It’s been said that a stringent focus on marketing metrics can bring your marketing budget to higher ROI. But if that is the case why is it, then, that only few marketing managers are managing their marketing budgets based on a set of critical few marketing metrics?

If not then, why now?
Eventhough the widely known direct marketing metric "CPN"/"CPI" (Cost per name, cost per interest) has been around for decades I still find that very few companies are measuring this simple, yet important marketing metric. If such an old-school metric is not beeing used, how ….

can one expect marketers to even begin to consider implementing other metrics?

Website ROI should give you a hint
More often than not, investments in building websites are bad investments from a ROI point of view. Especially B2B firms tend to put an exaggerated emphasis on building websites with cool features and in the process forget to ask themselves "is this investment going to pay off", let alone the important question "how am I going to (afford) drive traffic to this website?" My guestimate is that less than 10% of the B2B websites out there actually pays off.

Basic metrics for starters
In order for any marketer to start using marketing metrics successfully, a set of basic marketing metrics must be established.

For most companies is is possible to calculate two basic metrics, f.ex.;

- estimated customer life time value
- budgeted customer acquisition cost

Obviously if your customer life time value (LTV) is expected to be EUR/USD 10.000, it is very unlikely that you can afford to spend EUR/USD 5.000 on customer acquisition. On the other hand if your LTV is EUR/USD 1.000.000, it is likely that a customer acquisition cost of EUR/USD 5.000 is indeed a good investment.

Point is in order for a CMO to succeed  now and in the future, CMO’s must become more metric driven, more business-minded and driven towards proving to the rest of the organization, that marketing is not a cost, but a good investment.

While in the old days a marketer would justify the marketing spending by planning and executing a given number of activities, now and in the future a marketingbudget will be planned according to the needed achievements such as # of new customers, cross sales to existing customers etc.

Tip to get started: Calculating ROI
On the internet you can find many tools that might inspire you to setup your own Marketing ROI (ROMI = Return on Marketing Investment).

This one is very simple; http://www.cymbic.com/tools/roi_calc.php

Marketingboss will provide links to more tools in the near future. Next week Mchael Leander Nielsen will publish a continuation of this article with recommendations to concrete steps you can take to become Marketing Metric or Marketing ROI oriented.