How Chasing Your Metrics Has You Chasing Your Tail
Metrics. It just rolls off the tongue, doesn't it? Analytics. That sounds good too. At the end of the day, it really doesn't matter what you call it. Marketers and sales professionals are facing a constant ROI battle, and this has trained us to rely on numbers as if we were junkies.
While reviewing the metrics at every facet of a campaign is important to justify spend, this process isn't one that has to send us into the tizzy of graphs and charts where we seem to end up. Furthermore, meaningful metrics don't have to be the result of costly email campaigns or a list-buying extravaganza. Here's how to stop chasing mythical ROI, and start delivering metrics that matter.
A Sea of Formulas
With the abundance of ROI calculators built into nearly every technology we deploy, why is measurement still a touchy subject?
On the most basic level, marketers usually come from creative disciplines and have been put into technical roles in recent years. That's just the state of the marketing world—most of us went to bed as brand builders and woke up as number crunchers.
Wait a minute, isn't that the role of sales? It used to be, but because of the software that businesses use now for lead generation, marketing and sales have to come to terms and share this responsibility. This is why most marketing automation software is designed to integrate with CRM systems. But it's still an uncomfortable place for many marketers because it takes their focus off of brand management and puts it on numbers management.
On the whole, this isn't such a bad thing. The mix of marketing automation software with CRM has connected two departments that have not always communicated well in a cohesive way. It's only troublesome when all of that great software pumps out a lot of different "results." How is anyone to know which ones are really depicting a healthy campaign? This is where sales and marketing usually don't see eye to eye on which metrics constitute success. And it's in this sea of numbers and definitions of success where so many organizations get stuck.
Start by Redefining Leads
Organizations that have been tracking marketing performance (and yes, there are still some that don't) often do so by counting leads. Using the number of leads as a measurement of success can be faulty, however, if the definition of a "lead" is different from one department to another.
Rarely do sales and marketing agree upon that definition off the bat. This is beginning to change because successful marketing automation depends on qualifying a lead. Smart organizations are bringing sales and marketing together to agree upon what makes a lead salesworthy.
Before handing a leads report over to the CEO to show the success of a campaign, dig into those leads a bit more. A well-defined lead scoring process that's been agreed upon by both marketing and sales can really shift this measurement in a positive way. The good news? Both your marketing automation and CRM are built to support lead scoring.
Ditch the Sticks and Carrots
Executives are becoming hyperfocused on specific marketing numbers, and with that, are using the age-old tactic of offering incentives (or punishments) to hit those numbers. It behooves the executives to turn that hyperfocus onto the value of the numbers they're so anxious to achieve.
Here's why: If you tell me to get 5,000 new unique visitors to the Web site per month to hit a bonus or just to keep my job, guess what? You're going to get 5,000 new unique visitors per month. You have now taken away my responsibility for what happens with those visitors (thank you). You've made it easier for me to achieve my goal, and done nothing to actually help the bottom line.
The above scenario is largely responsible for the way marketers and sales professionals look at "results" and share those results with CEOs. They are being incented, or punished, based entirely on the volume of specific metrics and not on the bottom line itself.
This may have happened simply because we now have access to these metrics when we didn't before. We have taken the "volume" game to a new level, one that doesn't serve the end result. Before we had lead generation and pay-per-click and cost-per-acquisition and every other number we could fit into a deck to confuse the intended audience, we had customers and revenue.
We need to revert a little.
So What to Do with All Those Metrics?
Don't throw the baby out with the bathwater. The reason your marketing automation and CRM are providing you with those metrics is to help you find a path to the ones that matter—customers and revenue. Next time you generate a report with all of your metrics—leads, cost-per-clicks, conversions, visitors, etc.—don't stop when the numbers are on a graph. That's not your report, that's your path.
Your next step is to look at your goals, the revenue, and the customers and see if all those metrics you just collected line up accordingly.
Let's say your goal is to get more Fortune 500 customers. You see that the number of leads in the last 30 days has doubled from the previous month. The old you gets excited and ships the report to the CEO just before he heads into the board meeting. The new you digs into the leads. How many of those leads are Fortune 500 companies? How many in the previous month? What's THAT percentage increase? There's your meaningful metric. That might be a smaller and tougher number to sell to some CEOs, but it's honest and it's what's going to have the most impact.
Here's another example, this one with a little math. Let's say you have a Webinar coming up and the goal is to have leads in the midstage funnel convert to opportunities for the sales team. From those leads, you'd like to close $300,000 in new revenue.
Perhaps there are 10,000 leads at this stage. Your company's average deal size is $50,000 and you know from sales that the average closing ratio is 50 percent. That's 12 opportunities total that need to close from this Webinar. The old you is drooling over the 10,000 people who will be invited to the Webinar, and being able to tell the CEO that 500 showed up. The new you is just thinking about the best 12. Just .0006 percent.
Simply by moving your focus away from the volume of leads and onto the end goal, you're able to find the metrics that will get you there. Your attention now goes from overblasting your lists to drilling down to the individuals who have a lead score (agreed upon by marketing and sales) within a very specific range.
A few other meaningful metrics to keep your focus on are revenue by campaign, opportunities by campaign, average revenue per new lead, and cost per lead acquisition.
As a marketer or sales professional, you are probably faced with 50 different metrics for every campaign you implement. Retrain yourself, your team, and even your boss to stop seeing those numbers as the end point and start seeing them as part of the path to achieving goals. In other words, work backwards. In the end, there's really only one number that matters—the one on the bottom line.
Justin Gray is the CEO and chief marketing evangelist at LeadMD, which helps businesses generate and manage leads better through marketing automation processes and technologies. He can be reached at firstname.lastname@example.org.