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What metrics would you recommend companies use to measure marketing success?
This question is part of the Focus Sales & Marketing Roundtable: How to Achieve Stronger Marketing & Sales Alignment on January 28th, 2011
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7 Answers
Getting your Marketing metrics dialed in is really the key to having a successful Marketing program. The metrics definitely depend on the business model, so they'll vary. Here are a few that are worth tracking./
1. CAC - Customer Acquisition Cost - This is typically measured as the fully loaded cost of marketing & sales divided by the number of new customers in a month. The most variable cost is the marketing/advertising spend. Focus on driving this number to a healthy level is key.
2. # of Qualified Leads - Keeping the volume of qualified leads up each month is an essential driver of growth.
3. Lead to Sale Conversion - The conversion rate of your leads is directly correlated to the quality. Having this metric in place keeps the volume number above in check. If you drive on volume and get lazy on quality, the conversion rate will go down and CAC will suffer.
4. Churn Rate - For recurring business models, this is key. Again, churn is a reflection of lead quality and target. If you drive leads that are qualified and line up with a target market that needs your offering, churn will be low. If the leads aren't great, they'll churn. If your business is not a recurring business, you can use surrogates like upsell percentage, referral percentage, etc. The idea is that you're measuring the success & happiness of your customers.
5. Craig mentioned "Cost per opportunity" above. I also think this is a critical metric, but it's important to also have CAC or else you can drive your "cost per opportunity" down, and drag conversion rate down with it, if you're not careful.
First let me state my view of the world: I believe marketing's job is to get sales "shots at the plate". As a result, the metrics I recommend are the following:
1. Leads-to-Opportunity conversion -- This is a number worth tracking and optimizing. This is both a marketing success number AND a sales alignment number. There are many ways to optimize this besides lead quality, for example: lead followup is a potential optimization point.
2. Pipeline created -- Again, shots at the plate is the number I believe in, this tells the organization how much potential marketing created.
3. Cost per Opportunity -- I love this one. Cost per lead is such a narrow view of the world. What you really want to figure out is how much it cost to create an opportunity. For example, you may find the more expensive leads are cheaper cost per opportunity.
Identifying and tracking the right marketing metrics is not only important to measure marketing success, but also to help monitor and refine your marketing and sales process.
I agree with Craig and Tyler that Cost Per Opportunity (CPO) is an important metric and a more accurate measurement of success than Cost Per Lead. A campaign that produced 1500 leads and 5 opportunities is less successful than a campaign that produced 400 leads and 6 opportunities.
I also think Cost Per Sales Qualified Lead (SQL) is a good metric to track. This should go hand in hand with CPO. If you have a high number of SQLs and a low number of opportunities, you should work with Sales to re-evaluate what qualifies as an SQL. If there are no changes there, it could indicate a leak in the funnel somewhere between SQL and opportunity that should be addressed.
Cost Per Sales Qualified Lead, Cost Per Opportunity and overall ROI are three strong indicators of a marketing program's success; however, tracking other metrics such as Cost Per Lead can enable you to evaluate the process as whole and make adjustments and improvements when necessary.
Great answers - I think the top KPIs are:
CPL, CPSQL, # of SQLs, Lead to opp to Sales Conv % (waterfall), CPO, marketing influenced & sourced pipeline & bookings %, average lead value, ROI & retention.
Having a good balance of spend efficiency, volume of demand, and bookings impact is healthy for the sales & marketing engine, and your business.
Digital marketing -- in particular, social media marketing -- should follow the lead of David Ogilvy himself. "We SELL or else."
The opportunity is clear: To *design* "digital conversations” in ways that produce meaningful, relevant, value-laden experiences for customers. Experiences that ultimately SELL. "Customer engagement" isn't a business metric. Nor is it a desirable output. It's an excuse born of the advertising industry.
The answer to selling more with social tools is rooted in starting conversations that are worth having. And knowing whom to converse with... and how to converse in ways that produce value for buyer and seller alike.
Might it be more powerful to converse in ways that generate customer inquiries – questions that you can help them solve? Of course it would. And now we're talking about "content marketing" as lead generation.
Olivier Blanchard of BrandBuilder Marketing puts it more bluntly:
“Return on investment is still a question-mark for most social media 'experts' in spite of the fact that a) it has remained the same since the dawn of commerce, b) every first-year business major can tell you what it is, and c) most social media consultants cost a lot more per day than their expertise in basic business concepts seems to warrant."
and...
“Pushing your marketing campaigns through social media channels isn’t 'social.' It’s marketing. Nothing has changed."
Once we stop believing in "the social media revolution" and realize that it's actually an EVO-lution we can see how the digital marketing opportunity isn't about using Facebook or Twitter as a better place to advertise (gain attention). These are better tools to discover and capture demand. Example here http://bit.ly/giv9Q7
It seems to me that marketing deparments in general have defaulted to a cost per lead mentality, mostly because they do not get feedback on leads from sales - or the feedback they get is "the leads suck".
So, would anyone support creating an ROI by lead source (including "inbound") to truly measure the CPL?
Great comments!
Dan McDade
PointClear
@pointclearpd
All marketing efforts need to be measured, or they're not worth pursuing. The true question is: what is the objective of each marketing program or expenditure? If the objective is to bring qualified leads to sales, then measure that. If the objective is to increase the number of subscribers to your blog, then measure the increase. If the objective is to raise sales of a higher margin product, while phasing out the lower margin project, then measure that.
Making marketing measurable is a learned skill. Have a look.http://www.circeconsulting.com/marketing-workshops
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