Marketing Metrics

Marketing Forecasting: The Hidden Secret of Today’s Most Accountable CMOs

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Marketing Forecasting

At executive staff and board meetings, the number one topic of discussion is never the upcoming marketing program or the new brand strategy – it’s almost always the sales forecast. Everyone wants to know if the company will make the target for this quarter and what next quarter is going to look like. Invariably, this discussion is led by the Chief Sales Officer (CSO), with little or no input from the Chief Marketing Officer (CMO) or marketing team. With this dynamic, it is no wonder that most executives think of marketing as a cost center and not an essential part of the revenue team.

Forecasts matter. CEOs and boards are impressed by accurate, forward-looking forecasts – and they are even more impressed the further out the CSO can make predictions with confidence. This ability to make revenue forecasts – and to be held accountable for delivering against them – is the single biggest factor that gives the sales function more credibility (and power) than marketing at most companies.

However, because the sales forecast is based on what specific accounts will do at specific times, it becomes increasingly inaccurate the further out you look. Asking the sales organization — which by definition is focused on revenue in the near term — to predict revenue in future periods can be highly misleading.

In contrast, there is a function that is inherently more focused on the long term: the marketing organization. That is why today’s most accountable CMOs are stepping up to deliver a forecast of their own, one that uses analytical rigor and a deep understanding of how prospects move through the revenue cycle.

For these CMOs, marketing forecasting goes beyond basic marketing accountability; it is one of the essential keys for building marketing power and credibility. The benefits include:

  • Better justification for the marketing budget. Marketing forecasting quantifies the exact revenue impact of any increase or decrease in marketing investment, giving the CMO the tools to make a rigorous business case for more investment.
  • More power and influence for marketing. By talking about marketing in terms of outputs (revenue) and not inputs (e.g. budget and programs), marketing forecasting positions marketing as a revenue center that deserves investment to improve profits, not a cost center to be cut.
  • Higher compensation for marketing. When CMOs take on more responsibility – and risk – for revenue, their compensation begins to look more like their sales counterparts. While not every CMO is comfortable with this risk-reward tradeoff, it ultimately is an essential evolution for highly accountable CMOs.

Over the next few days, I will explore why Sales increasingly has limited insight into revenue for future periods, discuss why Marketing can and should take more responsibility for forecasting, and share a revolutionary new methodology for implementing modern marketing forecasting in your organization.