Marketers wear many hats. They are charged with building awareness, developing go-to-markets, optimizing journeys and experiences, and ultimately driving revenue.
Luckily, a plethora of technology options is out there to choose from that makes their jobs a little easier. The hard part is choosing the right one.
More than 3,800 marketing technology solutions flood today’s market. To put this into perspective, five years ago the same landscape featured just 150 solutions. That’s a 25-fold increase, and the market is still growing, with more than twice as many solutions available this year than in 2015.
While having options is usually a good thing, having too many options can often lead to poor decisions.
The sheer scope of possibilities can cause what experts call “decision fatigue,” where the quality of decisions deteriorates over long periods of time and can lead to irrational trade-offs, impulse purchasing or avoiding decisions entirely. With literally thousands of options to choose from, marketers face an uphill battle to properly evaluate each solution and decide which one best suits their needs.
And when it comes time to recommend a technology choice to the C-suite or purchasing committee, it can be very difficult for marketers to show they’re making an informed choice and that they’ve considered (and correctly discarded) all the viable options.
The good news is, with 3,800 plus solutions out there, qualified buyers are in short supply. Marketers can (and should) ask for exactly what they need and if they don’t receive it, simply walk away knowing that they’ll find what they need elsewhere. In the end, it comes down to one thing — evidence.
5 KPIs to Prove MarTech's Value
When a marketer identifies a software solution with the features and functionality they're looking for, they should call on the vendor to provide the following five proof points to ensure the solution “lives up to the sales pitch.” This will gives them the necessary ammunition to satisfy all stakeholders.
1. Incremental Revenue – How Much Revenue Will it Produce?
Start by asking the vendor for case studies that prove their clients have used the solution to drive revenue for their brands. Don’t take their revenue claims at face value and definitely don’t get distracted by the laundry list of clients who are “using” the software — it’s way too easy for a vendor to skirt around this.
Monetizing a marketing investment is not a simple thing, and new technologies (even if they’re amazing) might not offer a way to impact sales. They can be difficult to integrate, too far ahead of the consumer, or simply a great idea without a concrete business case.
2. Total Cost of Ownership (TCO) – What are the 'Big Picture' Costs?
Marketers need to show management that they can roll-out this solution efficiently, and the easiest way to do this is for the vendor to document exactly what other clients have gone through and how much it cost them to put the solution into play.
Ask for the details: licensing fees, upgrade costs, training costs, secondary hardware and software overhead, additional FTE and headcount increases — because chances are those costs are very real and are much higher than the original price tag.
3. Return on Marketing Investment (MROI) – Is it Worth the Additional Investment?
This critical metric is simple to calculate: take the incremental revenue and divide it by the TCO from above, and that provides a ratio of value to cost.
This number will come in handy when it’s time to present a technology recommendation to the powers-that-be, in that it gives a method to evenly compare and contrast all of the considered options. For example, “We’re selecting this option because the ROI is much more compelling than what we’ve seen from the other solutions in the market, and here’s the data to support that.”
Chances are, whoever is reviewing the recommendation will ask for this figure — so by presenting it proactively the recommendation will carry a lot more weight.
4. Net Present Value (NPV) – Will the Investment Make A Profit?
This is an absolute “must-have” when getting approval from any finance group — calculating a three year NPV is how most organizations choose between investment alternatives. NPV is essentially a way of determining the net profit of an investment, and takes into account all of the potential revenue, cost and cash flows from each alternative.
The finance team will want to run these numbers themselves, using their own projections, but showing the NPV realized by the vendor’s other clients is a great way for marketers to solidify their proposals, and show that they speak finance's language and have an opinion worth taking into consideration.
5. Payback Period – How Long Will it Take to Pay Ourselves Back?
The payback period is another financial metric that can really turn heads. Payback period determines how long it will take for an organization to recoup their costs from a potential investment based on the projected revenue. It will absolutely turn heads when a marketer can confidently say, “We expect that we’ll recoup this investment within X months of implementing the solution, based on the case studies documented by the provider.”
All-in-all, it’s well within a marketer’s right to ask for this kind of information. When a vendor can provide it, it shows a true connection and continued engagement with clients after the initial sale. Strong vendors document this sort of information religiously, for exactly this purpose — so marketers should make sure they ask before they buy.