You convinced everyone that this is important to the company, it even got approved and the budget allocated. Now everyone can feel it, it’s in the air — so much pressure from the business to start the platform’s implementation and show ROI. Martech investments are big and there is no surprise that businesses are keen to see fast results after making the investment. However, most companies are struggling to show martech ROI. In theory, showing martech ROI should be a simple and straightforward formula.
MARTECH ROI = ESTIMATION OF VALUE* — BUDGETED COSTS
Simply put we can say that Martech Value — Martech Cost = Martech ROI. The concept of martech ROI is simple and straightforward, but the realisation to get to that point is much harder than originally thought. In reality we see how difficult is to accurately track martech ROI. Firstly, this is linked to the subjective way that we define and measure value but what we will focus our attention on today is what comes out of the wallet first — the costs, and the way we budget for them when it comes to martech.
THE REAL COST OF MARTECH
While some martech costs are straight-forward and easy to understand and ballpark, the real cost of martech might be difficult to predict for many companies out there.
Depending on the project type, your martech costs might split in two categories:
· Upfront costs
· Variable costs
Upfront costs are the main costs, but not the only costs and they usually include license fees, service level costs, training, deployment and implementation. Many CMOs make the mistake to budget and plan only for these costs, forgetting about the fact that martech implementation is an ongoing process, especially as new features get released and new integrations are required as the stack matures, and the business grows. These are called ’variable’ costs as they are difficult to spot and forecast. It’s wise to plan for the variable cost’s thresholds, and focus areas but prepare to be flexible to their dependencies.
The accuracy of the martech ROI will depend on how we are budgeting and tracking our upfront costs and the ability to spot and forecast the variable costs, in addition to how we choose to define and attribute the value that our martech is generating.
HOW LONG IS TOO LONG TO SEE MARTECH ROI
Getting value from a technology investment can be expensive and time consuming, especially when it requires upskilling an existing team to learn a new skill or bring in expert resource to fill in the proficiency gaps. Ascend2 research indicates that the average timeframe from implementation to martech ROI for most organisations takes less than a year. However, we might need to differentiate between realisation and implementation.
For the majority of organisations it takes up to 12 months to implement a new platform, and considering that most companies add new tools to their stacks at least once a year, it’s safe to say that companies are in a constant position of managing their martech programs. With this constant circle of a new tool, new deployment, new integration, the ROI conversation takes backstage. Framing the importance of martech ROI right at the beginning of the project is key — it sets the scene and builds a sense of urgency for everything that’s going to follow; implementation timeframe, optimisation, tracking, and measurement.
While the time for ROI will vary depending on the business, the following factors often have the biggest influence in minimising the journey to ROI:
1. Understand the unique value of your martech
Define what your martech stack needs to do and enable it. Is it the customer journey, operational efficiency, collaboration or production? Or is it all of them?
Understanding the difference between what you have vs. what you need to have will help you fill the gaps faster. Avoid adding more complexity to the stack and make the right decisions to scale and grow. Organisations that think of their martech as a strategic asset (not just as a set of tools), alongside their brand and customer data, succeed at enabling great customer experiences, which ultimately translate into customer satisfaction, revenue and growth.
2. Set goals
The issue with martech today is not that goals are set too high or are unachievable — it is that goals are simply not being made. Lack of goal setting impacts the way your team operates and collaborates, impacting your time to market and harming your ability to juggle short-term and long-term programs.
3. Get access to the right skills
This is a big one. Some argue that it’s the most critical element of all as without the right skilled resources any initiative will struggle. When it comes to resource and skillset, there are a few elements that are essential:
a. Access to the right skills and resources — internally and/or externally
b. Partner and agency ecosystem — who can show you what great looks like, especially for the first time
c. Vendor relationship management and the procurement of technology enablement services at the time of purchasing new martech
4. Rationalise your martech stack
The principle involves pruning out tech that doesn’t make your business run faster and more efficiently. It’s worth differentiating the fact that stack rationalisation and stack utilisation are different. Rationalisation is all about decluttering tech and keeping only those tools that contribute to your business, while utilisation is all about driving user adoption, engagement, and operational efficiency.
5. Measure, analyse, action
In an age of data overload, it’s important to understand what really matters for your business. When setting up your measurement framework establish what makes the most sense to measure and what you’re going to do about those insights and business intelligence. I’d usually recommend building a layered martech measurement framework as not everything is equally important. For some businesses it might make more sense to track customer-oriented metrics, engagement rates, NPS scores and value to market, while for some more established and mature practices, it might be more important to measure operational efficiency, improved collaboration and speed to innovate.
CONCLUSION
Implementing the steps above will put you in a good position to start getting the value out of your martech and make that ROI conversation just a little bit less painful.
The effort of bridging the gap between your input (investment) and your output (business value) results in your martech velocity — this ability to react and action will get you closer to your martech ROI. Both speed and efficiency play an important role in driving your martech velocity.
The factors discussed above will continue to influence the development and the success of your martech, but it ultimately comes down to the martech velocity and the ability to add incremental changes every day that drives your ROI.