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Marketing performance management software can improve ROI

These specialized budgeting, analytics and data repository tools can integrate with CPM software and better align marketing initiatives with organizational goals.

Marketing performance management examines the effectiveness and efficiency of the activities performed by the marketing department, such as campaign management and lead generation. Software for marketing performance management helps automate creation of the marketing budget and measures the contribution of tactical marketing activities to the bottom line. The software also helps align marketing projects with business strategy.

In this article, I will briefly review how marketing performance management software aids the marketing function and how, from the point of view of the CEO, CFO and corporate performance management staff, marketing performance management and software must align with corporate CPM functions and overall strategy.

To better understand marketing performance management software, I spent some time looking at the offerings of two capable software vendors, Allocadia and Hive9. Both vendors have similar capabilities, which are summarized below and followed by two case studies.

Marketing performance management and corporate strategy

At a high level, marketing performance management (MPM) software allows organizations to define their business strategies and then align their marketing plans with individual components of the strategy. Then, the ROI of marketing can be computed by determining the relevant revenue and cost components of marketing's impact on the execution of the business strategy.

This is all quite valuable, but incomplete in two ways. In the first place, these MPM software vendors speak of marketing "inheriting" a business strategy, but don't discuss how marketing should have a seat at the table when the business strategy is created. While this is admittedly not a software function, it is nonetheless a methodology that the vendors should include somehow. Second, the entire business strategy, including the marketing strategy, should be supported with traditional tools, such as balanced scorecards and strategy maps.

Detailed budgeting for marketing departments

Both software products allow for the creation of detailed budgets and ROI calculations that are based on revenue and cost numbers. Again, this is quite valuable, but an additional step is needed to link the marketing budget to the corporate budget. For the corporate decision makers, the important questions are whether to accept the marketing budget, overfund it or even underfund it. That's one reason a close connection between MPM software and CPM software is critical.

Attributing costs and revenues

Consider email campaigns, an important tool in the marketer's arsenal. With the notion of attribution, managers can use a historical perspective to understand the cost and revenue contributions of completed campaigns. This also helps create a budget for new campaigns. Then, as the new campaigns unfold, attribution software can help measure the current results, leading to midcourse corrections, if necessary.

Dedicated data repository and analytics

All of the relevant data on plans, revenue and costs is typically stored in a data repository inside the MPM software. A wide range of analytics tools -- reports, dashboards and more -- are also available to help analyze results. While these local, marketing-specific analytics are quite valuable, the data must still be exported into CPM software for further analysis.

Allocadia case study: VMware

VMware, the global software company that helps companies virtualize their infrastructure, uses MPM software from Allocadia.

Previously, VMware marketing managers were building spreadsheets for their marketing budgets. The team wanted to analyze data by product and regions, and produce reliable benchmarks. With hundreds of disconnected spreadsheets, it was impossible to consolidate results and compute an overall ROI figure.

With Allocadia, marketers can now enter their budgets at the beginning of each quarter and track expenses by activity, product, segment or stage in the lead-to-sales process.

VMware is hitting its goals of better forecasting and expense management. Variance reports are widely used to manage budget groups. And, with all the finance data in one place, VMware can actively participate in both the marketing and corporate budget processes.

VMware's experience shows why importing marketing spreadsheets into a central repository can be of great value, especially when it is combined with relevant analytics.

Hive9 case study: Zebra Technologies

Zebra Technologies is a $3.6 billion corporation that sells mobile computers, scanners, specialty printers and RFID devices. When Zebra acquired a large part of Motorola, its marketing organization needed to absorb a team three times its size.

Zebra's objective was to create a consolidated marketing department, with a singular focus on revenue attainment. By implementing Hive9, Zebra was able to develop all its marketing plans in a single repository, which enabled easy collaboration among marketing managers. Then, with all plans in one place, they could easily analyze multiple scenarios. Marketing budgets could now be tied to specific marketing initiatives, which makes the budgets more transparent and relevant.

One example of revenue attribution revolved around Zebra's many marketing campaigns. With Hive9 as the marketing planning system of record, marketers at Zebra can plan and approve campaigns in Hive9, and Hive9 will push them into Oracle's Eloqua marketing automation software.

Zebra's experience demonstrates how MPM software allows a more orderly approach to marketing. In particular, budgeting becomes a more scientific process as plans are tied to initiatives. Then, when marketing initiatives are run, it's easier to measure the revenue attributable to each one.

As an all-inclusive system for marketing performance, MPM software is most effective when all three of its main functions -- budgeting, analytics and data repository -- are used. And since MPM software results are important input for overall corporate budgeting and strategy, it is vital that the chief marketing officer meet quarterly with financial executives to decide how plans need to be created and updated, and how to use the central CPM software to integrate marketing plans with corporate plans.

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