The time has come for marketing to become more accountable.

What’s your recipe for marketing success? One pound of strategy, six ounces of targeted media, two cups of breakthrough creative, three tablespoons of sheer luck and a pinch of executive gut feel? If so, it’s time for a new recipe.

Marketing is maturing into a results-driven discipline. No longer can marketing executives rely purely on their past experience, gut feel and intuition. ROI needs to be as fundamental an ingredient in marketing as it is in finance, sales, product development or any other strategic department in the organization. 

For marketing execs, the issue is front and center: Marketing needs to prove its worth to the organization -- to earn the respect of the CEO and CFO, to justify budgets based on returns and to nurture profitable relationships with customers and partners. In other words, it’s time for marketing to become more accountable.

The CMO Council's recent report, “Measures + Metrics,”  reveals that the measurement of marketing performance is a top priority for many marketing executives. However, fewer than 20 percent of those surveyed have developed meaningful, comprehensive metrics for their marketing organizations. So, what are the obstacles and challenges we’re facing? According to research conducted by the Association of National Advertisers and Forrester Research,  the adoption of ROI measurement in marketing is easier said than done. Research shows that almost 50 percent of surveyed CMOs feel “ROI data is hard to obtain” and more than 40 percent said “it isn’t granular enough.”

In order to add ROI to your recipe for success, organizing your efforts around four key areas may help: 1) organizational mindset, 2) optimization processes, 3) key metrics and 4) technology.

Establishing the ROI mindset within your organization

How do you promote an ROI mindset in your organization and mature from an activity-based department to a results-based department? The paradigm shift won’t happen overnight but you can begin by doing three things to breed the ROI mindset within your marketing organization:

• Build performance metrics into the planning process. Every project must start with a defined objective, and the project should have a performance scorecard that includes the metrics (a.k.a. Key Performance Indicators or KPIs) that measure results against the stated objectives.
  
  
• Host weekly metrics meetings with your marketing staff to review, discuss and reset direction based on the results.
  
  
• Hold your staff accountable for measurable results. Set personal incentives within individual performance reviews and reward their ability to meet or exceed the established targets.

Since analysis isn’t an intuitive activity for many, you’ll need to establish some momentum to infuse ROI across everything you do. For many companies, the Web is the perfect starting point to seed the ROI mind-set.

Companies accelerate their ROI on the Web

Today, we’re seeing a very steady rise in the next wave of the Web. Unlike a few years ago, organizations are now measuring how the Web influences and accelerates ROI based on core business fundamentals. 

Although direct revenue contribution is certainly meaningful for multi-channel retailers, it’s the broader influence across all channels that organizations are now discovering, and with surprising results. According to September 2003 findings from The Dieringer Research Group, not only did consumers spend more than $93 billion online in the twelve months prior to the study, but they also spent more than $137 billion on offline Internet-influenced purchases . For some organizations, the indirect sales contribution can be as much as four-times larger than the direct contribution. Therefore, the Web has a much larger impact on the overall business than a direct ROI analysis would indicate.

As a result of the Web channel’s contribution across business channels, Web metrics are now topping board meeting agendas. Similarly, applications like Web analytics are becoming mission-critical for marketing executives to prove tangible ROI. 

This increased awareness and pressure from the top is accelerating the need for better measurement in marketing, but measurement alone isn’t the answer. If you can’t act on the analysis, you’re wasting cycles on measuring information you can’t use.

Measurement is just activity if it’s not actionable

In the direct marketing world we often talk about moving the prospect to favorable action. The same principle applies internally in how you plan, execute and optimize marketing programs. You need to leverage analysis to drive smarter decisions and favorable actions from your staff, which will lead to optimized results over time for your company. Here’s a deliberately simple process you can follow to initiate a more actionable culture within your marketing organization.

The 5-step R.A.D.A.R. process for continuous optimization:

1. Reporting: When it comes to reports, less is more. Focus your reporting on the key metrics based on your marketing objectives. For example, if your primary objective online is ecommerce, standard KPIs might be “Average Order Size (AOS)” and “Browser-to-Buyer Conversion Rate.” If your site is geared toward lead generation, you’ll have a different set of metrics.

2. Analysis: Next, analyze data to identify trends and pinpoint areas that need improvement. For example, by analyzing the Shopping Cart Conversion Funnel, you might see that you are losing a high percentage of your visitors on the shipping information page. Examining the abandonment paths visitors take from this step provides an immediate indication of what needs to be fixed to keep them moving toward conversion.

3. Decision: Now, make one decision at a time. This step is imperative because too often people are either not sure what conclusions to draw from the data, or when they decide to make changes to their site, they make several major changes all at once. Multiple changes make it difficult for marketers to know which specific change had the greatest impact on performance.

4. Action: Take action. Action needs to become addictive within your organization. And decisive action based on sound analysis is the best kind. This is the most critical step in this process. You can’t improve results if you don’t act upon your analysis.

5. Results: Finally, measure the reaction your visitors have to the change or changess you’ve made. You’ll measure and report on whether the result was positive or negative -- comparing the before and after. If the result was positive, continue with that strategy. If the result is negative, test another action to fix it. It’s a continuous process of integrating analysis into your organization’s daily operations.

The R.A.D.A.R. process is best leveraged when you are committed to testing different variables. Call it A/B testing. Call it the Taguchi method. Call it the Test and Roll method. Call it whatever you want. The discipline of testing and measuring is critical to ongoing success. Optimization is not a one-time effort, it’s an ongoing process. And those who understand and apply optimization continuously see dramatically higher returns over time. 

In summary, ROI isn’t just a metric. It’s good marketing. And the new recipe for your organization’s success requires the four ingredients I outlined ealier: a results-oriented mindset, objective-based KPIs, strong understanding of the optimization process and effective use of technology. 

Brent Hieggelke is Vice President of Marketing at WebTrends.