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Definitive guide-to-marketing-metrics-marketing-analytics


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  • 1. Thetive i efinideD GuMarketingMetrics &
  • 2. Definitive Guide to Marketing Metrics and AnalyticsContentsWhy Should I Read the Definitive Guide Part 5: Program Measurement 37to Marketing Metrics and Analytics? 3 Why Measuring Marketing Programs is Difficult 38 Method One: Single Attribution (First Touch / Last Touch) 40Part 1: Measurement Builds Respect and Accountability 4 Method Two: Single Attribution withWhy Now Is The Time For Marketing Metrics 7 Revenue Cycle Projections 41 Method Three: Attribute across Multiple ProgramsPart 2: Planning for Marketing ROI 9 and People 44Step One: Establish Goals and ROI Estimates Up-Front 11 Method Four: Test and Control Groups 46Step Two: Design Programs to Be Measurable 15 Method Five: Full Market Mix Modeling 48Step Three: Focus on the Decisions Program specific metrics – what you shouldthat Improve Marketing 16 measure and track 49 Conclusion: Program Measurement Applied 50Part 3: A Framework for Measurement 17Where Metrics Go Wrong 19 Part 6: Marketing Forecasting 51The Right Metrics 21 Part 7: Dashboards 55 Part 4: Revenue Analytics 23Define the Revenue Cycle 24 Part 8: Implementation • People, Process,Revenue Cycle Metrics That Matter 29 and Technology 59Revenue Performance Management Metrics 33 People and Culture 60 Process 62 Technology 64 Conclusion 65 Key Lessons to Improve your Performance, Profitability, and Credibility with Marketing Metrics and Analytics 66 © 2011 Marketo, Inc. All rights reserved. 2
  • 3. Definitive Guide to Marketing Metrics and AnalyticsWhy Should I Read the Definitive Guideto Marketing Metrics and Analytics?Do you know what profits a 10% increase This guide will help you do just that. Wein your marketing budget would generate? will help you answer key questions like:According to the Lenskold Group’s 2010 B2B • hat are the most important marketing W 5 QUESTIONS TO GUIDE YOURLead Generation Marketing ROI Study, the metrics for me to use? MEASUREMENT INSIGHTmost common answer to this question is 1. hat are your specific objectives for marketing W • ow can I measure my various marketing H“I Don’t Know.” investment and how will you connect your programs’ impact on revenue and profit?Forty-four percent (44%) of qualified investments to incremental revenue and profit? • ow can I best communicate marketing Hmarketers have no idea what a 10% budget 2. hat impact would a 10% change in your W results with my executive team and board?increase could do for their companies. marketing budget (up or down) have on your • hich personnel, procedural, and W profits and margins over the next year?If you fit into this 44%, you will experience cultural changes need to occur within my The next three years? Five?difficulty protecting your budget. In fact, you’ll organization so I can implement marketinglikely find yourself asking the question the other 3. ompared to relevant benchmarks (historical, C measurement?way around: “What will happen now that my competitive, marketplace), how effective are youbudget has been decreased by 10%?” • And many more… at converting marketing investment into revenueYou can’t expect your organization to place value and profit growth? The bottom line of any business is the topon something you’re unable to quantify. line: revenue and faster growth! 4. hich are appropriate targets for improving W revenue leverage (defined as dollars of profit So let’s get started. over dollars of marketing and sales spend) over the next few years? Which initiatives will get you there? 5. hat questions do you still need to answer W with regard to your knowledge of the return on marketing investments? What are you going to do to answer them? (Source: MarketingNPV) © 2011 Marketo, Inc. All rights reserved. 3
  • 4. Definitive Guide to Marketing Metrics and AnalyticsPart 1: MeasurementBuilds Respect andAccountability © 2011 Marketo, Inc. All rights reserved. 4
  • 5. Definitive Guide to Marketing Metrics and AnalyticsPart 1: Measurement Builds Respectand AccountabilityMarketing suffers from a crisis of credibility. • ow much profit was made last quarter HTypically, executives outside the marketing versus this quarter?department perceive that marketing exists • ow much revenue and profit do you H CUT PROGRAMS TO BUILD CREDIBILITYsolely to support sales, or that it is an arts and forecast for the next quarter? According to Marketo CEO Phil Fernandez, the #1crafts function that throws parties and churnsout color brochures. Either way, marketing • hy are you confident in the above answers? W thing a marketer can to do to build credibility withoften does not command the respect it the CEO is to offer some cuts to marketing programs.deserves. Soft metrics like brand awareness, GRP, Show that you are “de-funding” things you impressions, organic search rankings and previously did that either A) didn’t work; B) weren’tWhat can marketers do so they are seen reach are important – but only to the extent aligned with evolving company goals; or C) seemas part of a machine that drives revenue that they quantifiably connect to hard less important now than other initiatives. This helpsand profits? How can marketers take more metrics like pipeline, revenue, and profit. demonstrate a strong sense that you are managing acontrol over the revenue process, build the portfolio of investments, and that you are willing torespect of their organizational peers, and Of course, marketers must track and measure the impact of all key marketing activities, make hard choices with company money.earn a seat at the revenue table? both hard and soft. But keep all but the most critical metrics internal to marketing.Use metrics that matter to By speaking the same quantitative languagethe CEO and CFO as the CEOs and CFOs, marketers will betterIt’s no secret that CEOs and boards don’t communicate marketing’s value and impact tocare about the open rate of your last email the executive suite. Seventy-six percent (76%) of B2B marketing professionals agreecampaign or your last press release’s numberof views. See Part 4 for more on how to measure or strongly agree that their “ability to track marketing ROI givesIn today’s economy, CEOs and CFOs the right revenue metrics. marketing more respect.” Source: Forrester Researchcare about growing revenue and profits:• ow much faster are we growing now H versus last quarter? Last year? © 2011 Marketo, Inc. All rights reserved. 5
  • 6. Definitive Guide to Marketing Metrics and AnalyticsPart 1: Measurement Builds Respectand AccountabilityKnow the impact of each When you talk about marketing spending, “ arketing has always been a grueling and competitive sport – not Mmarketing investment other executives think of costs and profit unlike running a marathon. With the changes in the buying process,If you can’t confidently identify which parts of loss. When you talk about future results, in media and technology, and managing expectations, it’s likeyour marketing truly deliver financial returns, they think of revenue and growth. running a marathon as the ground shifts beneath your feet. Whatmarketing’s impact and influence will continueto be limited across your company. This will To formulate accurate forecasts, sales was already difficult is becoming increasingly difficult. If you’re and marketing must sit together at the going to do it without measurement, it’s like running a marathon,not only hurt marketing’s influence and revenue table.credibility; it can also prevent your company in an earthquake, blindfolded.” David Raab, Author, Winning thefrom making the right strategic investments to See Part 6 for more on Marketing Forecasting. Marketing Measurement Marathonimprove results over time.See Part 5 for more on measuring the impact Make hard business cases for spending With its forecast in place, marketing must thenof various marketing programs. make a hard business case for the resources it needs to deliver the results it has promised.Forecast results, not spending This requires knowing what it will take – inForecasting is perhaps the single most money, time, and effort – to acquire newimportant thing marketers can do to change qualified leads and nurture those leads untilthe perception that marketing is a cost center. they are ready to talk with sales.In the same way that you can’t drive quickly Marketers who use this type of rigorousif you rely only on your rear-view mirror, you methodology are able to frame their budgetscan’t be an effective marketer if you only in terms of investments, not costs, and arereport what has happened in the past. The better able to justify and defend their marketers forecast the results they expectin the future – and quantify their forecasts interms of leads, pipeline, and revenue. © 2011 Marketo, Inc. All rights reserved. 6
  • 7. Definitive Guide to Marketing Metrics and AnalyticsPart 1: Measurement Builds Respectand Accountability As the function that “owns” the relationship CEOs Grade MarketingWHY NOW IS THE TIME FOR with these early stage prospects, Marketing 67% of CEOs give their marketing departments a B or CMARKETING METRICS 20% now is responsible for a much greater portion of the revenue cycle than ever before.The way that prospects research and buysolutions today has been forever transformed But with great power comes greatby the abundance of information available on responsibility. Not sure the marketing programswebsites and social networks, and this in turn made a difference, but they probably Enter Marketing Metrics. had some impact even thoughfuels a significant change in the way marketing contribution wasn’t measuredand sales teams must work – and work CEO ratings of marketing’s performance 47%together – to drive revenue. directly rise and fall with marketing’s ability to quantify how their campaigns and programsBecause they have ready access to deliver value in line with company revenueinformation, buyers resist engaging with sales objectives. It is more important than ever foruntil much later in the buying process. marketing to link the impact of its efforts and Marketing programs madeThis presents an incredible opportunity financial investments to revenue and profit, a difference but contributionfor marketing to reinvent itself as a core and establish a true process for marketing ROI wasn’t measuredpart of the company’s revenue engine. in their companies. 35%“ 0% of the buying process is now complete 7 Marketing programs made an by the time a prospect is ready to engage with impact and marketing was able to sales.” SiriusDecisions, Inc. document their contribution Source: VisionEdge Marketing Marketo 2010 Marketing Performance Measurement and Management Survey of 423 executives © 2011 Marketo, Inc. All rights reserved. 7
  • 8. Definitive Guide to Marketing Metrics and AnalyticsPart 1: Measurement Builds Respectand AccountabilityTHE 5 STAGES OF MARKETING ACCOUNTABILITY1. Denial 3. Confusion Inevitably, this will reinforce the perception“Marketing is an art, not a science. It can’t be “I know I should measure marketing results, that marketing is a cost center, not a revenue-measured. The results will come; trust me!” but I just don’t know how.” producing asset.At first, the CMO may deny the need to be The CMO knows that marketing accountabilityaccountable for results. Being stuck in this is inevitable, but the path to achieve it 5. Accountabilitystage often leads to marketing’s isolation from remains hidden. Basic metrics such as lead “Revenue starts with marketing.”other departments and executives. source tracking and cost-per-lead are put in At this stage, marketing truly finds its place place, but there is no holistic understanding in front of the revenue pipeline – where2. Fear of how marketing activities are impacting key marketing stops being a cost center and“What if my marketing activities don’t impact bottom line metrics. starts justifying marketing expenditures asthe bottom line? Will I lose my job?” investments in revenue and growth. This isTaking on accountability can be scary, 4. Self-Promotion when the CMO can act, and talk, like a trueespecially when you don’t yet know how “Hey, come look at all these charts C-level executive, measuring and forecastingwell (or poorly) your department is doing. and graphs!” marketing’s impact on metrics that matter toMarketing accountability is a double-edged the CEO and CFO. This is when marketing truly In a desperate attempt to appear accountable,sword, shining a bright light on weak earns a seat at the revenue table. marketing measures everything that can beperformance as well as good performance. (easily) measured — from website page views Getting to this final stage of marketingSome CMOs may be tempted to avoid to press release downloads to search engine accountability is difficult for any organization.accountability just to avoid facing which rankings. These CMOs proudly display their It requires top-level commitment, discipline,category they are really in. results and claim marketing accountability. and investment in the right systems and tools. However, important as these metrics may It can also require a rethinking of marketing be, they lack an explicit connection to hard incentives and compensation. The journey metrics like pipeline, revenue, and profit. The may not be easy, but the results—in terms result is a focus on soft marketing KPIs instead of peer respect and impact on profits—are of hard revenue growth, on short-term ROI clearly worth it for any marketing team. over long-term marketing accountability. © 2011 Marketo, Inc. All rights reserved. 8
  • 9. Definitive Guide to Marketing Metrics and AnalyticsPart 2: Planning forMarketing ROI © 2011 Marketo, Inc. All rights reserved. 9
  • 10. Definitive Guide to Marketing Metrics and AnalyticsPart 2: Planning for Marketing ROIMany marketers think of marketing ROI as The fastest-growing companies measure Marketing ROI Management Processreporting on the outcome of their programs, ROI to find not just what works, but whatoften in the form of a set of reports they have works better. They focus on “improving ROI,” 1 Best Assumptionsto deliver monthly. But the best companies not just “proving ROI.” Process begins with ROIrecognize that reporting for reporting’s sake scenarios early in the Planning for marketing ROI involves planning cycle to shapeis less important than the decisions those three main activities: objectives, strategies ROI Scenariosreports enable to improve profits. and tactics. 1. stablishing targets and ROI EThis is the difference between backwards- estimates up-frontlooking measurement and decision-focusedmanagement. 2. Designing programs to be measurable 2a Objectives Strategy Tactical Plan Impact Measurements are ContributionIt’s important to plan your programs with ROI 3. ocusing on the decisions that will F prioritized first andin mind from the outset. When you quantify improve marketing then planned concurrentthe outcome you expect from each marketing to campaign plans, so tests Measurement Plan Only with discipline, planning, and a and variations can be Test Variations in Planinvestment, you can then determine exactly incorporated tohow you will measure the program against closed-loop process will you be able to improve precision.those goals and position yourself to achieve improve your marketing ROI. Measurementsthem. 2b Measurements capture lift, diagnose weaknesses, and generate insight to improve effectiveness. 3 ROI Measurement ROI results guide changes to strategies and tactics in the next cycle of marketing, based on which have the History to Guide higher ROI potential. Next Campaign (Source: Lenskold Group) © 2011 Marketo, Inc. All rights reserved. 10
  • 11. Definitive Guide to Marketing Metrics and AnalyticsPart 2: Planning for Marketing ROI STEP ONEESTABLISH GOALS AND Benefits of ROI goals With ROI goals in place, the CFO will see notROI ESTIMATES UP-FRONT only the cost that goes out the door, but also SHOULD MARKETING HAVE exactly what benefit is expected to come from TO JUSTIFY ITSELF?When planning any marketing investment, that cost. As a result, he or she will be muchyour first step is to quantify your expected more likely to support the investment. According to consultancy MarketingNPV, the twooutcomes. All too often, marketers plan most common questions asked by non-marketingprograms and commit their budgets without Don’t worry too much about the fact that executives are:establishing a solid set of expectations about you are making estimates. As long as they arewhat impact they expect the program to clearly labeled, the CFO will understand that 1. Does our marketing generate any value for “have. This is a terrible habit, and is one of any plan requires numerous assumptions. shareholders?”the underlying reasons why other executives, Just the fact that the marketer is walking 2. “How do we know that marketing really works?”especially CFOs, question marketing in the door with a spreadsheet of numbers establishes that marketing is speaking the Unfortunately, these questions immediately putinvestments. CFO’s language. That in itself is highly effective marketing on the defensive and inevitably causeThe solution is to assign up-front goals, for building credibility. marketers to conduct time-consuming and expensivebenchmarks and KPIs for each marketing analysis to justify their business function. This resultsprogram. Modeling your ROI goals will also help you to: in a significant “insight opportunity cost” since all the resources that could have been directed towardsThe first step of any program plan should be to • dentify the key profit drivers that most I the pursuit of true insight are instead diverted todefine your objectives and then pick measurable affect the model and ultimately your profits. “proving” that marketing works.metrics to support those goals. Imagine if each • reate “what if” scenarios to see how CPO came with an ROI plan – with best case, worst changing parameters may vary the results Most companies will find that profits increase whencase, and expected case scenario outcomes – and impact profitability. constrained analytics resources are focused on thethat answered the basic (but critical) question of key decisions that will improve profits rather than“what do we expect will happen in exchange for • stablish the targets you will use to compare E justifying marketing’s existence.this money we want to spend?” actual results. © 2011 Marketo, Inc. All rights reserved. 11
  • 12. Definitive Guide to Marketing Metrics and AnalyticsPart 2: Planning for Marketing ROI STEP ONEHow to build models for ROI goals Here’s an example ROI calculation, courtesyNot every program will have a complete ROI of Lenskold Group. Note how it captures allcalculation. Some programs will have softer expenses including all variable costs on thegoals, such as number of attendees at an left, and focused on incremental gross marginevent, but as always, the closer you can get to on the right.measuring profits and ROI, the better you willjustify the investment. Basic ROI CalculationEven the simplest ROI goals should include: MARKETING EXPENSES (EXCLUDING OFFER COSTS) MARKETING IMPACT QUANTITY• How many incremental sales are generated Campaign Development $25,000 Target Reached 27,000• ow much revenue each sale produces H Mass Media $100,000 % Convert to Sale 2.2%• he gross margin percentage T• he total marketing and sales investment T Direct Marketing $40,000 Incremental Sales 594 Total Marketing Budget $165,000 Net Present Value per New Sale $875 MARKETING STAFF EXPENSE Incremental Revenue $519,750 Number of Staff Days 6.25 Average Daily Rate $450 Average Gross Margin % 38.0% Total Staff Expense $2,813 Profit from Incremental Sales $197,505 Total Marketing Investment $167,813 Incremental Gross Margin $197,505 Gross Margin – Marketing Investment Return (i.e., Net Profit) $29,693 Return / Marketing Investment ROI 17.7% (Source: Lenskold Group) © 2011 Marketo, Inc. All rights reserved. 12
  • 13. Definitive Guide to Marketing Metrics and AnalyticsPart 2: Planning for Marketing ROI STEP ONELenskold Group provides excellent toolsfor managing marketing ROI, including anonline Lead Generation ROI planning tool.This and other tools are available for freefrom the Lenskold Group website ( (Source: Lenskold Group ‘CMO Guide to Marketing’) © 2011 Marketo, Inc. All rights reserved. 13
  • 14. Definitive Guide to Marketing Metrics and AnalyticsPart 2: Planning for Marketing ROI STEP ONEUnderstand Best Case, Worst Case,and Risks ScenariosThe best plans show a range of targets, INCORPORATE ALLincluding expected case, best case, and worst RELEVANT EXPENSEScase scenarios. This lets you protect yourcredibility in case things go sour, and shows Often, marketing ROI models show ridiculously highan understanding of how changes to various returns because they don’t incorporate all relevantassumptions might impact the results. variable and semi-variable costs. Examples include:It also shows that you understand the possible • taff costs within marketing Srisks that would hurt your program’s ROI. It’s • ravel expenses Toften a good idea to run your assumptions and • he cost of sales’ time spent following up on leads Ttargets by the most skeptical and pessimisticmember of your team. Let them find all the Take, for example, a program that generates a lotways the program could fail – and then, where of leads but does not include the cost of the timepossible, put in place contingencies to manage sales wastes on pursuing leads that don’t convert.the risks. This may include things directly It’s quite possible that a program that at first appearsrelated to the program, but it can also include profitable will show a negative ROI once thesebroad changes to the business environment expenses are included.and economy. By proactively identifyingand managing risks up-front, you lessen thelikelihood that other executives will shootbullets at your feet later on. © 2011 Marketo, Inc. All rights reserved. 14
  • 15. Definitive Guide to Marketing Metrics and AnalyticsPart 2: Planning for Marketing ROI STEP TWODESIGN PROGRAMS TO BE Data Collection A key part of planning for measurement isMEASURABLE simply tracking the appropriate attributes MEASUREMENT COSTS MONEY – for all your marketing programs (and their SO SPEND WISELYThe best marketing programs have variants). This can include target audience,intentional measurement strategies planned message, channel, offer, investment level, and Exercise advance. So as part of planning any any other relevant attributes. While it’s possible to measure just about anythingprogram, you need to answer these three in marketing, it is impossible (and unprofitable!) toquestions: Most companies do not begin this process measure everything. early enough in their lifecycle, and they pay• What will you measure? for it later. Even if you don’t use the data Begin with the end in mind.• When will you measure? right away, it will become invaluable down As Jim Lenskold says, “Prioritize when and• How will you measure? the road when you attempt any of the more what to measure based on the answers you need sophisticated approaches towards measuring to make decisions that will improve your profits.”In almost every case, you will need to program effectiveness. These attributes can Invest in Marketing RD.take specific steps to make your marketing be stored in anything from your marketing This is a term used by consultant Jim Sterneprograms measurable. This often includes automation system to a simple spreadsheet (@jimsterne). Just like the overall corporation investssetting up test and control groups or varying hosted on a share drive – what matters the in RD to generate future profits, marketing shouldyour spending levels across markets to most is that you start to build the history as do the same to generate similar insights to optimizemeasure relative impact. Without variance early as possible. future profits. In other words, sometimes it is OK toin your marketing, you may not be able to run a marketing program where the primary goal isuse modeling to tease apart the incremental to learn whether something works, or how to makeimpact of your marketing programs and it work better. A good rule of thumb is that allocatingimprove your marketing precision and mix. “ It is more important to periodically capture 10% of your budget to testing and experimentationSee Section 5 for more on measuring ROI potentially high-impact insights than to frequently is usually a wise investment.using test and control groups. measure less important outcomes simply for reporting purposes.” Jim Lenskold, Lenskold Group © 2011 Marketo, Inc. All rights reserved. 15
  • 16. Definitive Guide to Marketing Metrics and AnalyticsPart 2: Planning for Marketing ROI STEP THREEFOCUS ON THE DECISIONS Your highest-ROI decisions will often flow from strategic questions about offers,THAT IMPROVE MARKETING messages, target segments and geographies – MARKETING REPORTING: JUST BECAUSEYou’ll deliver the best ROI and reap the not simply “pass/fail” assessments of specific YOU CAN DOESN’T MEAN YOU SHOULD programs or tactics. You can always evolvehighest corollary benefits when you move past your mix of tactics, but even the best tacticsbackward-looking measurement to forward- Perhaps you’ve heard the adage that you can applied across the wrong strategies won’tlooking decisions. torture the data until it confesses? What this means produce a fraction of your desired results. is it’s important not to measure just what you can,This is the difference between marketing In other words, marketers should focus but what you can ACT on. Think about where youmeasurement and marketing management. beyond “what is” and start measuring want to end up before you begin, and strategize fromIt is the difference between data, intelligence, “what if.” there. Ask yourself, “What question am I trying toand knowledge. answer, and what would I do if the answer were Each measurement should seek to augment X or Y?”An integral part of your planning process your understanding of how to make theis identifying up-front what decisions you program better and align it with yourneed to make to drive company profits, and company’s strategic objectives. This way,then building your measurements to capture even if you don’t meet all of your programinformation that facilitates these decisions. goals, you can still figure out why and how toThis means you must measure things not just improve the program. This is almost alwaysbecause they are measurable – but because better than launching a new program youthey will guide you towards the decisions don’t yet know anything need to make to improve companyprofitability.Isn’t it time to swap your over-the-shoulderstance, which prevents you from movingforward efficiently, for strategic, objective-driven momentum? © 2011 Marketo, Inc. All rights reserved. 16
  • 17. Definitive Guide to Marketing Metrics and AnalyticsPart 3: A Frameworkfor Measurement © 2011 Marketo, Inc. All rights reserved. 17
  • 18. Definitive Guide to Marketing Metrics and AnalyticsPart 3: A Framework for MeasurementCEOs and boards don’t care about 99% of There are many other areas of marketingthe metrics that marketers track – but they metrics that are not addressed directly in thisdo care about revenue and profit growth. Guide. These include: CUSTOMER SATISFACTION AND NET PROMOTER SCORESThere are two primary categories of financial Customer Profitability: Lifetime value of an For many companies, a key metric is their Net Promoter Score (NPS),metrics that directly affect revenue and profits: incremental customer a customer loyalty metric based on customer answers to the question,• evenue Metrics: Marketing’s aggregate R W eb Analytics: Measures Web visibility to “how likely are you to refer us to friend or colleague?” According to impact on company revenue target audiences against potential audiences, answers on a 0-to-10 rating scale, customers are grouped into three and compares against industry and competitor categories:• arketing Program Performance Metrics: M benchmarks Promoters (9-10) The incremental contribution of individual marketing programs Public Relations: Measures views and impact Enthusiastic customers who will fuel growth with repeat and referral of corporate communications initiatives business. Passives (7-8) Product Performance: Comparatively Current customers susceptible to competitor offerings and thus have a measures the total sales and margins of neutral brand impact. individual products Detractors (0-6) Brand Preference and Health: Assesses Customers who voiced dissatisfaction and harm brand preference in relation to preference for the brand. competing brands To calculate a brand’s NPS, use the following equation: Sales Tool Usage: Measures which product NPS = [% of Promoters] – [% of Detractors] marketing materials are being used the most A company’s Net Promoter Score has been shown to have positive And many other areas… correlations with faster growth and profits. Marketo’s own research This is not to imply that these metrics are not provides support for measuring customer satisfaction: high-growth important for marketers to track – just that companies are more likely than low-growth companies to incorporate they are likely to be less relevant to financially- customer satisfaction into their marketing executives’ compensation. focused executives outside of marketing. © 2011 Marketo, Inc. All rights reserved. 18
  • 19. Definitive Guide to Marketing Metrics and AnalyticsPart 3: A Framework for MeasurementWHERE METRICS GO WRONG Measuring what is easy Activity, not results When it is difficult to measure revenue and Marketing activity is easy to see and measureThere are literally hundreds of marketing profit, marketers often end up using metrics (costs going out the door), but marketingmetrics to choose from, and almost all that stand in for those numbers. This can results are hard to measure. In contrast, salesof them measure something of value. The be OK in some situations, but it raises the activity is hard to measure, but sales resultsproblem is that most of them relate very little question in the mind of fellow executives (revenue coming in) are easy to measure. Is itto the metrics that concern a CFO, CEO and whether those metrics accurately reflect the any wonder, then, that sales tends to get theboard member. financial metrics they really want to know credit for revenue, but marketing is perceived about. This forces the marketer to justify as a cost center?Of course, it’s okay to track some of these the relationship and can put a strain onmetrics internally within your department marketing’s credibility. Efficiency instead of effectivenessif they will help you make better marketing In a related point, Kathryn Roy of Precisiondecisions. But it’s best to avoid sharing them Focusing on quantity, not quality Thinking suggests paying attention to thewith other executives unless you’ve previously According to a 2010 Lenskold Group / emedia difference between effectiveness metricsestablished why they matter. Lead Generation Marketing ROI Study, the (doing the right things) and efficiency metrics number one metric used by lead generation (doing – possibly the wrong – things well).Vanity metrics marketers is lead quantity, whereas barely half For example, having a packed event is noToo often, marketers rely on “feel good” of marketers measure lead quality. Focusing good if it’s full of all the wrong people.measurements to justify their marketing on quantity without also measuring quality Effectiveness convinces sales, finance andspend. Instead of pursuing metrics that can lead to programs that look good initially senior management that marketing deliversmeasure business outcomes and improve but don’t deliver profits. (To take this idea to quantifiable value. Efficiency metrics are likelymarketing performance and profitability, they the extreme, the phone book is an abundant to produce questions from the CFO and otheropt for metrics that sound good and impress source of “leads” if you only measure quantity, financially-oriented executives; they will be nopeople. Some common examples include not quality.) defense against efforts to prune your budgetpress release impressions, Facebook “Likes”, in difficult times.and names gathered at trade shows. © 2011 Marketo, Inc. All rights reserved. 19
  • 20. Definitive Guide to Marketing Metrics and AnalyticsPart 3: A Framework for MeasurementCost metrics What went wrong here? The marketerThe worst kinds of metrics to use are “cost performed well, but he made the mistakemetrics” because they frame marketing as of not connecting his marketing results to FINANCIAL OUTCOMES OVER ACTIVITYa cost center. If you only talk about cost and bottom-line metrics that mattered to the CEO.budgets, then no doubt others will associate Look at the following (sanitized) letter from a CFO to a CMO for an By framing his results in terms of costs, he illustration of why financial outcomes are more important than activity,your activities with cost, too. perpetuated the perception that marketing cost and quantity.Let’s take a look at a real-life example: is a cost center. Within this context, it’s only natural that the CEO would reduce costs and “We seem to be purchasing GRPs and click-thrus at a lower cost than Recently, a marketer improved his lead most other companies, but what value is a GRP to us? How do we reallocate the extra budget to a “revenue quality and simultaneously reduced his know that GRPs have any value at all for us, separate from what others cost-per-lead to $10. Thrilled with his generating” department such as sales. are willing to pay for them? How much more/less would we sell if we results, he went to the CEO to ask for purchased several hundred more/less GRPs? more money to spend on this highly I think we need to look beyond these efficiency metrics and find a successful program. way to compare all these options on the basis of effectiveness. We Did the marketer get his budget? need a way to reasonably relate our expenses to the actual impact No. The CEO decided the reduced lead cost MARKETING CHAMPIONS they have on the business, not just on the reach and frequency we create amongst prospective customers. Until we can do this, I’m not meant marketing could deliver the same “Marketers have to be clear about what marketing comfortable supporting further purchases of advertising exposure results with fewer dollars – and so she cut produces. Sales sells, but what does marketing either online or offline… the marketing budget and used the extra produce? You might answer brand awareness, funds to hire new sales people. It seems to me that, if we put some of our best minds on the challenge, leads, and sales tools. But these answers we could create a series of test markets using different levels of disempower the marketing function. The best advertising exposure (including none) in different markets which might answer is that marketing generates cash flow in actually give us some better sense of the payback on our marketing the short term and identifies sources for future expenditures. cash flow in the long term.” My experience tells me that we are not approaching our marketing Roy Young and Allen Weiss, MarketingProfs programs with enough emphasis on learning how to increase the payback, and are at best just getting better at spending less to achieve the same results.“ (Source: MarketingNPV) © 2011 Marketo, Inc. All rights reserved. 20
  • 21. Definitive Guide to Marketing Metrics and AnalyticsPart 3: A Framework for MeasurementTHE RIGHT METRICS The Time Dimension Set Goals Lenskold Group points out that there are As discussed in Section 3, make sure you setIf activity, cost, and quantity aren’t the also different types of metrics in each goals for each of the key metrics you chooseright metrics to use, what are? Anything category, based on time: to track. Your goals will put your performancethat speaks to the CFO’s areas of primary Past: How did we do? into context, and help you and your fellowconcern: revenue, margin, profit, cash flow, Present: How are we doing? executives see if your results are on par withROI, shareholder value – in other words, your Future: How will we do? what’s expected – or better, or’s ability to generate more profitsand faster growth than your competitors. These questions break into three corresponding metric categories:This is what Roy Young and Allen Weissof MarketingProfs call “speaking the financial Business Performance These are the most common reporting metrics thatlanguage of business.” Metrics KPIs you share with fellow executives, often on a dashboard.Financial Metrics How did we do last week? Last month? They are mostly BACKWARDS looking metrics.Most B2B marketers should focus on two Last quarter? categories of financial metrics: Diagnostic Metrics These metrics deliver insight into your CURRENT What is working, and what can work better? performance, often by comparing against historical dataRevenue Metrics Marketing’s aggregate trends and competitor and marketplace benchmarks. impact on company revenue Leading Indicators These metrics help you look FORWARD and forecastMarketing Program The incremental How will we be doing in the future? future results. (See Section 6, Forecasting.)Performance Metrics contribution of individual marketing programs © 2011 Marketo, Inc. All rights reserved. 21
  • 22. Definitive Guide to Marketing Metrics and AnalyticsPart 3: A Framework for MeasurementThe Right Metrics: Summary BUSINESS PERFORMANCE DIAGNOSTIC METRICS LEADING INDICATORS PAUL ALBRIGHT, MARKETO’S CHIEF REVENUE METRICS KPIS PRESENT: WHAT FUTURE: HOW WILL OFFICER, SHARES HIS SECRETS FOR PAST: HOW DID WE DO? IS WORKING? WE BE DOING? MEASUREMENT SUCCESS:Revenue Metrics Aggregate impact • ead generation L • onversion rate C • ize of prospect S 1. hoose no more five key metrics. It’s hard to C on company revenue versus targets versus trend or database size put organizational focus on more than that, so • Cycle time benchmark • arketing M choose wisely. contribution forecast 2. easure success versus goals for those metrics M for every campaign, every channel, every salesMarketing Program Incremental • Investment • Response rates • xpected E rep/region, every product, etc.Performance Metrics contribution of • Pipeline contribution • ift over control L contribution forecast individual marketing • rogram ROI P group 3. how trends for those metrics over time – that S programs way you can immediately see where you are improving and where you are not.Profit Per Customer Lifetime value of an • verage selling price A • nvestment to I • Retention rates 4. ut on a dashboard for everyone to see so there P incremental customer acquire • roducts per P is always a succinct view of what marketing is a customer customer trying to achieve, and where you stand. • arginal cost to M • Net promoter scores serve 5. ave recognition systems tied to goals. Make H sure top contributors get recognition – give them badges they can put on the desks or cube. 6. Rinse and repeat. The best performing companies track results weekly, monthly, and quarterly – so they can improve just as often. © 2011 Marketo, Inc. All rights reserved. 22
  • 23. Definitive Guide to Marketing Metrics and AnalyticsPart 4: RevenueAnalytics © 2011 Marketo, Inc. All rights reserved. 23
  • 24. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsPerhaps the most important metrics for a prospect’s movement from one stage tobuilding marketing’s credibility are the the next, they create the foundation for ametrics that show marketing’s aggregate comprehensive set of robust revenue metrics. A NEW BREED: REVENUE MARKETERS™impact on revenue. Methodology To thrive in today’s changing marketplace, marketingSome old-fashioned marketers say that Defining the stages of the revenue cycle must begin to operate and sound more like isn’t responsible for revenue. We requires a new revenue methodology. As demand generation agency The Pedowitz Groupdisagree. In today’s online and social world, says, marketers must “manage a predictable, reliable Traditional sales methodologies such as SPINmarketing is responsible for up to 70% of funnel with a plan that ultimately produces higher Selling and Miller Heiman provide standardthe entire buying process – which means value leads and maximizes revenue.” benchmarks and best practices for the salesmarketing and sales need to rethink how function, and these sales methodologies form Today’s successful marketer has evolved beyondthey work (and work together) to generate the basis for the best sales analytics. At their the language of traditional marketing. The Pedowitzrevenue. This new way of working requires core, these methodologies break the sales cycle Group coined the term “Revenue Marketer™”new metrics and analytics. into stages and allow the sales executive to in 2007 to describe this new breed of marketer.We call this new measurement process track movement through the stages – which in Debbie Qaqish, Chief Revenue Marketing Officer‘Revenue Cycle Analytics’, and this new turn lets them answer key questions such as of The Pedowitz Group, says that these Revenueway of working ‘Revenue Performance “how long is the sales cycle?” and “how much Marketers™ use the language of business to describeManagement’. pipeline coverage will help me hit my targets their contributions with metrics that measure for this quarter?” pipeline, opportunities, and revenue. They measure Traditionally, marketers have not applied what matters to a CxO – and talk about these metricsDEFINE THE REVENUE CYCLE the same level of rigor to their portions of in terms their executive leadership can understand and evaluate. the revenue cycle. This is unfortunate, sinceThe first step in Revenue Cycle Analytics is it is the only way marketers will be able At any given moment, a Revenue Marketer™ knowsto define the stages of the revenue cycle, to understand how their activities move how their key metrics stack up against their targets,starting with potential buyer awareness and prospects forward. and what they plan to do to improve their results.moving through marketing and sales to closed That is why the foundation of Revenue Cyclebusiness and beyond. When marketing and Analytics rests in clearly defined stages andsales collaborate to formally define each stage, clear rules for how prospects move throughas well as the business rules that determine the stages over time. © 2011 Marketo, Inc. All rights reserved. 24
  • 25. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsExample: Marketo’s Revenue CycleDifferent companies will make different decisions about what AWARENESSdefinitions best suit their revenue cycles, but as a case studyexample, here are Marketo’s definitions. The methodologybehind these definitions is in part responsible for Marketo’shighly efficient revenue engine and fast growth. All Names MarketingSTAGE DEFINITION EngagedAll Names This is the entry point for everyone. We have purposely called this stage “Names” because these individuals are not leads when they first enter the funnel. Prospect Engaged This definition applies to those who show real engagement, such as attending Recycled a webinar, downloading content from our website, or clicking an email that we send. At this stage, we filter out the names that haven’t engaged with us as a brand, such as those who simply threw business cards into our bowl at Nurturing a trade show. Database MQL Lead SDRProspect This stage refers to qualified prospects that could buy one day, but aren’t yet ready for engagement with sales. “Qualified” denotes the right kind of person at the right kind of company, as determined by our “fit” scoring rules. This is Sales SAL Lead the first metric that we report to fellow executives and the board. Opportunity CustomerLead These marketing-qualified leads are prospects that show enough behavioral Sales engagement or buying intent that we want to call them. SQLSales Lead These leads have been qualified as “sales-ready” by a sales qualification rep.Opportunity The sales team has accepted these leads and added them to the pipeline as a deal they are actively working.Customer We have closed these deals and won new customer business. (These customers are then passed on to a new revenue cycle for upsell and retention.) © 2011 Marketo, Inc. All rights reserved. 25
  • 26. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsThree Categories of StagesYour company may use only a few revenuestages, or you may model something moresophisticated like Marketo’s model – but nomatter which specific stages you choose, thereare only three categories of stages:CATEGORY DEFINITION / TIMELINE EXAMPLEInventory Stages An inventory stage is a “holding pool” where leads and Common examples of inventory stages include the prospect accounts can sit for an unlimited amount of time until they’re pool, where leads are nurtured until they are sales-ready; ready to move to another stage. active opportunities are not yet committed to a certain timeline.Gate Stages A gate stage is a simple qualification check with no time Assume your company only wants leads from companies of dimension. $100+ million in revenue. In the gate stage, a lead will move forward if his/her company has more than $100 million in revenue. If not, the lead is disqualified.SLA Stages SLA stands for “service level agreement”. These stages denote When a lead is deemed “sales-ready,” it can become a defined time period in which a lead must be evaluated a “marketing-qualified lead.” The appropriate sales before moving forward or be eliminated from the process. representative has 14 days to contact the lead and choose to accept the lead, disqualify it, or recycle it back for further nurturing. If a lead stays in this stage for over 14 days, it becomes “stale,” which can trigger a process that alerts sales management or even reassigns the lead to a different sales rep. © 2011 Marketo, Inc. All rights reserved. 26
  • 27. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsRevenue Stage Model Best Practices Detours DETOUR DISQUALIFIED INACTIVE RECYCLED LOSTA best-practice revenue stage model is based Of course, not all leads follow a linear STAGESon three fundamental principles: success path, so make sure your model also defines “detour stages” to captureSales resources are relatively expensive. To Definition Names Prospects Qualified Lost or leads that are not qualified, or that requireprovide the highest value, sales should not marked as who are non- leads in deferred a few rounds of nurturing before they’reengage with prospects until prospects are not-in-profile responsive need of more opportunities sales-ready.ready to engage with sales. Sales interactions over the last nurturing (ongoingshould start relatively late in the pipeline, Transition Rules 6 months nurturing)once leads are well qualified, and use lower As the final step in formulating your revenuecost channels such as marketing to develop stage model, you need to define the businessrelationships with everyone else. rules that govern how and when your prospects move from one stage to another.No lead left behind. Don’t let potential This includes how your leads move from thecustomers end up in “lead purgatory.” traditional success path to various detourImplement SLA stages wherever possible stages and back again. For example:to ensure your leads either flow forward orare recycled back to marketing. Keep your 1. person may move from Engaged to Ainventory stages to a minimum – perhaps just Prospect if their company reports annualone in marketing – so prospective customers revenue above $10 million and belongs todon’t sit idle. one of your target industries.A prospect’s journey from initial awareness 2. Prospect may become a Lead when his/ Ato customer is often non-linear. Sometimes her Lead Score exceeds 100 points.leads originally deemed “sales-ready” are not. 3. A Prospect may become InactiveBecause no lead should ever remain stagnant if they don’t respond to a campaign or visitin the system, these leads should be recycled your website in more than six months.back to marketing for nurturing. 4. n Inactive Lead may move back A to Prospect status if they respond to a new program. © 2011 Marketo, Inc. All rights reserved. 27
  • 28. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsExample:Marketo’s Complete Revenue CycleBelow is Marketo’s final revenue cycle as BENEFITS BEYOND ANALYTICSshown in the Revenue Cycle Modeler. You’llnote that it includes the success path stage, A revenue cycle model creates a common language the entireas well as detours and transition rules. organization can use to measure results, understand the status of any prospective customer, and define the actions required from each department. Based on this, Sales and Marketing can better coordinate their activities and ensure alignment throughout the revenue cycle. A revenue stage model also provides operational benefits that improve lead management processes. A revenue stage model can help you: Customize lead nurturing based on each prospect’s location in the cycle and automatically move prospects between nurturing tracks as they move through the funnel. Adjust lead scoring rules and sales alerts by stage. For example, you might be interested if an early-stage prospect visits your pricing page, but expect it from a late stage opportunity. Trigger campaigns and sales actions as prospects transition from stage to stage. Define service level agreements for how long a lead can stay in certain stages, and automatically send alerts and trigger campaigns when leads go stale. For example, you can reassign a lead if no sales action is taken within a specific time. © 2011 Marketo, Inc. All rights reserved. 28
  • 29. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsREVENUE CYCLE METRICS METRIC QUESTIONS IT WILL ANSWER EXAMPLESTHAT MATTER Flow (Lead How many people entered each stage H ow many new prospects were createdWith the model in place, marketers can begin Generation) in a given period? last month, and how many marketing qualifiedto explore the four key “metrics that matter”: A re these trending up or down? leads did we pass last week?Flow, Balance, Conversion and Velocity.This is where critical insight can be gained Balance (Lead How many people are in each How many active prospects do I have –in measuring and optimizing marketing’s Counts) pipeline stage? since the size of my target prospect databaseaggregate impact on revenue. How many accounts? is a key leading indicator of future success? How does that vary by lead type? Are the balances going up or down over time? Conversion W hat is the conversion ratio Which (if any) of my conversion rates from stage to stage? are trending up or down? Which types of leads have the best conversion rate? Velocity What is the average “revenue cycle” time? Do certain types of leads move faster through How does it break down by stage? the pipeline? How is their speed changing over time? © 2011 Marketo, Inc. All rights reserved. 29
  • 30. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue Analytics The larger your flow in any given stage, the more meaningful these metrics become. QUESTION: SHOULD METRICS COUNT PEOPLE, Companies that sell a lot of deals at lower ACCOUNTS OR DOLLARS? price points will find more significance in their conversion metrics and flow than companies People are the easiest variables to track across the that sell fewer deals of greater size. But even entire revenue cycle, but the value of these metrics companies in the latter scenario will find is limited because revenue usually comes from meaningful flow and results data at the early accounts, not individuals. stages of their funnel. In this case, digging into Accounts are relatively easy to track for later-stage your earlier stages can serve as a valid proxy deals, but CRM systems such as make for marketing ROI. it hard to track accounts for early-stage leads. For example, a company that closes only Dollars are what we want, but it is difficult to several deals per quarter may find it more accurately track revenue until the sales cycle. Also, meaningful than a company closing many if your deal amounts are highly variable (or just deals to measure marketing’s results on large), some of your marketing activities will show qualified leads generated rather than wild profits while others will not, based simply on measuring closed business – especially the whether a deal has closed. It’s a bit like playing ROI of specific programs. roulette. Given these pros and cons, most companies (including Marketo) find that a mix of these three approaches is best.Here is a screenshot of Marketo’s Revenue Cycle Analytics Dashboard. Note the ability to see the metrics thatmatter: balance, flow, conversion, and velocity. The ability to track how all those metrics are trending over timegives critical insight into trends versus historical benchmarks, and drilling down into performance by lead source,business unit, geography, etc. helps to understand the aggregate revenue impact of each lead type. © 2011 Marketo, Inc. All rights reserved. 30
  • 31. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsExample: Marketo’s Metrics Opportunities. As discussed above, ourUnderstanding the conversion rates and SDRs apply a very strict filter to what theyvelocities of each stage in your revenue qualify and pass onto the sales team. Our LEAD DEFINITIONS CONVERSION RATES:cycle will help you better understand – and SDRs only pass 7% of all Leads to our AEs AN INTIMATE RELATIONSHIPcommunicate – your revenue cycle economics. as Sales Leads – but a full 80% of what they pass gets converted to an Opportunity. There will always be a trade-off between how strictlyLet’s use Marketo’s actual revenue cycle It’s typical for more than one lead to be you define your leads and the conversion rates youmetrics to illustrate: attached to each Opportunity, so the resulting see as a result. At Marketo, we use behavioral leadPaid Names. As of early 2011, Marketo spends combined conversion between number of scoring to determine when a Prospect becomes a~$275,000 a month on various demand leads and number of opportunities is 4%. This Lead that one of our Sales Development Representa-generation programs to produce 9,500 new means an incremental opportunity is worth tives (SDRs) should contact.paid Names each month. about $2,000 in terms of variable demand For Marketo, it is relatively inexpensive for an SDR generation investment. to call an incremental lead, but relatively expensiveProspects. About 40% of paid Namesultimately become Prospects, generating ¾ New Customers. Finally, Marketo wins about in opportunity cost if we miss out on a potentialof all our Prospects; inbound programs 35% of all opportunities (the vast majority of deal. For this reason, Marketo is relatively loosegenerate the remaining ¼. Our average the others are deferred or no decision), so an in what we call a Lead. At the same time, we don’tinvestment per paid Prospect is $73, and the incremental customer is worth about $5,800 want to annoy potential customers by calling themaverage for all Prospects is $55. of marginal demand generation investment. too early in the buying cycle. So we’ve set our scoring thresholds such that about 20% of all newConversion of Prospects to Leads. Typically, This information is invaluable when it comes Prospects become Leads within a short timeframe,20% of our new Prospects become Leads in the time to set and defend the marketing budget. and about 4% of the active Prospect databasefirst month, and the rest enter our nurturing At Marketo, we set the demand generation becomes a Lead every month.database. Slightly less than half of our Leads budget by working backwards from how many customers we want to close in future months. But while we incur a relatively low cost on SDRs, it’scome from new Prospects, and the rest come It also allows us to answer precisely how much more expensive when our Account Executivesfrom the nurture database. On average, and when more (or less) budget will impact (AEs) call Sales Leads. That’s why Marketo’s SDRs4% of the nurture database becomes a Lead revenue. apply a very strict filter to which Leads they qualifyeach month, and about 10% goes “inactive,” and pass on to the Sales Team. In fact, our SDRs passmeaning they haven’t done anything in six only 7% of their Leads to Sales – but a full 80% ofmonths. About 40% of Prospects will become those Sales Leads convert to Opportunities.Leads over a two-year period. © 2011 Marketo, Inc. All rights reserved. 31
  • 32. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsDrilling in by Lead Type Other examples might include industry, LEAD SOURCE CONVERSION RATIO AVG TRANSITION FLOWDifferent types of leads will move through product line, or channel source. Drilling in (ALL TYPES) TIME (DAYS)the revenue stages differently; some will by lead type is a great way to make betterhave better conversion rates than others, marketing investment and mix decisions. Not Website 47.77% 14 2465some will convert faster than others. That’s only can you parse the differences between your conversion rates, velocities, and your Online Ad 13.87% 29 1736why Revenue Cycle Analytics become evenmore powerful when you can drill into the investments required for each lead type; Trade Show – Virtual 11.67% 54 1362metrics that matter (balance, flow, conversion, you’ll also be able to track what is trending Trade Show 14.49% 37 946velocity) by lead type. up and down. AppExchange 50.88% 15 464 For example, if your leads for a certain source Important Lead Type Variables or product are converting faster than others, Webinar 17.03% 38 418 A Lead Type is any specific category of it may be a sign to invest more in that area. leads that may move through the revenue Alliance 36.95% 37 313 cycle differently. Examples include: PPC_GS_US 43.48% 13 260 Lead source: Leads generated from Not Available 26.32% 4 234 pay-per-click will usually convert faster than leads from purchased lists. Sponsorship 5.44% 70 229 Partner 8.82% 55 164 Company size: Leads from large enterprises may convert more slowly than SMB leads. Content Syndication 10.04% 37 133 Division: Whether your divisions are Web Direct 30.83% 44 115 by geography, business unit or both, Organic – Google 44.84% 24 113 the leads from each division will likely behave differently. Web Referral 51.63% 40 111 Example of revenue cycle metrics by Lead Source. Here, we see Marketo’s Prospect to Lead conversion rates, flows, and velocities by lead source. This shows that Prospects from the AppExchange and Website are the highest quality and are most likely to convert to Leads; Prospects from PPC tend to convert the fastest; and Prospects from Sponsorships, Partners, Virtual Trade Shows, and Content Syndication convert at the slowest rate. © 2011 Marketo, Inc. All rights reserved. 32
  • 33. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsREVENUE PERFORMANCE With an RPM mindset in place, companies With this in mind, here are some additional begin to realize that the most important metrics that effective RPM marketers can addMANAGEMENT METRICS marketing metrics are really about sales to their own dashboards: effectiveness. In other words, the mostRevenue Performance Management (RPM) - Average selling price important questions you can answer aboutis a strategy to optimize interactions with - Sales cycle times marketing’s results are:buyers across the revenue cycle to accelerate - Sales productivitypredictable revenue growth. Because RPM 1. What effects are marketing’s investments - Win ratesis about transforming how marketing and having on sales’ effectiveness and - Time to ramp a new sales repsales work – and work together – it requires productivity?a new set of metrics that focus not on how 2. How are marketing’s activities loweringmarketing or sales is performing, but on the the total expense-to-revenue ratio foroverall effectiveness and efficiency of the sales and marketing combined (e.g. how isend-to-end revenue engine. marketing improving the net revenue engineThe best way to measure the overall effectiveness)?effectiveness of your revenue engine is to When you no longer focus on marketingmeasure total revenue (or bookings, or gross in isolation, but rather on how marketingmargin) generated divided by the total spend impacts sales productivity, you will gainon marketing and sales. This metric, more a much more comprehensive view of yourthan any other, provides an accurate measure activities’ true ROI.of your revenue engine’s efficiency. (Total Revenue or Bookings)Revenue Engine Effectiveness = (Total Marketing and Sales Investment) © 2011 Marketo, Inc. All rights reserved. 33
  • 34. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsThe Big List of Revenue MetricsIncorporating all these together, here’sa broad list of metrics you can choose fromto measure your impact on revenue.FLOW CONVERSION IMPACT INVESTMENT SALES AND RPM OTHER# of New Names % Name to Prospect % of Pipeline Contributed Investment per New Average Selling Price Balance of Active Prospects by Marketing Names in key inventory stages# Prospects % Prospect to Marketing- Value of Pipeline Investment per Prospect Sales Cycle Times Balance of Open Qualified Lead Contributed by Marketing Opportunities# Marketing Qualified % Marketing-Qualified % of Wins Contributed by Investment per Marketing % Reps Making Quota Velocity / Cycle Time forLeads Lead to Sales-Accepted Marketing Qualified Lead New Name to Lead Lead# Sales Accepted Leads % Sales-Accepted Lead to Value of Revenue Investment per Sales Time To Ramp a New Sales Velocity / Cycle Time for Opportunity Contributed by Marketing Accepted Lead Rep Opportunity to Win# Opportunities % Opportunity to Win Investment per RPM Efficiency = (Total Key “Awareness” Metrics: Opportunity Revenue) / (Total web traffic, direct/branded Marketing + Sales traffic, social followers, etc. Investment)# Wins Investment per Win Total Period Revenue vs Quota# Lost Discounts# Churn Pipeline Renewals / Retention © 2011 Marketo, Inc. All rights reserved. 34
  • 35. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsVariants of Each Metric TRACKING METHOD BENEFITEach metric on the previous table will havemultiple variants depending on how you slice By week, month and quarter A regular cadence helps keepand dice them, each of which will frame your operational focus.metrics in a different context to help youmake better decisions. Trends over time Looking at your data over timeFor example, you may look at the number helps you see if you’re improving.of Marketing-Qualified Leads and conversionrate from Prospect to Lead over time versus Versus goals The best marketers set goals (weekly, monthly,goals for each geographic region. and/or quarterly) for all key metrics, and always track results AND results versus goals.It can be costly and unwieldy to look at toomany variants too frequently, so pick the Versus benchmarks Compare results (e.g. conversion rates) versusnumber of metrics to track in keeping with similar companies, as well as versus your ownyour organization’s needs. company’s historical results. By source Many companies look at lead flow and opportunity creation by source (e.g. sales created vs. marketing created). By channel, product, region, etc. The more complex your business, the more important it is to track your key metrics on a more granular level. © 2011 Marketo, Inc. All rights reserved. 35
  • 36. Definitive Guide to Marketing Metrics and AnalyticsPart 4: Revenue AnalyticsExample: Marketo’s Key Revenue Here are some of the key metrics we track on Lead to Opp %Metrics a monthly basis. We track Actual, Target, and Size of Target Prospect DatabaseAt Marketo, we track five key metrics versus Actual / Target %. We also track the 12-monthgoals on a weekly basis, and 30 key metrics trend for all these variants over time. Size of Open Opportunity Pipelineversus goals on a monthly/quarterly basis. All Website Traffic Deferred or Lost Opps Branded Traffic Net-Add OppsHere are the key metrics Marketo tracks on (Direct + “Marketo” Keyword) Won Oppsa weekly basis, as well as the key variants: Blog Subscribers Dollar Value1. ew Prospects: New Since Last Week, New N Facebook Monthly Users Total Demand Generation Month-To-Date, % On-Target Total New Prospects Programs Investment2. ew Leads: New Since Last Week, N Demand Gen Investment Per Prospect New Month-To-Date, % On-Target Total New Leads emand Gen Investment Per Opportunity D New Target Active Leads3. ew Opportunities: New Since Last Week, N Target Latent Leads Total Marketing Investment New Month-To-Date, % On-Target Inbound Leads (All Programs + All Headcount) SMB Leads • West otal Marketing Investment T4. ize of Target Prospect Database: S Per Opportunity Size today plus trend over 12 months SMB Leads • East Enterprise Leads Total Bookings 5. ize of Open Opportunity Pipeline: S International Leads SMB Size today plus trend over 12 months Enterprise Total New Opportunities6. ew Business Closed: Month-To-Date, N Marketing/SDR Opps Channel vs Quota, % On-Target Sales Outbound Opps International Referral Opps Install Base7. psell Business Closed: Month-To-Date, vs U Quota, % On-Target SMB Opps • West Average Selling Price SMB Opps • East8. enewals Business Closed: Month-To-Date, R Enterprise Opps Average Discount vs Quota, % On-Target International Opps Retention / Churn © 2011 Marketo, Inc. All rights reserved. 36
  • 37. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program Measurement © 2011 Marketo, Inc. All rights reserved. 37
  • 38. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program MeasurementWHY MEASURING MARKETING larger companies or more complex purchases, such a committee can involve 21 or morePROGRAMS IS DIFFICULT influencers. Different marketing programs affect DON’T GO OVERBOARD ON PROGRAM each individual differently, so it is a challenge to MEASUREMENTIt’s easy to ask the question, “What kind of know which programs have the most impact.results do my programs deliver?” However, Marketing measurement should not be aboutdetermining the answer can be very difficult. Extraneous variables. In many cases, factors proving ROI, but improving ROI. Jim Lenskold pointsSome of the key challenges to marketing outside marketing’s control can significantly out that marketers tend to overemphasize theirprogram measurement are: impact program results – from macro-economic assessments of media and marketing channels, since trends to the weather to the quality of the these align to the budget allocation process and tendKnowing when to measure. The money you sales reps. If revenues increased because the to be visible to the CFO and other executives.invest today will have an uncertain impact at an economy improved, can marketers claim theiruncertain point in the future. Last month’s trade programs delivered better ROI? In the end, the revenue metrics in Part 4 areshow may deliver results next month or perhaps usually more important than program effectiveness Measuring the contribution that a given measurement.not for two years, but marketers need to decide marketing program has on revenue andwhere to invest their budgets today. profits has been the holy grail of marketing measurement ever since John WanamakerMultiple touches. Conventional marketing famously remarked, “Half of the moneywisdom says at least seven touches are needed I spend on advertising is wasted; the troublein order to convert a cold lead into a sale. is, I don’t know which half.”Whether or not this is the correct number everymarketer knows it takes multiple touches to Perhaps the most common question marketerscreate a customer. This fact makes it difficult to ask is, “Did this program (trade show, email blast)allocate revenue to any specific touch. deliver results?”Multiple influencers. According to This section is all about how marketers canMarketingSherpa, the average buying committee answer this challenging question – and buildfor a five-figure purchase at a mid-sized a sensible framework for measuring thecompany comprises six people. In the case of effectiveness of their decisions. © 2011 Marketo, Inc. All rights reserved. 38
  • 39. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program MeasurementMethods to Measure Marketing Program ROI Each sequential method on this list will give How lead generation marketersJust because measuring marketing ROI is hard you a more accurate view into your customer measure marketing programs:doesn’t mean it’s impossible. Fortunately, value data – but this additional insight comesvarious methods exist to give companies with a corollary rise in cost and complexity. As ainsight into their various programs’ levels of result, most organizations begin the process ofeffectiveness: marketing program measurement with the first and second methods and begin to experiment 45% with more approaches as they move up the Single Attribution maturity curve. LESS ACCURATE LESS COST 20% No tracking1. ingle Attribution (First Touch / Last Touch) S2. ingle Attribution with Revenue Cycle Projection S 21% Attribute Across3. ttribute across Multiple Programs and People A Multiple Programs and People 11%4. Test and Control Groups Test and Control5. Full Market Mix Modeling Groups INCREASED INCREASED 3% INSIGHT COMPLEXITY Market Mix Modeling (Source: The Lenskold Group / eMedia Lead Generation Marketing ROI study) © 2011 Marketo, Inc. All rights reserved. 39
  • 40. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program Measurement PROS AND CONS OF SINGLE ATTRIBUTION (FIRST TOUCH / LAST TOUCH) Pros Cons METHOD ONE Relatively easy implementation and low cost Doesn’t account for the influence of subsequent touches– so insights are directional at best Provides good insight into the earlySINGLE ATTRIBUTION The most common methodology for tracking the stages of the revenue cycle Attributes too much credit to lead results of marketing programs is to assign all the(FIRST TOUCH / LAST TOUCH) value to the first (or last) program that touched Works well when the majority generation programs and not enough to nurturing touches or contributions the deal. This usually means allocating the of investments are made in lead from sales generation instead of lead nurturing deal to the source of the first person from that Hard to account for quality until the deal company, or to the key person. Gives straightforward insight into closes; can be skewed by a particularly “investment per” lead metrics large deal or long sales cycle Program Analyzer SINGLE DEFINITION EXAMPLE New Analyzer Settings Print PDF ATTRIBUTION Default First Touch First touch attribution If a company held Program Analyzer Standard Reports New Analyzer Settings Filter: Driver: Chris, Shonal | Location: San Francisco, New York Print PDF Default Lead Reports Filter: Driver: Chris, Shonal | Location: San Francisco, New York Settings allocates all the value a webinar and to the FIRST program generated a Lead that Standard Reports X Axis Lead Reports Leads by Campaign Settings 2,000,00,000 X Axis that touched the closed a deal one year Leads by Campaign G4.$ 2,000,00,000 Leads by Month Leads by Month G4.$ deal. Typically this is later, that company Email Reports Email Reports Campaign Reports From: 2500 To: 8000 From: 2500 To: 8000 the Lead Source. would give revenue Company Reports Program: Webinar Y Axis Campaign Reports Cost $53,000 Pipeline Dollars Web Page Reports Pipeline Contribution: $10,000 S2)6*)$T66%#4$ Program: Webinar Y Axis Company Reports credit to the initial Revenue Cycle Analytics Contributing Leads: 45 Tags From: 1000 To: 4500 Example Reports Location: San Francisco Cost $53,000 Pipeline Dollars Web Page Reports S2)6*)$T66%#4$ Pipeline Contribution: $10,000 webinar. My Models Program: Webinar Bubble Size Analyzers Cost $53,000 M)37)#4$ Revenue Cycle Analytics Pipeline Contribution: $500,000 Contributing Leads: 45 Success Path Analyzer Contributing Leads: 45 Comparison Analyzer Tags From: 400 Tags To: 600 From: 1000 To: 4500 Example Reports Last touch attribution If a Lead becomes Driver: Chris Location: San Francisco Opportunity Analyzer Program Analyzer Location: New York Color Last Touch My Models Program: Webinar Bubble Size gives revenue credit a Prospect after N-,,)44$M)37)#4$ 0 Contribution Analyzer Analyzers Batting Average Analyz 0 Cost $53,000 200,000 M)37)#4$ 20,3)$ to the LAST program watching a product From: 400 To: 6000 Pipeline Contribution: $500,000 Success Path Analyzer Contributing Leads: 45 Comparison Analyzer Tags Driver: Chris From: 400 To: 600 that touched the lead demo, that demo Opportunity Analyzer Location: New York Color before the key action would receive revenue Program Analyzer N-,,)44$M)37)#4$ was taken. credit, even though a 0 Contribution Analyzer 0 200,000 sales rep had nurtured Batting Average Analyz 20,3)$ From: 400 To: 6000 the Lead in several other ways. © 2011 Marketo, Inc. All rights reserved. 40
  • 41. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program Measurement METHOD TWOSINGLE ATTRIBUTION WITH Solution: revenue cycle projections By adding revenue cycle projections toREVENUE CYCLE PROJECTIONS a first touch single attribution, you can gain PROS AND CONS OF SINGLE ATTRIBUTIONAn obvious disadvantage of first and last deeper insight into the long-term impacts WITH REVENUE CYCLE PROJECTION of your programs. For example, instead oftouch attribution is that today’s marketing waiting to see the actual results of a trade Pros Consinvestments may not pay off for quite some show, this approach looks at what impacttime, so the ROI of your current marketing the trade show had at the top of the revenue Focuses on revenue impact Attributes value to leadprograms remains in limbo. of programs, not just top sources without accounting cycle and embellishes that view by estimating for the influence of other of the funnelApproaches to marketing ROI measurements the trade show’s long-term impact based on marketing touchesthat do not properly account for the time-to- historical conversion metrics. Uses estimates to quantify the future value of today’s Uses past performance toinvestment payoff can lead to decisions that In the example model on the next page, Trade estimate future results, investmentsbias towards short-term gains over building Show 1 occurred a year ago and shows a so cannot incorporatetrue long-term value. This applies across all Uses lead quality, not fairly good picture of its returns. In contrast, underlying changesindustries, but its impact is especially acute in just quantity, to evaluate Trade Show 2 just happened last week. With programs Requires that estimatescompanies with considered-purchase products the basic first touch single attribution model, must eventually be backedand long revenue cycles. Trade Show 2 looks as if it has delivered very up with actual results poor results. But this is not an apples-to- apples comparison. © 2011 Marketo, Inc. All rights reserved. 41
  • 42. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program Measurement METHOD TWOPROGRAM INVESTMENT DATE ALL TOUCHED PROSPECTS LEADS OPPS WINS PIPELINE REVENUETrade Show 1 $18,000 Last Year 901 560 207 17 5 $421,082 $117,903Trade Show 2 $12,000 Last Week 1,012 517 21 1 0 $15,946 $–However, when we apply revenue cycleunderstanding of how leads from similar tradeshows have converted over time to the abovemodel, we are able to estimate what the totalfuture impact of the trade showwill be.PROGRAM INVESTMENT DATE ALL TOUCHED PROSPECTS EST. LEADS EST. OPPS EST. WINS EST. PIPELINE EST. REVENUETrade Show 1 $18,000 Last Year 901 560 209 21 7 $590,510 $161,214Trade Show 2 $12,000 Last Week 1,012 517 221 18 7 $663,221 $258,656Think of it this way. When discussinga recent marketing program, would you rathersay, “The event was great; 500 people stoppedby the booth,” or “The event was great; 500people stopped by the booth, and we expectto add an incremental $600,000 to pipelineover the next 12 months as a result?” © 2011 Marketo, Inc. All rights reserved. 42
  • 43. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program Measurement METHOD TWOMarketo Case Study ExampleMarketo relies mostly on Single Attribution withRevenue Cycle Projection to internally assess its KEY INSIGHTS: COLUMN DEFINITIONS:program results. Below is a summary of someof our recent program results: Inbound leads are by far the highest quality, fastest Sources above the line are programs with variable moving, and most likely to convert to opportunities. demand generation program investments. ThoseSOURCE PROSPECTS INVESTMENT % LEAD VELOCITY LEAD TO This reflects the fact that our website does not below the line are Sources with fixed investments PER PROSPECT (DAYS) OPP INDEX require registration for early-stage content but does only. for buying-oriented content, so any Prospect who Prospects show the total flow (number) of newTrade Show – Virtual 3,793 $25.44 17% 81 1.0 actually does register on the website is likely to be Prospects from each Source. later in their buying process.3rd Party Email to Investment per Prospect lists the average variable On the other hand, we meet prospects at everyPromote Content 3,302 $34.65 18% 43 0.5 investment per Prospect from that Source. stage in the buying process with paid programs. % Lead shows the likelihood that a Prospect fromTrade Show 2,703 $221.30 23% 61 1.9 Taking all the costs and conversion rates into that Source will convert to a lead over a 12-month account, virtual trade shows are the best performing time period.Paid Webinar 1,760 $68.50 21% 60 1.0 source; followed by PPC, paid webinars, and using third-party email lists to promote our content. Velocity shows the average time it takes a ProspectPay per Click Search 990 $158.10 45% 42 1.4 from that Source to convert to a Lead. In-person trade shows are not a cost-effective way to generate new Leads (though they can be useful to Lead to Opp Index shows the relative likelihoodContent Syndication 536 $82.84 12% 59 0.3 accelerate movement from existing leads). that a Lead from that Source will convert to an Opportunity. (For example, Leads from the websiteOther Paid 208 $187.50 13% 93 1.3 Content syndication tends to generate very early are 2.6 times more likely to turn into Opportunities stage Prospects that do not convert. than leads from a virtual trade show.)Website 2,871 58% 27 2.6Sales Prospecting 1,888 26% 46 2.2Partner Co-Marketing 903 17% 102 1.1Other Inbound 370 100% 19 9.0 © 2011 Marketo, Inc. All rights reserved. 43
  • 44. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program Measurement METHOD THREEATTRIBUTE ACROSS MULTIPLE By Time: You may want to weight some touches over others based on when they occurred inPROGRAMS AND PEOPLE relation to the action that delivered value. This EXAMPLE OF ATTRIBUTING ACROSS assumption is especially true for programs that MULTIPLE PROGRAMS AND PEOPLEThis approach recognizes that it takes multiple happen immediately before the key behavior.touches from multiple people to close a deal, For example, the fact the prospect attended last Assume a deal worth $100,000 recently closed.and attempts to measure the contribution of week’s webinar may have more to do with them Three people were involved in the deal:each individual touch. becoming a lead than the white paper they Person A attended Trade Show 1 and Seminar 2.How to Track and Analyze Allocations downloaded and trade show they attended 12 months ago. Person B attended Trade Show 1 only.First things first. Start with the action you areanalyzing (pipeline creation, closed revenue, By Role: You may give more weight to programs Person C was sent Direct Mail 1 and clicked toetc.) and work backwards to identify each that touched the key decision maker than those the website.significant touch that affected all of the contacts affecting other influencers. Just be sure your In this scenario, you might give $50K credit to Tradeassociated with that particular deal – but make weighting matches your business realities – a Show 1, $25K to Seminar 2, and $25K to Direct Mail 1.sure you account for only the touches that CEO shouldn’t be weighted more heavily thanoccurred before the action was taken. You will a Manager if he or she has little impact on thetrack each touch and contact person from here. deal.Once you compile a comprehensive list, you By Program Type: Some marketers will chooseneed to allocate portions of the resulting deal to weight certain types of touches more heavily PROS AND CONS OF ATTRIBUTION ACROSS MULTIPLE PROGRAMS AND PEOPLEto each one – including count, pipeline, revenue, than others, based on the level of engagement. Pros Consprofit, and so on. This is where things can get For example, attending a two-hour seminar maytricky, so refer to our best practice guidelines: Incorporates nurturing touches as well as lead Requires assumptions that can add bias to the have more impact than a simple website visit. generation analysisAllocation Methodologies However, be careful not to give more weight to more expensive programs just because they cost Especially useful for long revenue cycles with Important to find any possible “hidden”Before you allocate your revenues across many touches contributors, including online and sales activitymultiple programs and people, you need to more – that opens you up to other executivesdecide how to weight each touch point – if at all. questioning your assumptions. Focuses on all contacts associated with a deal, Lacks insight into synergy of tactics, no not just the first correlations or connections Risk of over-crediting low impact touch points, especially if you weight all touches equally © 2011 Marketo, Inc. All rights reserved. 44
  • 45. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program Measurement METHOD THREEThe first step in attribution across multiple all the relevant contacts associated with anprograms and people is to track all the opportunity. Once you have that, you need tosignificant touches – including programs, allocate the value of the opportunity to each WHEN YOU ASSUME YOU MAKE AN ASS OUTonline activity, sales activity, etc. – that affect of the touches. OF U AND ME Assumptions may be necessary when using multi-touch attribution, but they inherently add a subjective element to any ROI analysis. So no Account Analyzer Publish Settings Add more people matter what allocation assumptions you make, be New Analyzer Actions Print PDF to this opportunity sure you can defend them in front of your executive Against Score or Against the like a consultant Default leadership and board – otherwise you risk hurting Model as the LINE dimension View: Score Mode Account: Acme Inc Standard Reports Star = Role in Opty Acme Inc the credibility of the entire analysis. Lead Reports Account Analyzer Activity Interesting Leads by Campaign Edit me and clone me Logged Joe Smith (8) Moment Nancy Jones (12) Leads by Month 80 Phil McCloud (4) Email Reports Frank Johnston (3) Campaign Reports 70 Freddie Rainbow (1) Company Reports Harold Scotsman (0) Web Page Reports 60 Jamal Tucker (0) Revenue Cycle Analytics Example Reports 50 My Models Checking box includes Analyzers 40 Opty their history – these Success Path Analyzer Created are people attached Comparison Analyzer 30 to the account but not Program : Webinar Opportunity Analyzer Cost per Lead: $21 the opty 20 Success: ? Program Analyzer Contribution Analyzer Ability to right click on 10 Web Activity a name and add a role Batting Average Analyz to an opty right here Time Axis (By first touch for any lead “checked” to last)This is a screenshot of the Marketo Influencer Analyzer. You cansee every time an opportunity touches a contact. © 2011 Marketo, Inc. All rights reserved. 45
  • 46. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program Measurement METHOD FOURTEST AND CONTROL GROUPS Putting it to practice 2500 With test and control groups, you need toA great way to measure the true impact apply the program or treatment that you 2000of a particular marketing program is to test want to measure to one component of your target buyer group, and not to another Outcome Unitsthe effectiveness of that initiative against a 1500well-formed control group by comparing the homogeneous part of that group. All other Control group adjustedtwo groups’ results. Of course, this means you factors being equal, you’ll be able to attribute to treatment group sizeneed to plan your programs to be testable any difference in buyer behavior between the 1000 Baseline includesfrom the get-go. two groups to the particular program. all other marketing and non-marketingAlmost anything can be measured using Say, for example, that you want to measure 500proper test design, but it’s prohibitively the impact of one of your brand advertisingexpensive to test everything. campaigns on target awareness. One potential 0 approach would be to split your market into 1 2 3 4 5 6 7 8 9 10 11 12 two equal geographic parts, and spend twice Time Period as much on one group than the other. You can compare the behaviors of these two Baseline Campaign market segments to analyze your campaigns effectiveness – did you experience more Source: Lenskold Group growth in direct and branded search from the geography with more spending? Assuming all other marketing and sales influencers on these two groups were the same, you can credit any difference in traffic growth to your brand advertising spend. © 2011 Marketo, Inc. All rights reserved. 46
  • 47. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program Measurement METHOD FOURTest design The importance of statisticalThe outcome metric (what you measure) can significancebe anything: revenue, profit, leads, search You don’t need to go overboard, but ANOTHER OPTION: PRE-POST TESTINGtraffic, conversion rates, average selling price, you do need to make sure the differenceetc. – or all of them. This is good in situations between your control and test groups is A common, much less rigorous form of testing iswhere it may be hard to see the impact of the statistically significant in comparison with to compare your results before your marketingprogram on things like revenue. average standard deviations. Eighty percent program to your results after – or to project what confidence should be good enough – we’re not the outcomes WOULD have looked like without theYou can also test almost anything, including: touch, based on historical trends. talking about drug testing or other things thatPrograms and tactics. Did that particular require 99% confidence.webinar have an impact? Pro: This approach doesn’t give all the credit to the For more on testing statistics, see Marketo’s marketing touch since it assumes you would haveMessages. Which message and/or copy The Ultimate Guide to Test Statistics. some existing sales without it. No one wants to beresonated the most with you target audience? the brunt of the joke that says, “If results are up, marketing gets credit. If results are down, it mustContact frequency. How often should we be something else.”send an email?Spending levels. What happens if we double PROS AND CONS OF TEST AND CONTROL GROUPS Cons: It’s difficult to account for seasonal or cyclicalinvestment in display advertising? Pros Cons effects. Pre-Post testing doesn’t have a rigorous control group in which all other factors are the same.It’s also possible to measure combinations More sophisticated and analytical – Focused on specific tactics – can’t Other factors – such as the economy, sales initiatives,of touches rather than just single touches. reveals the true impact of a marketing report on effectiveness of all programs and other marketing programs – can still influenceThis is a great way to test lead nurturing program the results.tacks – allowing you to test and measure the Almost everything can be tested, buteffectiveness of one entire lead nurturing Can measure almost any impact on it’s prohibitively expensive to test almost anything with the right test everything Pre-post testing can give you directional informationtrack versus another rather than individual about program effectiveness, but since it can’temails, etc. Should you want to test multiple Relatively low cost if you can design a Only works when you’ve incorporated eliminate non-marketing factors, it’s an estimatecampaigns at one time, you can also use decent control group variance to support program at best.multivariate testing methodologies. measurement © 2011 Marketo, Inc. All rights reserved. 47
  • 48. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program Measurement METHOD FIVEFULL MARKET MIX MODELING • earch advertising gets credit S for 3x5=$15MMarket Mix Modeling (MMM) shows how • isplay advertising gets credit D PROS AND CONS OF MARKET MIX MODELING for 2x5=$10Msales volume outcomes are dependent on Pros Cons • rade shows receive credit Tvarious independent marketing touches for 1.5x10=$15Mand other non-marketing factors by using Very accurate Needs lots of data; canstatistical techniques, such as regression. Only be costly to collect all the3% of B2B marketers currently use this model (MMM)aking it your own Measures the impact of all required historical data As you might imagine after seeing this programs – and all externalto measure marketing ROI. factors as well Requires sophisticated example, the selection of your independentHere’s a sample statistical equation variables can be a complicated affair – and Gives insight into program analytical skills(albeit an extremely simplified example): arguably involves as much art as it does effectiveness and efficiency Focus on short-term science. You’re likely to find that you’ll expend sales changes canCompany X makes $165M in revenue. the most of your resources – both in time andCompany X spends: undervalue longer-term money – in collecting your data, not analyzing it. brand building activities $5M on search advertising. $5M on display advertising. Regardless, make sure you drill down to $10M on trade shows. the science of your own MMM equation by incorporating all factors that might impactCompany X’s marketing mix model your output. Possible factors include:might have an equation like this:Sales=125M+3.0*ℎ+2.0*Display+1.5*Trade Show • Pricing • Promotion/advertisingThis equation shows that, without • ProductMarketing, Company X would have • Placemade $125M in sales. And of the $40M in • Distributionrevenue generated by marketing: • Sales • Competitive moves • The economy • And so on… © 2011 Marketo, Inc. All rights reserved. 48
  • 49. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program MeasurementPROGRAM-SPECIFIC METRICS – WHAT mail Metrics E Unsubscribe rate ommunications Metrics C No of press releases irect Mail D Eyes OnYOU SHOULD MEASURE AND TRACK Bounce rate No of interviews Delivery Rate Open rate No of press events Response RateWhile CMOs should be using methods C lick-through rate Volume of coverage Cost Per Conversionlike attribution and market mix modeling Share of voiceto determine program effectiveness and ebinar Metrics W ustomer Metrics Ccontribution, campaign- and program-specific Attendee rate ebsite Metrics W Churn Ratemetrics should not be ignored. While less Drop-off rate Views/Visitors Customer Lifetime Valuerelevant to the CEO, these will be early Engagement rate Unique Views Share of Walletindicators of market changes, and will help Backlinks Customer Engagement vent Metrics Etrack growth so program managers can ensure Conversions Registrationproper campaign mix. Attendees log Metrics BThis list may represent only some of the Satisfaction Postsprograms you run; it’s important to capture Subscribers ocial Media Metrics Sinformation across your marketing mix. Here Views/Visitors Gross viewsare a few metrics you may want to track on Unique visitors Connectionsa regular basis, organized by program type: Social shares Mentions Activity nline Ad O Engagement Impressions Conversions Cost Per Click (CPC) Sentiment Cost Per Thousand Views (CPM) Cost Per Conversion (CPC Cost Per Action (CPA) © 2011 Marketo, Inc. All rights reserved. 49
  • 50. Definitive Guide to Marketing Metrics and AnalyticsPart 5: Program MeasurementCONCLUSION: PROGRAM Quality trumps quantity. You’ll benefit your company and improve your marketingMEASUREMENT APPLIED programs more with a few fine-tuned measurements than a handful of inaccurate,It is no small task to maneuver through the inconclusive metrics. Start in small, bite-sizedvarious program measurement models and chunks, and go from there.methodologies that are available to you – andif you’re among the 20% of B2B marketers What you put in is what you’ll get out.who don’t yet measure the ROI of their When you strategically invest your time andmarketing programs, then getting starting may financial resources in developing a marketingseem like a daunting prospect. But before you measurement model, you position yourselfget too overwhelmed, remember that: for future success. You’ll optimize your overall program mix and prune individualYou’re not alone on the learning curve. top-performing programs to increase companyAccording to a recent MMA/Forrester/ANA sales, profits and market share. Who doesn’tstudy, 87% of senior marketers did not feel want that kind of reputation?confident in their ability to impact the salesforecast of their programs. Said differently,this means you have the ability to snaga competitive advantage over 87% ofyour competition! © 2011 Marketo, Inc. All rights reserved. 50
  • 51. Definitive Guide to Marketing Metrics and AnalyticsPart 6: Marketing Forecasting © 2011 Marketo, Inc. All rights reserved. 51
  • 52. Definitive Guide to Marketing Metrics and AnalyticsPart 6: Marketing ForecastingAt executive staff and board meetings, the Methodology for Marketing Forecastingnumber one topic of discussion is never an Though the details can get quite sophisticated,upcoming marketing program or the new the methodology for making accurate HIGHLY ACCOUNTABLE MARKETINGbrand strategy – it’s almost always the sales marketing forecasts is simple in concept. FORECASTSforecast, and there’s usually little to no inputfrom the CMO. 1. odel the stages of the revenue cycle, and M We are not discussing “traditional” marketing then measure how each type of lead moves forecasts, which take the form of a top-down marketIt’s no wonder most executives don’t through the various stages (conversion size analysis. Those kinds of forecasts can be usefulconsider marketing to be an essential part percentage and velocity). This was for strategic planning, but do not have the sufficientof the revenue team. discussed in Part 4. granular and actionable data required to complimentLong-Term Visibility 2. et accurate inputs for how many new G the sales forecast.Sales forecasts are based on what specific leads of each type the marketing team will Highly accountable marketing forecasts enable theaccounts will do at specific times, so they put into the system over future periods. CMO to make statements such as, “Next quarter,become increasingly inaccurate the further marketing will generate an incremental 30 newout you look. And the shorter the sales cycle, 3. odel the flow of current and new leads M through the various stages over time. deals worth $4.0 million of bookings that are notthe worse the problem. currently in the sales forecast.” Done right, theIn contrast, when marketing takes 4. eview the results and apply management R marketing forecast gives a CMO the confidenceresponsibility for the early stages of the judgment to finalize the forecast. to stake a portion of his or her compensation onrevenue cycle, they have better visibility meeting the goal, and a CSO relies on marketing’sinto future period revenue. Marketing input to make a valid forecast for the period.executives can forecast how many new leads,opportunities, and customers marketing willyield in future periods because they knowhow many prospects are in each revenuecycle stage – and how they are likely to movethrough each stage over time. © 2011 Marketo, Inc. All rights reserved. 52
  • 53. Definitive Guide to Marketing Metrics and AnalyticsPart 6: Marketing ForecastingGet Accurate Inputs Review Results and ApplyMarketing forecasts are subject to the rule Management Judgmentof “garbage in, garbage out”. You will need Of course, these numbers are just estimatesan accurate estimate of how many new leads and assume your conversion rates will remainwill flow into the system in any given period, steady over time. Marketing and sales canby type, to serve as the fuel for your revenue and will affect the conversion rates, and youengine. need to take this into account. That is why it’s essential for marketers to apply executiveModel Flow through the judgment to their model projections beforeRevenue Stages finalizing their forecasts. For example, CMOsProject your revenue cycle forward by at larger companies will need to “roll-up” themodeling how existing and new leads will marketing forecast from multiple divisionsconvert through the various revenue stages (product, geography, etc.) into one top-levelover time. If your understanding of conversion forecast, sometimes lowering the forecastrates and inputs are accurate, you will create from divisions that habitually overestimatea solid projection of what the revenue funnel their results.will deliver in future periods. © 2011 Marketo, Inc. All rights reserved. 53
  • 54. Definitive Guide to Marketing Metrics and AnalyticsPart 6: Marketing Forecasting MARKETING FORECAST -4 -3 -2 -1 CUR +1 +2 +3 Commit 244 254 263 263 273 282 295 302Commit, Target, Forecast Target 257 266 276 286 292 302 311 321Any CMO making marketing forecasts should -4 257 266 276 286 - - - -be rigorous about the difference betweenCommit, Target and Forecast. -3 - 273 276 270 276 - - -• ommit is the number that the CMO can C -2 - - 305 276 276 289 - - guarantee and should not vary frequently; this is the number to use as the basis for the Previous Month - - - 276 282 302 311 - CMO’s quota / bonus. Current Month - - - - 294 305 315 331• arget is a number higher than Commit T which reflects what the team should be Commit Target Forecast Actual aiming for. The goals for individual groups Number of New Customers by Month should roll-up to meet the overall Target, not Commit. This type of presentation is useful for showing Conclusion actual results compared to forecast and plan, Forecasts matter. CEOs and board members• orecast is the CMO’s best estimate for what F as well as how the forecast changes over are impressed by accurate, forward-looking will actually happen and should be based on time. The example shows actual results for forecasts – especially over the long term. the most recent estimates and adjustments. the current month and a forecast for the next This is the single biggest reason why salesCMOs that track and communicate progress three months; it also shows the forecasts from has more credibility (and power) thanagainst these three metrics are sure to build the prior four months compared to actual marketing at most companies.the credibility they deserve. results. This presentation can also illustrate the forecast for other revenue stages such But when marketing teams are able to makeOne way to present these metrics is as new prospects, marketing qualified leads, revenue forecasts – and deliver againstvia a waterfall chart. For example: even closed bookings. them – with equal or greater accuracy, they will leverage a key competitive advantage in establishing their own clout within their organizations. © 2011 Marketo, Inc. All rights reserved. 54
  • 55. Definitive Guide to Marketing Metrics and AnalyticsPart 7: Dashboards (Source: © 2011 Marketo, Inc. All rights reserved. 55
  • 56. Definitive Guide to Marketing Metrics and AnalyticsPart 7: DashboardsDashboards create a visual display of all the Designing a Great Dashboardrelevant information you need to measure and Your marketing campaigns and programsrefine your current effectiveness in delivering generate a huge amount of data, most ofagainst your goals – and communicate your which is not relevant. So as you design yourperformance levels in a format that is intuitive dashboards, you want to determine whatto others inside and outside your department. is most useful to you. This will translate intoFurthermore, dashboards help you make just the right number of metrics – enoughmore knowledgeable, sophisticated decisions for you to understand what is really going onabout improving your metrics and your future inside your data, but not so many that youinitiatives. are overwhelmed with marginally relevantThere are many kinds of dashboards: internal dashboards as well as dashboards Focus on the five key metrics that matteryou share outside of marketing, often with most. As Coco Chanel said, “before youyour senior management and the board. In leave the house (or in this case, publish thethe case of external dashboards, remember to dashboard), take one thing off.”focus on the key financial metrics that mattermost. This will assist you and your fellowexecutive leaders in focusing on what is ofultimate importance: making better-educateddecisions to improve revenue. © 2011 Marketo, Inc. All rights reserved. 56
  • 57. Definitive Guide to Marketing Metrics and AnalyticsPart 7: DashboardsAn important factor here is using the rightinformation graphic for the data you have andthe insight you need. This sample dashboardfrom Lenskold Group serves as a best practiceexample of many elements that typicallyappear in a great dashboard:Few numbers. Relatively few numbers areshown, but the select few that are featuredare key financial metrics.Speedometers show progress versus goals.This is an effective graphic for conveying thisinformation.Line charts show trends. Line charts showyour data over time and allow you to seetrends.KPI alerts. Simple arrows are effective toindicate your upward, downward or flatprogress against key performance indicators.Take the time to make your dashboards lookattractive. A visually appealing dashboardcan build your credibility. (Source: Lenskold Group) © 2011 Marketo, Inc. All rights reserved. 57
  • 58. Definitive Guide to Marketing Metrics and AnalyticsPart 7: DashboardsCommunicationThe best dashboards don’t just serve areporting function. They should also guide PHYSICAL DASHBOARDShow people within your organization think,acting as catalysts for effective decision This is a seemingly minor yet critical point. Inmaking. This should greatly influence how you our virtual business world, it’s easy to overlookpresent your dashboards (or any metrics, for a highly effective form of dashboard: a physicalthat matter): version displayed on whiteboards around your office. People are motivated by what they can see,Frame your destination. Start by reminding so you build excitement around the office whenothers what you collectively want to you give your growing success public visibility onaccomplish. When you communicate a clear a day-to-day about what you are trying to achieve,you enable others to align towards the sameobjective.Paint the bigger picture. While you do needto present your numbers, it’s more importantto share insight into what they mean and keytakeaways.Call to action. Spell it out: “Here is what weneed to DO as a result of these data andinsights.”Remember, the actions you take basedon your data matter more than the actualnumbers themselves. © 2011 Marketo, Inc. All rights reserved. 58
  • 59. Definitive Guide to Marketing Metrics and AnalyticsPart 8: Implementation – People,Process, and Technology © 2011 Marketo, Inc. All rights reserved. 59
  • 60. Definitive Guide to Marketing Metrics and AnalyticsPart 8: Implementation – People,Process, and TechnologyAs with any business transformation, the What Kinds of People? Communication skills. An analyst mustsuccess of your marketing measurement In a perfect world, it’s ideal to hire a possess excellent written, oral and visualprogram depends on how well you implement full-time analyst for this job – the pace of communication skills in order to explainit. This requires you to set in place the right your enterprise’s adoption of marketing the results of a given project in ways thatpeople, the right process and the right analytics will be faster if you do. However, enable an organization to learn and improvetechnology. most marketers are faced with the reality of its operations. Such capabilities begin in embarking on their measurement journeys effective interpersonal communication and with only the staff they already have. If you extend to listening and group facilitation skills find yourself in this scenario, assign analytics across a full platform of modalities: electronicPEOPLE AND CULTURE ownership to someone currently within your communication, telephone and face-to-face organization – and then make absolutely sure conversations, group presentations, and so on.Even the most efficient methods and latest they have the skills, adequate support, and Bias for experimentation. The ideal analystcutting-edge technology are useless if you coverage to be successful. needs to possess a demonstrated willingnessdon’t have the right people driving the to problem solve with new approaches. If you aren’t getting the metrics you need,process, so effective executives begin by it’s probably because you haven’t made them Technical savvy. Your prospective analyst mustasking themselves the following questions: a priority. understand how computers, data networks,W hat kinds of people do I need What Kinds of Skills? databases, and operating systems work – andon staff to implement marketing You’ll want to be intentional about the skills work together – to be successful in the role.measurement? you search for and cultivate: This involves knowing each technology’s potential uses and limitations.• re these high performers already on A Analytical proficiency. Someone with my team, or do I need to look outside my analytical skills will be able to absorb, visualize It may go without saying, but the analyst must organization? and articulate large amounts of data and also understand your organization’s unique complex concepts, and make decisions to products, services, industry and operations.• hat kinds of skills does my current W If an analyst isn’t familiar with your business, solve existing problems that make sense based employee mix need to develop? they won’t be able to interpret your data. on the available information.• ow can I create a culture of analytics? H © 2011 Marketo, Inc. All rights reserved. 60
  • 61. Definitive Guide to Marketing Metrics and AnalyticsPart 8: Implementation – People,Process, and TechnologyCreating a Culture of Analytics Accountability. It’s pointless to set targetHiring (or designating) the right people is only goals if you don’t also hold peoplethe first step. Even at companies that already accountable for meeting them.have significant analytical activities underway, Act on information instead of gut.doing the analysis is only about a third of the All too often, businesses suffer from thebattle. The other two-thirds involve driving it curse of the H.I.P.P.O.: the “Highest Paidinto all current business workflows in a way Person’s Opinion.” People may refrain fromthat prompts your organization to use and act conducting valuable analysis and simply waiton your valuable conclusions. for their bosses opinion – or they might allowSchedule some quality time. The velocities a H.I.P.P.O. to override the analytics. Perhapsat which most marketing teams operate this is the case in your organization. Or maybetoday often do not accommodate analytics, you yourself are the H.I.P.P.O.. In either case,nor do they allow time for reflection around do what you can to ensure all relevant dataimplementing analytical conclusions to and insights are communicated before theimprove operational efficiency and company H.I.P.P.O. comes out.revenues. If you want to benefit from your Bias toward insight, not data. It can bemarketing metrics, analytics are something tempting to believe your success will increasefor which you need to allocate certain periods with every additional metric you measure, butof time. this is not the case.A facts and numbers mentality. A historical Of course, none of this will work withoutfocus on “soft metrics” have caused buy-in and support from executive leadership,many marketing departments to become especially the C-suite. When done right,accustomed to operating outside of metrics can create a virtuous circle, in whichframeworks that are conducive to fact-based the right metrics create the support fordecisions and accountability. For marketing more useful and actionable metrics. If not,measurement to be successful, you need you’ll encourage a vicious cycle with theto bias your mindset toward hard financial opposite scenario.metrics. © 2011 Marketo, Inc. All rights reserved. 61
  • 62. Definitive Guide to Marketing Metrics and AnalyticsPart 8: Implementation – People,Process, and TechnologyPROCESS Build from there. As you continuously evolve Lenskold Group reports that one of the best and adapt your marketing measurement techniques to drive marketing ROI adoption system over time, you’ll refine it so it gets is to configure pilot teams to introduceIn Part 2, we discussed the components better and better. You may not end up where new capabilities – preferably consisting ofof an effective ROI process – what to measure, you thought you would when you started, but people who demonstrate adaptability andwhen to measure, how to measure. Here, you’ll likely end up in a great place. high interest in the changes you want towe will discuss how you can manage and implement. Successful pilot programs willimplement the changes necessary in your In addition to well-defined principles, you excite others within your organization aboutorganization for this marketing measurement need to formalize the methods you’ll use to your measurement initiatives.system to succeed. implement your marketing ROI processes. Well-defined methods (and stages) will ensureMarketing ROI is a marathon, not a sprint. your metrics’ efficiency and effectiveness.To be successful, you need to take a Examples include:methodical approach over the long termin several key areas: • dentify who will be involved and who will I own each part of the process.Dream big… As with many projects, you’llposition yourself for greater success if • ormalize training to cultivate and refine the Fyou begin with a grand – albeit granularly specific skill sets your marketing team needs.articulated – vision of what you want yourmeasurement end-state to resemble. • et a feedback loop in place for S performance reviews.…Then start small. Slow and steady wins theROI race. Proceed with manageable, digestiblesteps.Win small victories quickly. This will ensurestakeholder buy-in across your organization– and increase your chances for success overthe short and long term. © 2011 Marketo, Inc. All rights reserved. 62
  • 63. Definitive Guide to Marketing Metrics and AnalyticsPart 8: Implementation – People,Process, and TechnologyWhatever principles and methodsyou decide to use, marketing managers MARKETING MEASUREMENT IN REVIEW: A CHECKLISTshould be able to answer any of thequestions below instantly: 1. efine your data collection D 3. ssign granular KPIs to A 6. roduce visual reports of P 9. nalyze and optimize. It’s A and storage approaches. How your unique campaigns. your marketing success. time to act on the business• hat would be the expected ROI if we W will you collect your data Determine the impact of Be discerning in how much intelligence you gather with increased your budget by 10%? What would across multiple channels, individual campaigns and data you incorporate into the system you’ve set in be the impact on sales closed? including your customer channels, as well as their these scorecards. Too much place. Which channels are database, ad networks, influence on other channels information will overwhelm performing best? Which• hat would be the impact on sales W search engines, in-house and campaigns, and your your ability to quantify the campaign mix and variations? if we decreased the marketing budget spreadsheets, etc.? You can marketing measurement business revenue impacts of Integrate historical data by 10%? build your data warehouse success as a whole. It’s your individual and collective trends with your “whatSound familiar? It all comes back internally or rely on outside helpful to integrate historical marketing investments. if” scenarios to adjust andto where we started. agencies or analytics data into your metrics as well improve your marketing 7. mploy your data to calculate E providers. to uncover historical trends. investments moving forward. true impact. Assign values to 2. dentify your Key I 4. ormalize campaign data F each channel, campaign and 10. ROI-inse and repeat. Performance Indicators collection and tracking. This is attribute across all marketing As Visual IQ says, “an (KPIs). When you involve where you establish business touch points to deliver true enterprise marketing key stakeholders who rules around when and how metrics that represent how measurement system is […] will use your data in their to measure what you want to effective each source is in not a one time, set-it-and- daily business functions to measure – and identify who generating revenue. forget-it project.” Enable measure how well they’re will oversee each phase of stakeholder buy-in with 8. here individual user data is W achieving their goals, you the process. small victories at first, and unavailable, use “top down” ensure their sponsorship of build your initiatives as you 5. ntegrate sales transaction I attribution. Mathematical the marketing measurement see what works and what data from all sources. You’ll algorithms exist to calculate process. doesn’t. establish a virtuous cycle for the value of individual your marketing ROI when marketing touches that you (Source: Visual IQ, 10 Steps to Enterprise Marketing Measurement) you close the loop of your can’t access on a user level, measurements. such as offline channels like TV, print and radio. © 2011 Marketo, Inc. All rights reserved. 63
  • 64. Definitive Guide to Marketing Metrics and AnalyticsPart 8: Implementation – People,Process, and TechnologyTechnology Automation Must-Haves 3. Powerful and Easy Analyzers. Very few “ he first rule of any technology TGiven the importance and potential of A successful analytics solution requires of the marketers who want and need to used in a business is thateffective marketing measurement, as well as four components: consume analytics data are business analysts. automation applied to anthe scope of the problems that companies For such an audience, powerful analyzers and 1. Central Marketing Database. Analytics dashboards are required, so marketers can efficient operation will magnifywho don’t use such metrics experience, there the efficiency. The second is require access to highly detailed marketing explore the data trends and gain insight intois no lack of vendors promoting “the next bestthing” in marketing measurement technology. data, so marketers need to begin tracking this their programs without wasting valuable time that automation applied to an information now – preferably in one place. in acquiring the expertise needed to maneuver inefficient operation will magnifyWhile Excel spreadsheets and other ad hoc Required information will include historical the technology, build custom reports, and so the inefficiency.” Bill Gatestools can do a lot for companies, they cannot data around when marketing programs ran, on. Just make sure your marketing automationfunction as solutions for businesses that want what their attributes were, who they touched, solution offers tools that are both easy andto implement a robust analytics process. In how much they cost, and so on. Without powerful!contrast, automated measurement processes this information, analytics are essentiallyprovide much more definitive, reliable and worthless. 4. Ad Hoc Reporting and Dashboards. On thetimely insight. other hand, business analyst experts will need 2. Time Series Analytics. Unless an complete flexibility to delve deeply into theAutomation frees up analysts’ time from operational system stores historical data, data and customize their own ad hoc reports.information collection and presentation, a marketer cannot measure or understand In this case, table-like reports and charts areand allows them instead to focus on gaining marketing trends. Yet the majority of most effective and allow analysts to “followvaluable insight into that data and refine marketing and sales systems are operational the scent” of particular insights as far as theytheir actions toward better results. This gets and do not store historical information – need to go.the analysis completed faster and better. requiring marketers who want to analyze their metrics for prior time periods to According to Gartner, companies that manually take data “snapshots” from their automate their lead management business Excel spreadsheets. However, time series processes between marketing and sales analytics give marketers a full picture of their before 2012 will increase their conversion performance trends over time because the rates by at least 50%. Many companies will engine is powered by a historical data mart. also see a 5% to 10% increase in revenue by 2015. © 2011 Marketo, Inc. All rights reserved. 64
  • 65. Definitive Guide to Marketing Metrics and AnalyticsConclusion © 2011 Marketo, Inc. All rights reserved. 65
  • 66. Definitive Guide to Marketing Metrics and AnalyticsConclusionKEY LESSONS TO IMPROVE YOUR Maintain financial integrity Create an environment to succeed C EOs and CFOs care about growing E nable access to critical marketing, salesPERFORMANCE, PROFITABILITY, revenue and profits – use the hard and finance data. Employ tools to displayAND CREDIBILITY WITH MARKETING financial metrics they care about to build what’s urgent, important and relevantMETRICS AND ANALYTICS: credibility I mplement marketing technology to use B e comprehensive in accounting staff and marketing assets more efficiently for marketing-generated costs E nhance data analysis capabilities to Plan for future success M odel the stages of your revenue advance precision of ROI analyses R eporting for reporting’s sake is less cycle and understand your lead flow, important than the decisions reports enable T rain and hire experienced, tech savvy conversion rates and speed of closing to improve profits; find not just what works, people with a bias for experimentation sales but what works better. Focus on “improving C reate a virtuous cycle of communication ROI,” rather than just “proving ROI.” Measure strategically with your C-level suite I dentify measurement priorities et goals and run scenarios for all S in advance of campaigns and plan ultivate a culture of continuous C marketing programs – prior to spending campaign-specific measurements improvement money concurrent with campaign planning E stablish a roadmap for increasing Design programs to be measurable marketing ROI and measurement I ntegrate diverse measurements to capabilities over time A pply the insights from prior determine how to best leverage the measurements in the current cycle unique strengths of each methodology D evelop a process that aligns marketing of planning and to allow multiple measurements to and measurements to business objectives have a cumulative effect R un pilot initiatives to introduce new D elve into all expenses involved in capabilities customer value and improve the profit potential of each individual account – and B uild momentum by acting on insights improve targeting for new accounts for initial wins C ontinuously evolve the marketing ROI process — it is a journey, not a destination © 2011 Marketo, Inc. All rights reserved. 66
  • 67. Definitive Guide to Marketing Metrics and AnalyticsAppendix: More Resources18 Must-Know Marketing Analytics Adam Greco, Pat LaPointe, Tom Pisello,and Metrics Experts Senior Partner, Web Analytics Demystified Managing Editor, NPV and EVP-Americas, Chairman and Founder, AlineanNeed help getting started or advancing Website: Web Analytics Demystified MarketShare Blog: Tom Pisello, The ROI Guyyour current marketing metrics? The Twitter: @AdamGreco Book: Marketing by the Dashboard Light Twitter: @TPiselloexperts below represent the best of the Website blog: in marketing analytics, marketing Leland Harden, Twitter: @MeasureMan David Raab,metrics, marketing forecasting, marketing EVP, Global Marketing, Usee Owner, Raab Associatestesting, and marketing testing. Some Book: Marketing by the Numbers Jim Lenskold, Book: The Marketing Performancehave books, others consulting firms, Website: Digital Engagement Managing Director, The Lenskold Group Measurement Toolkitbut all have the A+ smarts to push your Twitter: @LelandHarden Book: Marketing ROI: The Path to Website: Raab Associates to the next level. Campaign, Customer, and Corporate Blog: Customer Experience Matrix Anne Holland, Profitability Twitter: @DRaabAmy Africa, President, Anne Holland Ventures, Website: Lenskold GroupCEO, Eight By Eight Publisher, Which Test Won,  Twitter: @JimLenskold Ron Shevlin,Website: Eight by Eight Website: WhichTestWon Senior Analyst, Aite GroupBlog: Amy Africa’s Blog Twitter: @AnneHolland55 Rebecca Jacobs Madigan, eBook: Everything They’ve Told You AboutTwitter: @AmyAfrica Executive Director, Performance Marketing is Wrong Mark Jeffery, Marketing Association Blog: Ron Shevlin’s Marketing WhimsTim Ash, Managing Partner, Agile Insights + Director Website: Performance MarketingCEO of SiteTuners Chair of Conversion of Technology Initiatives, Kellogg School of Association Jim Sterne,Conference Management Twitter: @PMAssociation Chairman, Web Analytics Association,Book: Landing Page Optimization: The Book: Data-Driven Marketing: The 15 President, Target MarketingDefinitive Guide to Testing and Tuning for Metrics Everyone in Marketing Should Neil Patel, Website: Target MarketingConversions Know Co-founder, KISSmetrics and Crazy Egg Book: Social Media Metrics: How toWebsite blog: SiteTuners Website: Agile Insights Blog: QuickSprout Measure and Optimize Your MarketingTwitter: @Tim_Ash Twitter: @NeilPatel Investment Avinash Kaushik, Twitter: @JimSterneBryan and Jeffery Eisenberg, Analytics Evangelist at Google Laura Patterson,Managing Partners, Eisenberg Holdings Book: Web Analytics 2.0 President, VisionEdge MarketingBook: Always Be Testing Website blog: Occam’s Razor Book: Marketing Metrics in Action:Website blog: Eisenberg Associates Twitter: @Avinash Kaushik Creating a Performance-Driven MarketingTwitter: @TheGrok, @JeffreyGroks Organization Website blog: VisionEdge Marketing Twitter: @LauraVEM © 2011 Marketo, Inc. All rights reserved. 67
  • 68. Definitive Guide to Marketing Metrics and AnalyticsAppendix: More Resources10 Steps to Enterprise Marketing CMO Guide to Marketing ROIMeasurement: A Marketing Executive from Lenksold GroupChecklist by VisualIQ marketing_roi.htmlwhite-paper-executive-checklist-marketing- 2010 B2B Lead Generationmeasurement Marketing ROI Study – Lenskold GroupBook Excerpt: Marketing Metrics in Action: a Performance-Driven Marketing LeadGenROI_2010.htmlOrganization by Laura Patterson MarketingNPV: _base/all/topicsin-action-creating-a-performance-driven-marketing-organization.php Metrics that Matter for Marketing Measurement – Webinar with David RaabFree ROI Spreadsheet from Lenskold Group resources/best-practices/marketing-roi/html?fid=18 metrics-that-matter-for-marketing-Interactive Lead Generation ROI Tool measurement.phpfrom Lenskold Group © 2011 Marketo, Inc. All rights reserved. 68
  • 69. Definitive Guide to Marketing Metrics and AnalyticsContact usNorth America: +1.877.260.MKTO (6586) About Marketo Written by Jon MillerEurope: + 353 1 213 0500 Marketo is the global leader in Revenue Jon is VP Marketing and co-founder at Marketo. Performance Management. Marketo’s powerful He explores everything from lead nurturing and yet easy-to-use marketing automation and sales social media to marketing ROI and revenueEmail: effectiveness solutions transform how marketing performance management in Marketo’sVisit our website: and sales teams of all sizes work — and work popular blog, Modern B2B Marketing, and was together — to drive dramatically increased named a Top 10 CMO for companies under revenue performance and fuel business growth. $250 million revenue by The CMO Institute. JonTo get The Definitive Guide to Lead Nurturing online, The company’s proven technology, graduated Magna Cum Laude in Physics fromvisit: comprehensive services, and expert guidance Harvard College and has an MBA from the are helping corporations around the world to Stanford Graduate School of Business.To get The Definitive Guide to Lead Scoring online, turn marketing from a cost center to a business-visit: building revenue driver.To get The Definitive Guide to B2B Social Media online, Marketo has been recognized with the 2010 Designed illustrated by Velocity Partners,visit: CODiE award for “Best Marketing Solution,” the the B2B marketing agency. “Best Sales and Marketing 2.0 Solution” fromTo get The Definitive Guide to Sales Lead Qualification, SellingPower, and the “Best Marketingvisit: Automation Application” by Salesforce customers on the AppExchange. As of March 2011, more than 1000 enterprise andVisit our blogs: mid-market clients globally have adopted Marketo solutions. For more information, visit, or subscribe to Marketo’s award-winning blogs at http://blog. © 2011 Marketo, Inc. All rights reserved. 69
  • 70.© 2011 Marketo, Inc. All rights reserved. 70