Research: 79% of CMOs will invest more in conversion rate optimization in 2023
Budget cuts, layoffs, and paused hiring have already become the norm for marketing teams since Q4 of 2022. Marketing leaders have to do more with less. What they need is to pivot to a leaner marketing strategy for 2023 while remaining fresh, relevant, and competitive.
Here, at Wynter, we surveyed 100 CMOs to get a grasp on changing priorities and driving forces.
The results were insightful, yet diverse.
On the one hand, CMOs seem to be rallying more robust tech stacks to build a single source of truth for their teams. On the other hand, budget cuts force marketers to be more creative with the data and tools they already have.
Keep reading for insights into marketing shifts and the challenges B2B leaders face in 2023.
Only 1 out of 4 companies are cutting Martech spend, yet it continues to be a common pain point for CMOs.
Several marketing leaders feel they need multiple tools to prove the ROI of their marketing efforts. Whether it is channel attribution or the success of a new campaign, marketers say they don’t have the right tools to measure—or create—impact.
According to Gartner’s State of Marketing Budget and Strategy Report, lack of reliable marketing technology is creating CEO/CMO misalignment. Twenty-two percent of CMOs place marketing technology as one of the top three strategically important capability gaps in 2022.
The picture looks grimmer for 2023.
While 2022 was a thunderous year, companies still invested in marketing technology. Compared to 2021, the year-over-year spend doubles (from 5.0% to 10.1 %). But 2023 has “recession” plastered all over it.
As one respondent puts it:
“Our top pain is delivering higher-quality MQLs while being limited in terms of budget for new tools and headcount - a classic recession challenge.”
But the challenge isn’t just about marketing tool procurement. It also has to do with identifying the effective ones. Expensive tools automatically go to the bottom of the list, especially in a time of budget cuts.
“It’s an uphill battle to convey the value of a more expensive software tool that often gets lumped in with similar but less-effective tools that are less expensive,” says a respondent.
For companies where marketing is delivering leads and accelerating growth, a stagnant budget is a detrimental challenge. Ideally, rapidly growing teams should have more budget to educate new customers and constantly create upselling and cross-selling campaigns. But with a static budget, CMOs are forced to do more with less.
“Our marketing budget has not grown as our company has expanded. The upside of that is it forces us to be creative. The downside is that it makes having a consistent market presence a challenge,” says a respondent.
The takeaway: The perfect marketing tech stack varies for each organization, but it’s a critical capability gap that needs to be analyzed and budgeted for.
Recommendation: Get buy-in for mission-critical tools. If your team has a mandate for increasing leads while cutting costs, identify the channels and strategies that will prove ROI the fastest. Then, invest in tools for both execution and attribution.
Four out of 5 companies (79% of respondents) say they're going to invest in increasing conversion rate optimization over more paid acquisitions.
CMOs are doubling down on conversion rate optimization. And for a good reason.
Leads are getting more expensive every day. In 2022, the average cost per lead(CPL) went up for 91% of industries compared to 2021. For the B2B tech sector specifically, the average CPL comes in at $208. And if you can't funnel money into generating more leads, your best bet at growth is to convert the ones you already have.
As one respondent puts it:
"Generating a large number of MQLs is meaningless if a small percentage of these convert to opportunities or revenue. That is the trend we are ending the year seeing. Next year our focus is for fewer, better educated/ qualified leads to hit our sales makers."
But investing money isn't enough to increase conversion rates. CMOs also need to reconfigure sales and marketing alignment, test messaging, and create hyper-accurate personas.
A respondent shares their strategies for optimizing conversion rates at all stages:
The takeaway: CMOs are doubling down on conversion rate optimization while also redefining what it means.
Recommendation: Analyze how you can use existing tools to improve conversion rates. Also, identify where in your buyer’s journey you can increase interaction and build touchpoints.
Combined, demand generation and brand positioning are top priorities for 71% of CMOs in 2023.
When asked why demand generation takes precedence, several CMOs said it had proven ROI in the past. Especially for early-stage startups, it was essential to prioritize demand generation over demand capture to stay afloat for funding rounds.
Marketing leaders are investing in Brand Positioning and Messaging because it creates more personalized touch points in buyer journeys. Also, organic marketing and conversion rates have shown to be exponentially more powerful with the right messaging.
“In 2022, we re-calibrated our brand messaging and will focus more (people, budget) on positioning in competitive messaging that clearly demonstrates our capabilities against our competition,” as one respondent puts it.
Testing brand positioning is critical for companies in the early stages of the product market fit.
According to another respondent:
Stronger messaging is key for us. We are multivariate testing to see what messages best perform for which audience before we go to market with those messages in our trade marketing and channel initiatives.
Demand generation and brand positioning are also crucial for companies moving into lateral markets or niching down.
“We are optimizing our messaging for a smaller, more focused set of target personas. We will continue to invest in ensuring our messaging is consistently applied across channels,” another respondent highlights.
The takeaway: CMOs believe that demand gen and brand positioning will create quick wins in proving ROI. As “profitability” replaces “growth at all costs,” in 2023, leaders will spend on activities that have immediate impact, regardless of the channel.
Recommendation: If geographical expansion, product-market fit, or hyper-targeting is a priority for you in 2023, you’ll be well served by investing in demand gen and brand positioning.
When asked, "what's your top pain or challenge today when it comes to marketing?" the responses varied.
Even though no standard answer emerged, we identified six interdependent challenges.
By now, most teams are either navigating or anticipating staff reductions.
Lean teams feel the need for efficient tech stacks to compensate for the lost human resource. With slashed budgets, prioritizing revenue-generating activities has become more crucial than ever. As a result, long-term awareness-building initiatives are being replaced by campaigns with low customer acquisition costs and traceable ROI.
As one respondent says, "With budgets tightening (including our own), the question becomes which initiatives yield the lowest marginal CAC."
Bringing us to our next challenge: attribution.
Attribution affects every endeavor across marketing, sales, and customer success teams.
For marketing, attribution identifies successful channels, campaigns, and initiatives. For sales, first-touch attribution determines the sales cycle length and deal velocity. For customer success, upselling and cross-selling attribution identify levers that drive advocacy, retention, and upgrades.
And while most organizations have a system for attributing leads and revenue, it usually is either bloated or blurry. The gap stems from ineffective tech stacks, contradictory priorities, or inefficient team communication.
“We are just getting to the point where we can track pipeline and revenue resulting from Marketing efforts, but have no methodology for how much to count when multiple marketing activities are attributed to an opportunity, or when assets from other departments are also attributed.” says one respondent.
Differentiation was hard enough as it is, but the recession made it even worse.
Companies are now competing to differentiate themselves from rapidly growing competitors while cutting back on paid media, content creation, and social selling costs. There is a heightened expectation of campaigns being clear, distinct, and compelling. Marketers also want messaging to be more targeted, self-serving, and actionable across different use cases.
As one respondent puts it:
“Our biggest pain is reaching the right audience without getting into bidding wars, providing just the right content at the right time since our ideal customer personas are across four key industries all using us for something slightly different.”
Poor data hygiene is the mother of all marketing challenges.
With ambiguous buyer personas and untested messaging, marketing can be like shooting blindfolded at a moving target — you may occasionally hit the mark, but it’ll be more luck than precision.
Additionally, companies need CRM hygiene to avoid inaccurate analytics, which is far more dangerous than no analytics.
And finally, teams are more likely to invest in unsuitable marketing technology. Disparate and contradictory data creates confusion, chaos, and misalignment.
“It’s maddening not knowing deeply enough who our customers are or what they need. Clean data is hard to collect and maintain, and without it, you end up being driven by the internal myths of the company and not data-backed roadmaps,” one of the respondents said.
Following layoffs, internal restructuring has led to redundancy, disorganization, and scarcity.
To make matters even worse, tech stacks haven't readjusted, and marketing leaders are tasked with manual data migration. Rapidly-accumulating loose ends and 2023 planning demands seem to be pulling CMOs in opposite directions.
As one respondent puts it, "We also don't have a good ops/data person in the marketing department. And so we're running so fast in so many directions that we don't have time/energy to analyze what's really working."
The situation is even graver for early-stage teams. They have to trim the fat in their product-building operation while continually testing their product-market fit in an unstable economy.
"It's hard enough getting different parts of the team to be on the same page and share a consistent and compelling narrative. But to do so without moving too slow or getting caught in red tape is an operational nightmare for our team of four," a CMO said.
As old as getting marketing buy-in is, it has taken on a new meaning due to uncertainty.
CMOs report that founders and CEOs have developed unrealistic expectations from marketing. With lowered budgets, it’s heralded as a replacement for outbound, partner sales, and customer success initiatives.
Therefore, getting buy-in for slow-yielding — or even sustainably-paced — marketing initiatives has become backbreaking.
One respondent complains:
“Founders do not have an understanding of how marketing works and can be output based on needs, bandwidth and resources (i.e., budget). This often leads to founders thinking users will magically appear from a press release or a tweet, and this future vision justifies budget cuts (or complete removal). This is far out of touch with reality. The best way to get virality is improving conversion rates from your existing users.”
Even though there are multiple ways to pivot, a successful marketing strategy for 2023 will hinge on one principle: maximizing resources. Improving conversion rates, testing brand messaging, and building a strong tech stack are the three cornerstones of a lean marketing blueprint.
Each of these three tactics proactively eliminates marketing challenges:
And to bring it all together, keep tweaking all three levers till your marketing efforts yield maximum conversions at minimal costs.
Out now: Watch our free B2B messaging course and learn all the techniques (from basic to advanced) to create messaging that resonates with your target customers.