According to the recent 2013 Marketing Performance Management Survey by Forrester, ITSMA and VisionEdge, marketers still have a long way to go. To be relevant to the business, marketers need to measure and communicate the right metrics. Surprisingly, just 40 percent of marketers today think that measuring marketing’s contribution to the business is very important or critical. And even more startling: only a small percentage of CEOs (9 percent) and CFOs (8 percent) use marketing’s metrics in decision-making. The main reasons cited: marketers fail to report on business outcomes; and they tend to focus on past performance rather than predictive insights.

Another recent global study by the Economist Intelligence Unit and SAS uncovered a similar disconnect between CMOs and the rest of the C-suite over the value marketing provides to the company. According to the survey, nonmarketing executives – CEOs, CFOs, CIOs, etc. – prioritize driving revenue over acquiring new customers (30 percent to 19 percent). For CMOs, however, marketing priorities are new products/services creation and customer acquisition; driving revenue ranks third.

The C-suite expects marketing to paint a picture of how marketing contributes to the business (share of wallet, market share, category growth and ownership, lifetime value, etc.), especially with rising investments in digital marketing. With marketing optimization, marketers are better equipped to create clearer linkage between marketing investments and activities with business performance—to select the right metrics, set numerical targets, evaluate customer and business constraints, and show how marketing activity contributes directly to business outcomes.

With the advent of big data and the widespread adoption of automated tools, marketers have access to huge volumes of data with which to plan, execute and track digital marketing initiatives. Hidden in that data are the answers to two critical questions that connect digital marketing activities to business outcomes:

• Given all the current objectives and constraints on marketing activities, how can we maximize not just the success of this campaign, but overall contribution to organizational growth and profitability?
• If we increase marketing operations budget, what would the payback be? If we can quantify the financial impact of constraints, could we make a business case for adding resources?

The requirement to juggle multiple constraints and considerations is an inescapable part of the marketing equation. This is exactly where marketing optimization comes in – it gives marketers the power to plan and prioritize all customer interactions in a way that maximizes economic outcomes while balancing the capacity to deliver and the likelihood to respond.

A solid marketing optimization solution provides four key ways to improve marketing effectiveness:

1. Flexibly define objectives and constraints, whether the goal is to maximize a positive attribute (loyalty, positive word-of-mouth) or minimize a negative one (attrition, churn)
2. Incorporate real-world contact policies, such as cross-business considerations (who gets the lead? what assets can be re-used? ), recency and frequency rules, and blocking policies.
3. Understand the business implications of changing any of the resources, objectives or constraints.
4. Define and compare different scenarios predictively to see which ones deliver the most desired customer and business outcomes.

Marketing optimization essentially allows the CMO to link activities in the marketing war room to business value in the board room. For a deeper perspective on how marketing optimization can create positive customer impact, build efficiencies into your digital marketing, and  improve business outcomes, check out this paper: Improve ROI with Marketing Optimization.

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