles to effectively measure and prove the value of marketing’s activities with critical internal stakeholders. This is frequently articulated as a two-pronged challenge: to design strategic plans that on one hand deliver measurable commercial results, and on the other that secure cross-functional buy-in.
Recent evolutions impacting the modern marketing function appear to be making this two-pronged challenge ever-more challenging. These include (but are not limited to) growing expectations to drive growth, pressurized marketing budgets, more complex content ecosystems, and greater scrutiny from internal finance and operations teams…
Gartner research suggests that only 8% of CFOs have confidence in marketing’s budgeting and planning — the lowest of any function.
Hence, Marketers need to adopt an approach that not only shows how well the marketing team is performing, but how their success impacts all other functions.
Comparing Two Fundamentally Different Approaches
In terms of designing and deploying strategic plans, CMOs often fall into the trap of applying a bottom-up approach and trying to work marketing metrics up to higher-level business goals. This approach not only increases the risks of landing with less relevant KPIs but also runs the risk of making it harder to clearly justify how selected marketing activities are expected to impact broader marketing and cross-functional business goals.
It is for this reason that a top-down approach is better suited – especially for higher order strategic goal setting. This approach begins by clarifying cross-functional business or financial objectives and works down to demonstrate marketing’s return against them. It does so by translating these into more specific sets of marketing goals, activities and (eventually) metrics.
The return-on-objectives approach (ROO) is a tried and tested “top-down” approach to designing successful marketing plans that are measurable and generate internal buy-in. This approach can be used to bridge the gap quickly and easily between marketing performance metrics and higher-level business goals.
Key features of the ROO approach:
- A top-down approach, designed to lead to marketing activities and metrics (not with them).
- Focused on business objectives, not ROI.
- Helps justify marketing’s scope of activities and impact.
- Typically captured and communicated on a single page.
- Intended to be simple but adaptable.
- Helps marketing be more selective in identifying only the most relevant metrics to measure performance.
- Requires non-marketing stakeholder contribution both pre- and post-planning.
Operationalizing the ROO Approach
To boost senior stakeholders’ confidence in marketing, CMOs need to connect their team’s strategies and KPIs to the interests and objectives of their business partners.
Gartner has developed a five key step framework outlining all that is required to operationalizing the return-on-objectives approach and ensuring that all planned marketing activities can be directly connected to border business goals (see Figure 3). An essential component of this framework is the collaboration (pre- and post-planning) with senior non-marketing internal stakeholders. This is essential, as it allows marketing to not only capture useful cross-functional insight, but also to convey a sense of support and even ownership of marketing’s strategic plans.
For more detailed and specific guidance on how to operationalize the return-on-objectives approach, along with practitioner tips and case studies, please see here.