Small-business budgets are tight, and executives are scrutinizing marketing budgets like never before. As proof of their value, marketing teams have traditionally pointed to successes like how website page views have grown by 200% in the past month, or how campaign response rates increased from 3% to 8% last quarter.
Those metrics might look good on paper, but do they matter to the business? Is marketing measuring the right things? That’s a question aptly raised in the book and movie “Moneyball,” which portrayed a baseball team that dramatically changed the way it evaluated players. About 10 years ago, the Oakland Athletics baseball team began measuring base percentage and slugging percentage instead of batting averages and home-runs, and the results for the team were overwhelmingly positive.
Marketers also need to rethink metrics. Traditional metrics focus on lead volume instead of quality. This means that the sales force receives a large pile of names from marketing but then must painstakingly disqualify too many of them. Web-based analytics tools typically measure how much time a prospect spends at a company’s site, which pages they visited and which links they clicked. These metrics show some level of interest, but don’t show a clear picture of engagement.
Companies used to measure marketing on branding and the number of impressions. But how do you truly measure branding? How do you know if anyone actually read the content in your campaign? These measures have today become irrelevant, because they do a poor job of connecting marketing activities to closed deals. Today, marketing must show its impact on sales results and revenues.
The good news is, marketers have much more data available to them now compared with five years ago. The challenge is to integrate all of this data, which now lives within many different tools, from Google Analytics to e-mail, Excel spreadsheets, Web content management systems, social media sites, and business software. But a number of marketing automation tools exist to link together data from various sources and get a more comprehensive view of ROI and trend data across complex, multi-channel campaigns.
The new metrics
One goal for marketers is to look beyond the sheer volume of leads coming in from marketing campaigns and set a standard for marketing qualified leads (MQL). These leads typically meet certain criteria that indicate they’d be a good fit to become a customer. It’s best for marketing and sales to work together to define what makes a lead a good fit. The checklist may include explicit factors like job title or company size, but could also include activity-based indicators like engaging with key materials or passing a certain stage of nurturing. Once defined, marketing should assign only MQLs to the sales team.
Taking it a step further, another other core metric marketers should track is the percentage of MQLs that convert to opportunities, and then ultimately how many lead to closed deals. These numbers are the ultimate proof that marketing is delivering the right types of leads to sales, and a measure of how marketing impacts revenues across the board.
Focusing on sales-aligned metrics is also critical to shaping marketing strategies. Without this insight, it’s impossible to know which campaigns or specific strategies, such as video demos, have the most potential to attract qualified leads. Once marketers have a clear picture of their campaign performance, they can allocate resources accordingly and eliminate less profitable channels.
Making the shift from the old metrics to the new metrics isn’t always easy. Marketers may worry that poor results will cost them their jobs. Yet not making the shift could make marketing irrelevant to company decision-makers before it can even prove its worth. Sales may also be taken aback. In the new world of MQLs, sales teams may wonder why they are receiving fewer leads from the marketing department. Instead of getting a fire-hose of names, now they’ll get smaller lists with more potential. A bit of education can help sales understand the new lead qualification strategy.
With the right approach to marketing measurement and qualified leads on deck, the sales team is sure to improve its batting average, er, win rate.
1. Make sure you’re de-duplicating inbound leads so that your reports are as accurate as possible. Typically this is done through the use of systems with “smart forms” that de-duplicate leads upon conversion. There are also CRM-compatible apps that can help clean up your existing database.
2. You may have high-priority activities (requesting a test drive or filling out a Contact Me form, for example) that instantly elevate a lead to MQL status, even if they haven’t met other qualifiers.
3. When it comes to tracking marketing-sourced opportunities, showcase success not only in terms of the number of opportunities you generated, but also the dollar value of those opportunities. Sharing that marketing sourced $250,000 in new revenue last month is powerful stuff!
4. Another way to show marketing value, especially over an extended period, is to report on your figures as a percentage. For example: 62 percent of all new business closed in 2011 came from marketing-sourced leads.
5. Ready for something more advanced? It’s a bit trickier, but after you have a handle on measuring marketing-sourced leads, develop a strategy for measuring marketing-influenced leads. These are leads that didn’t come from a marketing campaign but received marketing touches such as drip nurturing throughout the sales cycle that ultimately helped close the deal.
Laura Horton is marketing manager for marketing-automation provider Pardot.
[Top photo credit: Ell Brown/Flickr]
VB's research team is studying web-personalization... Chime in here, and we’ll share the results.