B2B Customer Centricity: Measuring centric-approach performance
by Mark Eardley (@mdeardley) In the four previous Q&As with Laura Ramos, we’ve looked at how a customer-centric approach underpins marketing’s ability to attract and retain profitable business. Far from being a touchy-feely cliché, we’ve shown that full-on centricity creates sales, protects margins and reinforces loyalty. This final Q&A looks at measuring — and proving — its contribution to producing those paramount results.
Ramos is Forrester’s VP and principal analyst serving B2B marketing professionals.
Given that attracting and retaining profitable customers is marketing’s sole goal, knowing what to measure is straightforward: sales, margins and loyalty. By using those three crystal-clear criteria as benchmarks, how to measure should be guided by one principle: there must be a demonstrable link between activity and achievement.
When considering the execution of any tactic within a customer-centric strategy, marketers first have to define how they will evaluate its performance in relation to the benchmarks. Measurement can’t be an after-thought; it has to be a starting point:
“Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” —Dr H James Harrington, CEO, Harrington Group International
Back2Basics: How may marketers simplify the way they implement and verify their measurements? In other words, how may we build direct links that connect activity to achievement?
Laura Ramos: Business marketers struggle seriously to connect activity to achievement — 77% of global B2B said that their inability to measure results is one of their top concerns, up from 58% the prior year.
When B2B marketing execs can’t definitively quantify what their company gets in exchange for the money it spends on in-person events, sponsorships, advertising, and sales support, CFOs see marketing as a cost centre; sales execs see it as a resource diversion; and CEOs don’t consider it a strategic part of the management team. To gain this needed respect, marketing must measure its impact across the entire customer lifecycle and show how marketing produces the customer-centric engagement that is vital to increasing loyalty, advocacy and customer-lifetime value.
Engagement is the key word here. To simplify the way marketing measures its impact on the business, and its return on investment, marketers must focus their results-reporting on how their activity changes or improves the way customers interact, influence, and get involved with their communications, products and services. To measure engagement, marketers must understand what the business is trying to achieve as specific goals, not vague platitudes like “drive growth” and “increase market share”, but as measurable change in objectives that can be quantified — again, across the entire customer lifecycle. Customer lifecycle performance measures give marketers the data they need to quantify the contribution that marketing makes to building awareness, the pipeline, generating revenue, and growing accounts. For many marketers, this process will require them to challenge business leaders in functions like sales, support, and account management to be more specific about “how” they expect to achieve their business goals.
You can’t measure anything unless you know where you are now and where you need to get to by when. With this understanding, marketers can then turn to the question of how to demonstrate that what marketing does creates customer engagement that moves the needle on achieving those agreed, specific, measurable goals.
If you measure everything in relationship to how it ultimately affects the customer, the CFO, CEO and sales team will stop questioning why marketing does what is does and spends what it spends.
B2B: The ability to measure is the ultimate litmus-test for framing the scope and scale of marketing’s activities. Why should customer-centric marketers adopt a mindset that says if we can’t evaluate, we won’t initiate?
LR: Evaluating progress is a core principle of business, not just marketing. You won’t stay in business long if you can’t evaluate what you initiate and know if you are making money the right way. This applies to the entire business, not just marketing. (And marketers would be wise to remind their sales and customer success management counterparts of this axiom as well.)
Marketing’s measurement mindset should always start with customers and how marketing activity impacts their awareness, interest, understanding, desire, use, success, and engagement. This mindset should also focus on how marketing impacts this progression — as change over time against specific metrics — not just on factors like traffic, registrations, views, downloads, etc. For example, many marketers struggle to measure the impact of brand-building activity on market awareness. If you focus that activity on building awareness with specific accounts or market segments, by taking an account-based marketing or industry approach, then this goal becomes easier to evaluate. Moving from measuring impact on “the whole market” to specific segments or accounts also makes the measurement process more customer-centric.
To focus marketing measurement on the “how” of customer engagement, marketers must apply three key metrics to everything they choose to initiate:
- Impact: This is the direction metric. Are things moving in a positive trajectory? One of the most-important areas for marketing to quantify and communicate the trajectory is the percentage and value of the pipeline, revenue, and account-specific growth that marketing helps to generate.
- Predictability: This is the forecast metric. Will things continue to move in a positive direction? B2B marketers need to understand not only how well their programs perform at each stage of the customer lifecycle, but also how performance in any one stage drives activity in the next. Marketing measures here must focus on ways to track pipeline health and account penetration to confidently forecast both current and future quarters.
- Return on investment: This is the result metric. Which things have the most impact on or the best performance against goals? Optimising spend and resource use must address two key stages of the customer’s journey: presale and post-sale.
Marketing needs to measure the sales opportunities generated and use this data to continuously optimise the ROI achieved across a well-considered marketing mix. Marketing must also measure how post-sale communications help shorten implementation times; increase use; and improve opportunities to upgrade, add additional capabilities or services and increase wallet share.
That wraps my series of Q&As with Ramos on customer centricity. Many thanks indeed to her for being such a willing participant and taking the time to share her wise and actionable insights.
- B2B Customer Centricity: Defining, targeting content that creates sales
- B2B Customer Centricity: Why it’s vital for needs-based segmentation
- B2B Customer Centricity: Why competitor differentiation matters
- B2B Customer Centricity: Moving from lip-service to full service
Mark Eardley (@mdeardley) advises B2B companies on how to govern their marketing to attract and retain profitable customers; several of his clients have grown to become market leaders. He and Charlie Stewart have written Business-to-Business Marketing: A Step-by-Step Guide (Penguin Random House), which offers practical, actionable advice on how to make marketing make money. His monthly “Back2Basics” column covers how B2B companies and their agencies should manage their marketing.
— One subscription form, three newsletters: sign up now for the MarkLives newsletter, including Ramify headlines; The Interlocker, our new monthly comms-focused mailer; and Brands & Branding, launching soon!