Metrics Prove the Value of your Marketing Activities
Mighty Guides reached out to 28 marketing experts (including our own Paul Butcher) and asked the following question: “On which marketing metrics do you advise senior marketers to focus to most effectively measure the impact of marketing on business goals, and why are these metrics the most important?” The insightful answers are summarized in a new e-book called Defining Marketing Success. (Download the entire book here or see the chapter on slideshare)
Paul’s interview is shown below…
Paul Butcher recognizes that metrics need to prove the value of the activities they measure. “The holy grail of marketing metrics is the return on marketing investment, which shows leads and revenue generated by a marketing expenditure,” he says. How you arrive at that depends on the type of marketing you are analyzing, what channels and stages of the sales process the activity serves, and the types of media involved. Multiple components make up the calculation of return on marketing investment. Butcher says, “Key metrics that contribute to the return on investment (ROI) calculation are cost per lead and revenue per lead.”
When calculating cost per lead and revenue per lead, an important metric to measure is repeat sales. A second or third sale to the same customer costs less than the original sale, and those follow-on sales are also responsible for more positive referrals. “The level of repeat sales to your existing customer base is a major contributor to reducing your marketing costs per dollar of revenue,” says Butcher.
Furthermore, each part of the marketing funnel is supported by its own marketing strategy and associated metrics. For instance, quantitative metrics relevant to the top of the funnel may be reach-related, such as the number of views, while further into the funnel, you will be looking at metrics that relate to the number of marketing-qualified leads (MQLs) and sales qualified leads (SQLs) and the respective costs of generating them. As you move through the funnel, metrics become more specifically tied to costs and sales revenue.
These same marketing metrics are just as relevant when working with marketing automation and programmatic buying platforms, which automate both the activities and the calculations. Programmatic buying platforms make decisions based on the parameters you set. For instance, you might be running 10 different ads, and each ad might have 10 permutations based on language and design. You might specify the platform to target certain demographic groups or market cohorts. The platform automatically optimizes media buys and ad permutations based on real-time automated testing and performance metrics around the key performance indicators (KPIs) that are important to you. As leads come in, a marketing automation platform handles them, automating marketing actions based on what is known about the leads. “These two platforms work together to optimize lead generation through programmatic ad buying and then handling the leads through marketing automation,” Butcher says.
Marketing automation platforms change the way companies use metrics. “With new data visualization tools, it now becomes possible to visualize key high-level metrics in real time,” Butcher says. In doing so, some platforms automatically track and calculate common metrics.
For instance, an ideal setup that uses highly integrated automation platforms to generate and handle leads enables you to view continuous ROI on a marketing campaign in real time, like looking at stock market returns. This ROI visualization is automatically compiled from less visible metrics. Or you might be able to see that a campaign that yesterday was generating leads that cost $11.00 each is today generating leads that cost $10.00 each.
Butcher points out, “Although the metric components and calculations are being processed, used, and viewed on a more real time basis, they are the same core metrics driving the same business goals.”