One of the key challenges I see with many heads of marketing is the lack of the ability to communicate the value of marketing’s efforts in terms of business value. This gap translates into a fundamental challenge of ensuring the executive ranks and line of business owners are engaged in your marketing planning efforts. As I say all too often, if you plan marketing in terms of activities (e.g., website traffic or MQLs) then you are tactic of the business. But if you plan marketing in terms of revenue or growth then marketing has a seat at the c-suite table.
My tip, use the RMS Method. RMS = Revenue, Margin, Shareholder Value. Here are 3 ways to implement this approach:
Align ALL Marketing Activities to RMS
In essence, all your marketing programs, initiatives and activities should contribute to the topline (Revenue); improved Margins (EBITDA); or Shareholder Value (RMS). There are no exceptions. So as a marketing leader as you paint your vision for your companies marketing effort make sure each program, initiative or activity in you plan aligns to growing the business or improving margin or shareholder value.
One quick exercise I do with CMOs is for them to list the top 20 initiatives that the marketing team is working on and then label that program as revenue, margin or shareholder value. Then do the same exercise with with heads of business lines, sales leadership, and the c-suite to see if their interpretation of value of those initiatives align. If yes, then we are on the same page with the c-suite. If not, those initiatives that are not in alignment either need to be cut or redefined.
Plan Marketing in Terms of RMS
Before you planning marketing initiatives, you should have 3 things in place. First, what is the growth (more revenue & higher margin) plan of the company. For example, next year we need to grow our revenue by 10% across these segments. Second, what company-wide interdepartmental initiatives are planned. Third, understand your competitors and market.
Then, we can plan by identifying marketing activities that work together to drive revenue, margins and shareholder value. Align marketing activities to company-wide initiatives. Use your competitive analysis to identify opportunities of growth (e.g., an under addressed segment; or new product opportunity). Now your marketing plan isn’t about what we doing but rather about how we are contributing to revenue, margin and shareholder value.
Use RMS to Align Marketing Reporting with the Language of the C-Suite
All too often CMOs report to the c-suite in terms of activities (what we’ve done). Not the value we create. The first “page” in your monthly business review should be revenue, margin and shareholder value and marketing contribution to those efforts. This effort doesn’t need to be mathematical – though that helps and provides confidence – it can also be anecdotal.
For marketers that are neophytes at marketing measurement, I encourage CMOs to start with a simple 3 column chart with headers of Revenue, Margin and Shareholder Value. Then underneath those headers, list the marketing program, initiatives, or activities under the appropriate column. This will help the c-suite better visualize the contribution of value of marketing to the business.
What are your thoughts on how to communicate the value of marketing to executive leadership? Share your thoughts on Slack.