Marketing Performance Management Isn’t Hard, It’s Good Business
Sales has always enjoyed a quantitative edge over marketing but today that’s changing. Sales managers measure many things like sales calls per rep per week, forecasted revenue, the time a deal stays in the pipeline or in a particular deal stage and much more. Forecasts are often tallied in spreadsheets and they always involve an impressive array of revenue numbers and probabilities of close.
Pity the poor marketer. Marketing has been at a quantitative disadvantage because they have tracked response rates, click-through rates and many other qualitative measures of interest that can be as reliable as fickle customers. Worse still, the rest of the C-suite speaks the language of costs and profits while the CMO talks about things that don’t directly result in revenue. It doesn’t matter that some sales numbers, like probability of close, are just as qualitative.
In the past all marketers could do to arrive at “serious” numbers was to add up marketing campaign expenses and divide them by the number of leads and revenue that came in. This macro approach didn’t take into account which campaigns did the best job of attracting the customer initially or which one pushed the deal over the top. As a consequence, marketers couldn’t tell if one campaign or style of campaign was better or worse at doing a specific job and resource allocation was hit or miss.
But what if there was a way to define and track marketing metrics that more closely track revenue? For many years marketers couldn’t hope to track those metrics but thanks to the confluence of big data, analytics, social techniques and CRM, marketers can track the data their campaigns give off and make measurements that can stand on an equal footing with sales metrics. This reality has made the marketing funnel a real and important part of the overall sales process and spawned the discipline of Marketing Performance Management of MPM. Full Circle CRM provides a good example of an MPM solution.
A marketing department that tracks data on its activities can put itself and its company on a path to having greater certainty about its pipeline and revenue forecasts and greater influence in the C-suite. Every marketing campaign generates valuable data from the raw number of prospects it attracts to the time it takes to close a lead and even to knowing how many prospects with initial interest make it all the way to closure. So the issue for marketers no longer revolves around which data to collect or how to do it. Instead emphasis has shifted to which calculations to make and which metrics to apply.
If a marketing department tracks spending, dates of transition through the steps in the marketing funnel and number of leads generated — by each campaign — it can calculate many meaningful measures of performance that will make anyone in the C-suite smile. Here are some metrics that every marketer who is intent on improving MPM should consider.
- Immediately, the cost of marketing becomes clear with simple metrics like cost per lead, cost per revenue dollar and conversion rates by each campaign.
- A slightly more sophisticated measure can calculate cost per lead based on campaign type — trade show, direct mail, social campaigns — whatever. This can tell you the best sources of leads by volume and it can identify the best mix of campaigns by cost per lead and quality of lead.
- Capturing the date when a customer first raised a hand and date of close (from the SFA system) averaged over a number of leads in a specific time range gives the average sales cycle. It also gives the overall velocity of the sales funnel — the speed from first contact to closed deal. Further identifying leads by campaign type will also show which campaigns produce the most sales ready leads.
- You can use the deal velocity calculation on leads from specific campaigns too. This will tell you which deals might be accelerated to help ensure sales plans are met.
- By capturing dates for transition from one funnel or pipeline stage to another marketers can tell conversion rates by stage and, most importantly, if and where deals get stuck. This will naturally also show the kinds of campaigns that might be most effective at getting the funnel flowing again.
All of this data can be captured and stored in the CRM system. Many of these metrics depend on establishing historical norms or averages but that’s easy to do and the norms get refined over a short time.
So, tracking data on a relatively small number of attributes and applying the right math can significantly improve marketing’s visibility into the funnel — that’s what sales does and marketing can do the same. Of course, plenty of consideration ought to be given to the vagaries of each marketing department including overall budgets, product type and customer types. Marketing organizations therefore need ways to customize weightings for various programs and scores for resulting leads.
So when shopping for modern marketing automation solutions, keep an eye out for the performance management side of the equation and include marketing performance management as part of your shopping list. It can easily mean the difference between success in your new approach to marketing and remaining at a quantitative disadvantage to sales.