The 4 marketing metrics that matter in the boardroom

Whether attending board meetings in person or preparing the CEO for them, CMOs need strategic solutions backed by reliable data to demonstrate the impact of the organization’s marketing decisions. The board’s focus is long-term financial strength and shareholder value, so communicating at that level is critical for gaining alignment.

I’ve seen marketing communications with boards of directors go awry when the conversation shifts from macro-level profitability to celebrating increases in social followers or website page views. These vanity metrics may sound important, but they don’t connect to the metrics boards care about.

Vanity metrics also play a central role in analytics theater, where organizations appear data-driven without delivering meaningful insights. In this context, value comes from extracting actionable insights from reliable data through proper analysis. Without that, the exercise becomes what W.C. Fields once described: “If you can’t dazzle them with brilliance, baffle them with BS.”

To avoid falling into that trap, CMOs should focus on the metrics boards care about — or should care about. Here are four that every marketing leader should track before stepping into the boardroom.

1. Marketing-influenced projected revenue

To begin, the board wants to know how much revenue the organization is projecting. Often, the revenue pipeline is entirely attributed to sales, but many marketing efforts helped drive a significant portion of that revenue, and you need to be able to speak to that. 

Obviously, you’ll need to work with your team, sales, and possibly finance to devise an attribution model, but even if it’s not perfect, you still need to have something in place until a better one can be proposed and implemented. 

Otherwise, you’re signaling that all projected revenue comes from sales and, when you separate marketing from revenue generation, you effectively tell the board that marketing doesn’t generate revenue — or at least not measurably so. That turns marketing into a cost to be minimized or eliminated rather than a critical element of revenue generation.

2. Marketing-influenced revenue

A big question the board has for any organizational team is how much money you’re making for the organization. For marketing, this is it. Just like the first metric, you’ll need to work cross-functionally to develop the methodology, but this might be the most important metric for CMOs to get right.

It should be noted that marketing-influenced is an important distinction here. It’s common for sales to be the direct revenue-generating team that gets the (sometimes metaphorical) money placed into its hands. There usually isn’t sales revenue and marketing revenue, but simply revenue. While sales delivered the check, some amount of that check wouldn’t be there if it weren’t for marketing. It’s vital for the CMO to take — and get — credit for that in front of the board.

3. Return on marketing investment (ROMI)

• ROMI = (Marketing-influenced revenue – Marketing cost) / Marketing cost

Now that the board knows how much money marketing made for the organization, they’re going to want to know how much it cost to generate that revenue. This is the CMO’s profitability ratio, and you want it to be positive or at least trending in that direction. 

If it’s not positive now, you should be actively working on a plan to get it there. The ship isn’t necessarily sunk if you’re not there, but it’s worrisome. The board will want to know about the plan.

Internal conflict can arise from the marketing-influenced revenue metric, and you should anticipate it. 

Sales likely has its own ROI metric that’s often simply calculated as: 

• ROI = (Revenue – Sales cost) / Sales cost 

The problem is that marketing-influenced revenue is often, though not necessarily intentionally, included in sales’ ROI equation. If this happens, marketing-influenced revenue is double-counted when used in ROMI and sales ROI. 

To accurately calculate sales ROI, it should be: 

• Sales ROI = [(Total revenue – Marketing-influenced revenue) – Sales cost] / Sales cost 

Sales can sometimes see this as marketing stealing some of its revenue, so, as mentioned earlier, it’s important to develop a cross-functional methodology for marketing influence to hopefully avoid this conflict.

4. CLV:CAC ratio

• CLV ratio = CLV / CAC

In their own right, customer lifetime value (CLV) and customer acquisition cost (CAC) are key organizational metrics that CMOs should be fluent in. Ultimately, the board wants to know if the organization is profitable. 

CLV greater than CAC is a strong sign of overall profitability even in the face of a negative ROMI. A focus on this metric also avoids the sales-versus-marketing conflict that can arise from marketing-attributed revenue, as this ratio includes all sales and marketing costs alongside projected lifetime value.

While a board wants to see this metric above one, it isn’t a metric we should seek to maximize because a high CLV:CAC ratio suggests the possibility of underinvestment in sales and/or marketing. As a CMO, you should keep an eye on this, especially during budget conversations.

The boardroom language every CMO needs to speak

There are many metrics that CMOs and boards of directors use to ensure healthy marketing programs and businesses. To communicate effectively and build a strong relationship with the board, CMOs should thoroughly understand these four metrics and explicitly include them in their strategic plan.

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