Is your marketing working? Part 2 Measure your marketing success

Is your marketing working? Part 2

How to measure your marketing success

by Trip Jobe, CEO, Rand Inc.

Peter Drucker’s famous quote, “If you can’t measure it, you can’t improve it,” is always a great place to start. But by itself, it can lead to a false perspective on your results.

Drucker’s second famous quote is, “Management is doing things right, leadership is doing the right things.” When it comes to marketing, vanity metrics equate to doing things right, but KPIs measure doing the right things.

What do we mean by Vanity Metrics?

Vanity metrics are valid marketing measurements, but they don’t have a great deal of correlation with your business results. They will often simply show that your vendors or marketing teams are growing or creating positive results. A few examples may help shed some light on this.

Lead generation growth is often listed as a KPI, but unless you can show a strong correlation of leadsto-deal or revenue growth, it’s more likely a vanity metric.

I’ve seen many ways to buy or grow mass leads that aren’t qualified and cost businesses dollars and time wading through that information. Even if your marketing department or a vendor says leads grew by 60%, it is often not a solid indicator.

Key Performance Indicators

KPIs are measurements that help to determine if your marketing is leading to positive results in your business.

The number one KPI for marketing should always be revenue growth.

We can help you understand if other metrics and touchpoints are leading to business by attribution models. For example, if you sell via -e-commerce – only looking at visitors is likely eye-candy but time on site is more likely your KPI. Similarly, “opportunities created” is often a more valuable KPI than leads, which can be bought or influenced by contests.

A critical comparison

Another vanity metric is cost-per-lead; this can be “gamed” by offering more leads for a fixed cost. The challenge is the quality and real cost in working through those leads.

A real KPI is cost-per-opportunity or cost-per-deal; these more closely align with your effectiveness.

Take a look at the table above. Would you rather have a $5 cost per lead or a $8 cost per lead? In this example, the lower cost-per-lead is driven by unqualified leads that lower your per unit cost but will take time and effort to evaluate. A higher quality source of leads may cost more per unit but develop more deals and the cost per added revenue dollar is significantly less.

Other KPI vs Vanity Metric examples

Two common tactics in the outdoor home or commercial services markets are trade shows and emails. The results of these campaigns are often judged very differently, most often with vanity metrics. How many times have you heard the proclamation that we got 8% more leads than last year at this event or show? That’s nice, but it doesn’t tell me if many of these are from different employees at the same firm, current customers, or other vendors. I do want to track these leads, but I prefer to set up a KPI that counts appointments made within a period (30-90 days) of the show. This tells me how effective the event was at creating new business opportunities. Similarly, many firms will track your email open and click-thru rates and encourage you to use those as your KPIs. We absolutely track those and watch the trends, but we view your email subscriber base as a key component of your branding. Would I prefer to have a 1% improvement in open rate per year or would I be happier with the same open rate but growing my email subscribers by 10% in a year? In the second example, we are growing our pie of potential customers – a brand-driven tactic. If I have some important documents like a winter checklist or a summer guide that I can put in our emails and have subscribers download I can measure the number of downloads to see how engaged and interested those subscribers are in our products or services.

Again, it’s a great start to make sure you are measuring your marketing programs. To be more effective and ensure that you want to invest in marketing, be sure to align your metrics with how they impact your business results. Other valuable marketing KPIs include costper-deal (or customer-acquisition-cost) and Lifetime Customer Value. These critical KPIs will help you determine your progress and whether you should invest more, reduce spending, or try to test new tactics and learn.

About the author

Trip is the CEO of Rand Inc., a strategic marketing and analytics firm. Having sat in both sales and marketing leadership roles for large and small firms for 20+ years, Trip is an ambassador for driving sales and marketing alignment to fuel growth.

Email: tjobe@randinc.cc Web: randinc.cc LinkedIn: www.linkedin.com/in/tripjobe