No one should disagree at this point that collecting and analyzing data can reveal which marketing programs are working, which ones are failing, and why. Today’s marketers have access to tons of data — but how can we differentiate between helpful and irrelevant metrics? There’s just one deciding factor: revenue.
Remember that the underlying goal of every marketing initiative is to ultimately drive profit. Yet marketers continue to use metrics that are disconnected from real business outcomes to assess their own success. By relying on Marketing Qualified Leads (MQLs) or hiding behind the excuse of sales information deltas, these marketers miss out on identifying the problem areas and rich opportunities good metrics can illuminate.
The Relevance Of Revenue
The most common failing when it comes to metrics is a fixation on quantity. Open rates, click rates and the number of new net leads can all paint an artificially positive outlook or suggest a falsely negative picture of a company’s true marketing health.
To really place those numbers in context, other metrics are needed — yet the idea persists that more leads or more activity equals more revenue. This concept is so ingrained that many companies still pour money into Business Development Resource (BDR) teams dedicated solely to producing quantity results.
Of course, companies still need a rich lead pipeline, but the focus should be on determining the optimal amount of leads needed. That’s the metric worth tracking here, and that brings us back to the most significant factor of all in marketing metrics: revenue. To determine the optimal amount of leads needed, work backward by calculating the amount of work involved to produce revenue.
Say, for instance, that a lead generation effort nets 1,000 leads. Seems pretty good at first glance, right? Now if we hand all 1,000 leads over to the sales team, who spend time and energy pursuing each and every lead to have 100 convert, we’ve spent valuable resources collecting and cultivating 900 dead leads. To sharpen our tactics for the future, we need to examine the 100 leads that did convert and analyze the reasons they converted, the amount of time and money it took to convert those leads, and the ultimate effect on revenue they had.
Armed with those more refined metrics, we’ll know for future campaigns things like who we should be targeting, how many of those leads we need to target at a time, and how much effort they’re worth. While the ultimate lead generation number might be smaller next time, the uptick in revenue will be higher — and we’ll have saved ourselves significant time and money chasing dead ends.
Of course, there’s a reason those shallow metrics are so popular with marketers. They tend to be easy to present or explain and, frankly, they’re easy to achieve, as well. As a result, marketers have been using the same metrics for years to cloak the true results of their marketing initiatives. But by way of the data now available through CRM and marketing automation systems, executives are beginning to see past this smokescreen and demand true revenue-related evidence to back marketing programs.
Take email marketing, for instance.
Because so many inboxes are flooded with advertisements and spam, wily marketers have become adept at writing attention-getting subject lines that cut through digital noise. Therefore, a clever subject line can deliver a high open rate — strong results that look a lot like success.
Yet, the only success we’ve really proven here is that our marketers know how to avoid the delete key. To connect that open rate to ROI, you need to take the next (and really easy) step of tracking how many clicks eventually led to a purchase. Only by placing the open rate in context do we get a full picture of a campaign’s performance. All of today’s CRM and marketing automation platforms enable users to do this.
Measuring Metrics That Matter
To accurately determine the success of your marketing programs and make any course corrections necessary, you’ll want to focus on the below metrics. Why these in particular? Because they paint a detailed picture of buyer motivations and decisions at every stage of the funnel, providing you with a wealth of insight to incorporate into your strategies. Once you’ve analyzed the data, you’ll know what you’ve been doing right, what you’ve been doing wrong, and how you can drive even better results in the future.
Lead Volume & Close Rate. Yes, we said earlier that Lead Volume was an outdated metric — and it is, when it stands alone. But when it’s connected to your Close Rate, it reveals the effectiveness of your acquisition and lead nurturing programs. This is also a great metric to expose sales and marketing alignment issues and focus efforts around scoring and lead definitions.
Time To Close & Cost-Per-Close. Velocity reporting, or the time it takes a lead to move through your funnel, is absolutely cornerstone reporting. This key report will give you an idea of how long it takes on average to close each customer and what you’re spending on average to achieve it. A quick tip here is to assemble velocity reports and cost metrics around each Buyer Persona you are marketing to. Remember, different buyers act differently — one size fits all fails every time, even when it comes to reporting.
Revenue-Per-New-Customer. Calculating the revenue delivered by each customer will tell you the quality of your leads.
Ultimately, the logic behind metrics is simple. The number of leads needs to be offset by quality of leads; quality leads to conversion, which then leads to revenue. Therefore, to create an intelligent metrics program, we must work backward and base our marketing targets off revenue – specifically marketing-sourced revenue. Only then will marketers have the knowledge they need to craft truly powerful initiatives that deliver the best results.