A few short years ago, marketing was mostly considered an art with very little science. A marketer’s job was to drive awareness for a brand while directing leads to revenue-driven sales teams.
Marketing doesn’t quite look like that today — digital channels and precise analytics tools turned it into a revenue-driven science in its own right. The role of marketers is not just about finding leads but tracking their progress through funnels and calculating how much revenue they contribute to brands. As a result, marketing leaders are increasingly responsible for driving bottom-funnel metrics such as revenue and growth as they are for top-of-funnel metrics like awareness and affinity.
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These changes will only accelerate in the years ahead and marketers must be ready. CMOs need to understand what’s driving this shift, how marketing responsibilities are changing, and what tools will help them thrive in the years ahead.
The revenue-driven marketer
For decades, marketing represented the iconic phrase attributed to American advertiser John Wanamaker: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Campaigns had no option for measuring audience engagement or the effectiveness of ad creative. Instead, marketers mostly relied on feedback from focus groups and surveys, most of which could only provide rough estimates.
Thanks to the modern marketing tech stack, today’s marketing campaigns are a whole new ballgame. We know exactly which ad spend is effective, and we can increase gains through optimization. We understand which audiences convert after watching ads, and we can calculate their lifetime value. We can identify high-value audiences and their exact position in the marketing funnel with a high degree of accuracy. Finally, and most importantly, we can use everything above to calculate how much revenue businesses can generate for their ad spend.
That’s not to say everything has changed, of course. Marketers still tackle brand positioning, messaging, and reputation management. But these skills are a means to an end in an era when marketing departments are often tasked with generating significant volumes of revenue — between 30 to 40% for most businesses. It’s no wonder that revenue-driven marketing is quickly becoming the industry standard.
The revenue-driven CMO
So what do these changes mean for CMOs and other marketing leaders? For the most part, it means the following additional priorities and responsibilities:
- Financial modeling – Revenue-driven marketing teams need to make effective use of ad spend and maximize returns wherever possible.
- Niche targeting strategies – A granular understanding of audiences helps marketers convert high-value niche audiences. CMOs will pay far more attention to creating target personas for these groups.
- Pipeline management – CMOs are embracing a pipeline management approach to their marketing funnels, much like sales teams use pipelines when targeting high-quality prospects.
These jobs represent a lot more work for CMOs, but there’s a silver lining: Their positions are far more valuable to organizations than ever before. CEOs are acutely aware of marketing’s financial contributions, and more willing to support successful departments.
Now, this doesn’t mean the work of CMOs is any easier. In fact, veteran marketers can struggle when transitioning to revenue-driven thinking, especially when it comes to creating regular financial reports. All the same, CMOs who can back up success stories with hard numbers are well-positioned to thrive in the long term.
The revenue-driven future
It’s worth remembering that revenue-driven trends are constantly evolving — they remain an ongoing process as marketing departments become more familiar with them. CMOs will also find ways to manage their new responsibilities that will slowly become industry standards.
For example, I imagine most CMOs today are working in absolutely monstrous spreadsheets to keep track of audiences and LTV, which is unwieldy at best. In the years ahead, we’ll likely see them transition to pipeline management dashboards that handle financial analysis needs far more effectively. These features may start to migrate into CRM platforms as executives estimate the returns on nurturing customer relationships.
Marketing departments are also working even closer with sales teams. CMOs don’t just hand off marketing-qualified leads and close their file — sales provides high-value clients for marketers to nurture further or keep warm in retargeting campaigns. These arrangements will become even more important as CMOs balance customer relationships and financial responsibilities within the context of a larger organization.
Revenue-driven best practices
Are you worried about the future of marketing after reading all of the above? Don’t be — CMOs can still thrive in a revenue-driven world if they’re willing to make some changes. So to close out this article, here are a few best practices to help you move forward:
Don’t be afraid to delegate
Revenue-driven practices are new for most CMOs, but you don’t need to be a financial expert. In fact, this is an excellent opportunity to hire a data specialist or marketing analyst to manage the numbers. Delegating this responsibility helps you focus on big picture marketing strategies and provides financial reports you can verify and analyze.
Track everything
Revenue-driven trends are an emerging but crucial part of our data-driven industry. Keep a vigilant watch on your numbers, just like you would for customer analytics. Checking your revenue dashboard should be the first thing you do when starting work each day.
Keep your bosses appraised
Marketing leaders typically answer to a CEO, CFO, and an entire board of directors — make time to address revenue in each of these relationships. In meetings, always lead with the numbers. If revenue is growing, great! If you’re losing revenue, explain why and include a data-backed strategy to turn the decline around.
Revenue-driven marketing is here to stay. Instead of winding back the clock to focus on awareness-based marketing, CMOs must find ways to balance their creative and financial responsibilities.
Marketing was always valuable. Revenue-driven marketing just means we can prove it.