• by Laura Patterson , July 12, 2010

According to the IT Services Marketing Association, marketing budgets as a percentage of revenues are at an all time low. Marketers will continue to face budget challenges until we can demonstrate the value of our marketing programs and they contribute to the business.

According to a spring 2010 study by Econsultancy and analytics firm Lynchpin, over half of the responding companies indicated that the biggest barrier to an effective measurement strategy is a lack of budget and resources and less than one-third selected any other issue. Unfortunately, we're in a Catch-22. Being able to measure and improve performance in order to secure program budget takes investment; investments we can't secure funding for until we can demonstrate value.

How can we break the cycle and secure the funding needed to improve our effectiveness and accountability? The first step is to synchronize marketing activities and costs with business outcomes. This alignment effort should be incorporated into the marketing planning and budgeting process. The second is step is to make sure we have the right skills, infrastructure and performance management systems in place. Escape the Catch-22 by investing in three key areas: training, infrastructure, and benchmarking.

Invest in Your People

A recent study by Omniture confirmed the findings in our annual MPM study, that while marketers said it is important to measure marketing costs, orders, average order size and conversion rates, they tend to track metrics they have the greatest ability to measure. According to their study, the biggest reason marketers struggle to move from measuring metrics to measuring performance is talent.

Over half of the respondents in the Omniture study indicated that they don't have the training and support need to develop the analytical skills within their ranks in order to glean the valuable insights needed from the data available. What's holding these organizations back? You guessed it. Budget was the number one reason cited for the lack the talent. And of course, until we have these capabilities it will remain difficult to leverage analytics and data.

Invest in Your Infrastructure

Let's say we have the analytical talent. The next potential hurdle is being able to translate insights from analytical systems immediately into marketing decisions and then use operational systems to execute on these decisions. The challenge is that often these insights are derived from various disparate data sources that house various types of customer data -- such as customer profile information and segment data, customer transaction history, and communication history along with lead scoring models. Top that off with the need to append external data related to the market and competitors.

And all this data probably requires systems that can recognize the same customer/prospect across different channels and the ability to access and update information in real time. Real-time and near real-time updates alone require fundamental changes in how marketing databases are designed, managed and analyzed. Organizations often need to be able to revise business rules and execute analytics and update models as quickly as new data becomes available.

All of this explains why the entire marketing infrastructure is increasing in complexity at the same time that speed has become a dominant requirement. As a result marketing systems and processes need capabilities an order of magnitude better those most marketing organizations are using today. So improving marketing effectiveness will take revisiting and investing in the marketing infrastructure.

Invest in Benchmarking

A benchmark is defined as the standard by which all items of similar nature can be compared or assessed. Benchmarking is a self-improvement tool. It allows you to compare yourself with others, to identify areas of comparative strengths and weaknesses and learn how to improve. Robert Camp who published the first book on benchmarking suggests that by using benchmarking to identify and replicate "best practices," a company can enhance its business performance.

We need benchmarks to know what and by how much we need to improve yet, according to our annual MPM study, only a third of the 400+ respondents indicated they were satisfied with the marketing performance skills. Sixty percent of the respondents don't do any kind of auditing when it comes to data, analytics, performance target setting, systems, processes, measurement, and reporting. If improving your marketing performance is important to your organization, then it's time to invest in benchmarking.

In a matter of months many marketing organizations will begin to work on their next fiscal year plan and budget. Now is the time to take stock of your talent, infrastructure and how you stack up against peers and best-in-class performers so you can request the funds needed to improve your marketing organization on all fronts.