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Don't Let Bad Data Haunt You: An Expert Guide to Marketing Metrics
This document provides an overview of best practices for marketing metrics and return on investment (ROI) analysis. It emphasizes using metrics that demonstrate marketing's impact on key business metrics like revenue and profits. Specifically, it recommends focusing on the revenue cycle and pipeline performance, incremental revenue from programs, and marketing forecasts of new business. It also discusses challenges like multi-touch attribution and provides examples of using testing and controls to better measure individual program ROI. The overall message is that marketing should "speak the language of business" by selecting metrics that show their contribution to financial goals.
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Don't Let Bad Data Haunt You: An Expert Guide to Marketing Metrics
- 1. © 2014 Marketo,Inc. Marketo Proprietary and Confidential An Expert Guide to Marketing Metrics Don’t Let Bad Data Haunt You
- 2. Page 2 © 2014Marketo, Inc. @jonmiller
- 3. Page 3 © 2014Marketo, Inc. @jonmiller
- 4. Page 4 © 2014Marketo, Inc. @jonmiller
- 5. Page 5 © 2014Marketo, Inc. @jonmiller Topics • Building Marketing Credibility • The Right Metrics • Revenue Metrics • Marketing Program Performance
- 6. Page 6 © 2014Marketo, Inc. @jonmiller Quick Housekeeping • We will be recording the webinar for future viewing • All attendees will receive a copy of the slides/recording • Twitter hashtag: #Marketo
- 7. Page 7 © 2014Marketo, Inc. @jonmiller 12% 20% 15% 9% 44% Improve profits by more than 20% Improve profits by 10% to 20% Improve profits up to 10% No major change in profits generated Don't Know What Profits Can Be Generated With 10% More Budget? #1 Answer: Don’t Know Source: 2010 Lenskold Group / emedia Lead Generation Marketing ROI Study
- 8. Page 8 © 2014Marketo, Inc. @jonmiller Where Metrics Go Wrong Vanity Metrics Sound good and impress people, but don’t measure impact on revenue or profitability
- 9. Page 9 © 2014Marketo, Inc. @jonmiller Where Metrics Go Wrong Activity Metrics Measure what you do instead of what results and impact you have
- 10. Page 10 © 2014Marketo, Inc. @jonmiller When Metrics Take Away Credibility Cost Metrics Frame marketing in terms of cost and spending instead of results and outcomes
- 11. Page 11 © 2014Marketo, Inc. @jonmiller Metrics That Give Marketing Power “Speak the Language of Business” Aggregate impact on company revenue; pipeline performance; predictive forecasts Revenue Cycle and Forecasts
- 12. Page 12 © 2014Marketo, Inc. @jonmiller Metrics That Give Marketing Power “Speak the Language of Business” Incremental revenue contribution and ROI of individual marketing programs Program Performance
- 13. Page 13 © 2014Marketo, Inc. @jonmiller Revenue Cycle Metrics
- 14. Page 14 © 2014Marketo, Inc. @jonmiller Name Awareness Friend Engaged Target Marketo’s Revenue Cycle TOFU MOFU Opportunity Customer Lead Sales Lead Nurturing Database BOFU
- 15. Page 15 © 2014Marketo, Inc. @jonmiller Name Awareness Friend Engaged Target Marketo’s Revenue Cycle Opportunity Customer Lead Sales Lead Nurturing Database Exposed to us via content, brand, or word of mouth
- 16. Page 16 © 2014Marketo, Inc. @jonmiller Name Awareness Friend Engaged Target Marketo’s Revenue Cycle Opportunity Customer Lead Sales Lead Nurturing Database Feels a relationship and trust with us
- 17. Page 17 © 2014Marketo, Inc. @jonmiller Name Awareness Friend Engaged Target Marketo’s Revenue Cycle Opportunity Customer Lead Sales Lead Nurturing Database Names are just names.
- 18. Page 18 © 2014Marketo, Inc. @jonmiller Name Awareness Friend Engaged Target Marketo’s Revenue Cycle Opportunity Customer Lead Sales Lead Nurturing Database Meaningful interaction with us
- 19. Page 19 © 2014Marketo, Inc. @jonmiller Name Awareness Friend Engaged Target Marketo’s Revenue Cycle Opportunity Customer Lead Sales Lead Nurturing Database Qualified potential customer Nurture until sales ready
- 20. Page 20 © 2014Marketo, Inc. @jonmiller Name Awareness Friend Engaged Target Marketo’s Revenue Cycle Opportunity Customer Lead Sales Lead Nurturing Database Marketing qualified lead (score > 100) – Sales Development Rep (SDR) reach-out
- 21. Page 21 © 2014Marketo, Inc. @jonmiller Name Awareness Friend Engaged Target Marketo’s Revenue Cycle Opportunity Customer Lead Sales Lead Nurturing Database Qualified as sales-ready by Sales Development Rep (SDR)
- 22. Page 22 © 2014Marketo, Inc. @jonmiller Name Awareness Friend Engaged Target Marketo’s Revenue Cycle Opportunity Customer Lead Sales Lead Nurturing Database Accepted and actively worked by sales: marketing quota attainment
- 23. Page 23 © 2014Marketo, Inc. @jonmiller Revenue Cycle Modeler Screenshot: Marketo Revenue Cycle Analytics
- 24. Page 24 © 2014Marketo, Inc. @jonmiller Customer Revenue Cycle
- 25. Page 25 © 2014Marketo, Inc. @jonmiller Filter/Drill into data, e.g. by Program Type, Business Unit, Geography, etc. Key topic areas: • Balance (Reach) • Flow • Conversion • Velocity Trends over time Screenshot: Marketo Revenue Cycle Analytics
- 26. Page 26 © 2014Marketo, Inc. @jonmiller Use Metrics to Set & Justify Budgets New Targets 60,000 Inventory Of Active Targets 131,000 New MQLs Score>100 23,000 15.3% Inventory of Active MQLs 10.5% 20,000 New Opps* 1,000 6 Month Created Opp Inv. 2,000 270 *Opps is bigger than SQLs because includes outbound and partner referrals SDR capacity driven Inbound/ Programs 120,000 (900K DB Total) New Names New SQLs 922 2.4% 1.9% 75% Wins 35% win
- 27. Page 27 © 2014Marketo, Inc. @jonmiller Introducing Marketing Forecasts • Where the CSO lacks “bottom-up” visibility, marketing forecasts can fill the void • Marketing has long- term view and visibility into the early stages of the revenue cycle Traditional Marketing Forecast The market will grow by an estimated 4.2% overall and by 5.1% in the Western region. Highly Accountable Marketing Forecast Marketing will generate an incremental 30 new deals worth $4.0 million of bookings that are not currently in the sales forecast.
- 28. Page 28 © 2014Marketo, Inc. @jonmiller Marketing Forecasts Get The “Definitive Guide to Marketing Metrics & ROI” http://marketo.com/DG2MM
- 29. Page 29 © 2014Marketo, Inc. @jonmiller Program Performance
- 30. Page 30 © 2014Marketo, Inc. @jonmiller
- 31. Page 31 © 2014Marketo, Inc. @jonmiller Accurately Tracking “Investment” vs Budget
- 32. Page 32 © 2014Marketo, Inc. @jonmiller Why Measuring Return is Hard • Multiple touches. Seven touches needed to convert a cold lead into a sale • Multiple influencers. Typical buying committee has 5-21 people
- 33. Page 33 © 2014Marketo, Inc. @jonmiller Source: 2013 Lenskold Group 2013 Lead Generation Marketing Effectiveness Study Ways that Companies Measure Program ROI
- 34. Page 34 © 2014Marketo, Inc. @jonmiller First Touch
- 35. Page 35 © 2014Marketo, Inc. @jonmiller Source: Marketo data, Marketo Revenue Cycle Analytics. Does not include all sources.
- 36. Page 36 © 2014Marketo, Inc. @jonmiller Source: Marketo data, Marketo Revenue Cycle Analytics. Does not include all sources.
- 37. Page 37 © 2014Marketo, Inc. @jonmiller Source: Marketo data, Marketo Revenue Cycle Analytics. Does not include all sources. Inbound creates the best leads by far: high conversion, high velocity
- 38. Page 38 © 2014Marketo, Inc. @jonmiller Source: Marketo data, Marketo Revenue Cycle Analytics. Does not include all sources. But we also use a Portfolio of programs
- 39. Page 39 © 2014Marketo, Inc. @jonmiller Source: Marketo data, Marketo Revenue Cycle Analytics. Does not include all sources. Sponsored Email builds the database, but low conversion
- 40. Page 40 © 2014Marketo, Inc. @jonmiller Source: Marketo data, Marketo Revenue Cycle Analytics. Does not include all sources. Webinar, tradeshow, PPC, and virtual tradeshow are top paid TOFU
- 41. Page 41 © 2014Marketo, Inc. @jonmiller Source: Marketo data, Marketo Revenue Cycle Analytics. Does not include all sources. Paid Social & Display Ad drive brand and amplify inbound as well
- 42. Page 42 © 2014Marketo, Inc. @jonmiller Source: Marketo data, Marketo Revenue Cycle Analytics. Does not include all sources. Average days to Opportunity: 327 days
- 43. Page 43 © 2014Marketo, Inc. @jonmiller Multi-Touch
- 44. Page 44 © 2014Marketo, Inc. @jonmiller Track All Touches Across People Screenshot: Marketo Revenue Cycle Analytics
- 45. Page 45 © 2014Marketo, Inc. @jonmiller Track All Touches Across People Screenshot: Marketo Revenue Cycle Analytics
- 46. Page 46 © 2014Marketo, Inc. @jonmiller Example: Multi-Touch Attribution A deal worth $100,000 recently closed. Three people were involved in the deal: • Person A attended Seminar A and Trade Show B • Person B attended Trade Show B • Person C was sent Direct Mail C $100,000 Revenue $25,000 $25,000 $25,000 $25,000 Seminar A $25,000 Tradeshow B $50,000 Direct Mail C $25,000
- 47. Page 47 © 2014Marketo, Inc. @jonmiller Screenshot: Marketo Revenue Cycle Analytics (actual data)
- 48. Page 48 © 2014Marketo, Inc. @jonmiller Source: Marketo Revenue Cycle Analytics, Apr 2014 * Percentage of all programs in channel that achieve MT Ratio > 5
- 49. Page 49 © 2014Marketo, Inc. @jonmiller Source: Marketo Revenue Cycle Analytics, Apr 2014 * Percentage of all programs in channel that achieve MT Ratio > 5 Inbound + Nurture = 58% of (MT) Pipeline Paid Programs = 42% of (MT) Pipeline
- 50. Page 50 © 2014Marketo, Inc. @jonmiller Source: Marketo Revenue Cycle Analytics, Apr 2014 * Percentage of all programs in channel that achieve MT Ratio > 5 (MT) Ratio = Pipeline / Investment >10 is Great and <5 is Fail Sponsored Email = 12.8, Tradeshow = 10.6, PPC = 13.0, Webinars = 25.4, Field Events = 6.6, Content Syndication 7.7
- 51. Page 51 © 2014Marketo, Inc. @jonmiller Source: Marketo Revenue Cycle Analytics, Apr 2014 * Percentage of all programs in channel that achieve MT Ratio > 5 % Programs with MT Ratio > 5 e.g. Tradeshow has good average but 49% programs “fail”
- 52. Page 52 © 2014Marketo, Inc. @jonmiller Test and Control
- 53. Page 53 © 2014Marketo, Inc. @jonmiller Example: Test and Control Source: Lenskold Group
- 54. Page 54 © 2014Marketo, Inc. @jonmiller Planning for Marketing Measurement Measure ROI to find not just what works, but what works better. Establish Goals and ROI Estimates Up-Front Design Programs to Be Measurable Focus on the Decisions that Improve ROI
- 55. Page 55 © 2014Marketo, Inc. @jonmiller Tweetable Takeaways & Q&A 1. Reporting is less important than DECISIONS that improve ROI 2. Focus on financial metrics that matter to the CFO (profit, cash, revenue) 3. Avoid cost and spend metrics – focus on investment and return 4. Multi-touch attribution gives more insight into the full funnel 5. Almost anything can be measured with testing, but you can’t test everything 6. A trusted marketing forecast is the single most important step to make marketing a revenue driver, not a cost center @jonmiller
Editor's Notes
- #2 Passion – founding the company
- #6 Over the next 40 minutes or so, my goal is to show you how to earn your own seat at the revenue table. I’ll also illustrate all these points using many of Marketo’s the actual metrics Topics:
- #7 Please note that today’s webinar is being recorded. It will be available on-demand soon after the conclusion of the webcast.
- #8 To begin, do you know what profits a 10% increase in your marketing budget would generate? According to the Lenskold Group’, the most common answer to this question is “I Don’t Know.” Forty-four percent of marketers have no idea what a budget increase could do for their companies. If you fit into this 44%, you’ll experience difficulty protecting your budget and will likely find yourself asking the question the other way around: “What will happen now that my budget has been decreased by 10%?” You can’t expect your organization to place value on something you’re unable to quantify. But when you do use the right metrics and processes, there is nothing more powerful to help marketing earn it’s rightful seat at the revenue table. That’s why the Definitive Guide delivers the strategies and methodologies you’ll need to measure and improve ROI. So let’s dive in.
- #9 To begin, what are the WRONG metrics? Vanity metrics Too often, marketers rely on “feel good” measurements to justify their marketing spend. Instead of pursuing metrics that measure business outcomes and improve marketing performance and profitability, they opt for metrics that sound good and impress people. Some common examples include press release impressions, Facebook “Likes”, and names gathered at tradeshows. True story: Twitter
- #10 Measuring Activity, not Results = Focusing on quantity, not quality Marketing activity is easy to see and measure (costs going out the door), but Marketing results are hard to measure. In contrast, Sales activity is hard to measure, but Sales results (revenue coming in) are easy to measure. Is it any wonder, then, that Sales tends to get the credit for revenue, but Marketing is perceived as a cost center? A common example of this comes from the 2010 study from The Lenskold Group. They found that the number one metric used by lead generation marketers is lead quantity, and barely half of marketers measure lead quality. Focusing on quantity without also measuring quality can lead to programs that look good but don’t deliver profits. Having a packed event is no good if it’s full of all the wrong people. To take this idea to the extreme, the phone book is an abundant source of “leads” if you only measure quantity, not quality. Results convince finance and senior management that Marketing delivers quantifiable value. Activity metrics are likely to produce questions from the CFO and other financially-oriented executives; they are no defense against efforts to prune your budget in difficult times.
- #11 Cost metrics The worst kinds of metrics to use are “cost metrics” because they frame Marketing as cost center. If you only talk about cost and budgets, then no doubt others will associate your activities with cost. As an example, let’s take a marketer who improved cost per lead by $10. Based on these great results, he went to the CEO to ask for budget. Did the marketer get his budget? No. The CEO decided the reduced lead cost meant marketing could deliver the same results with fewer dollars – and so she cut the marketing budget and used the extra funds to hire new sales people. What went wrong here? The marketer performed well, but he made the mistake of not connecting his marketing results to bottom-line metrics that mattered to the CEO. By framing his results in terms of costs, he perpetuated the perception that marketing is a cost center. Within this context, it’s only natural that the CEO would reduce costs and reallocate the extra budget to a “revenue generating” department such as sales.
- #15 With change in buying, marketing has the opportunity to seize the day and take a much larger share of revenue – since Marketing is responsible for that 70%. Requires Marketing to think as rigorously about their process as Sales typically thinks about their. While you may not be doing all this analysis now, you most likely will in their future. [Be sure to focus on this point a lot so you don’t lose them.] Here’s Marketo’s…. Let me explain.
- #18 Many names are not yet our friends Names are NOT leads, don’t call them leads
- #21 Majority of leads NOT sales ready. This is OK since human interaction is part of developing the relationship (nurturing). These Lead are recycled back to Target for additional nurturing until Sales Ready.
- #22 Sales does on call, and converts if Opp
- #23 This is how Marketing gets paid… carry a quota for Opportunity created. Only Sales can create the opportunities. [Requires very solid definitions of what is an opp, since people get paid on it – can’t be subjective.]
- #24 Model Note Success Path and Detours; Inventory and SLAs
- #26 Google Analytics for Revenue
- #27 Focus on MQL to SQL pinch False positive not expensive False negative is!
- #28 Present to the slide Conclusion: The ability to create trusted marketing forecasts creates more power and influence for marketing, better justification for the marketing budget, and ultimately the potential for higher compensation for marketers. So how do you do it?
- #31 ROI: First investment – then revenue Measure ROI to find not just what works, but what works better Establish goals upfront Make sure programs are measureable Focus on decisions that improve ROI
- #32 Next, let’s focus on “Investment” side of ROI. Notice it’s investment, not cost. You “invest’ in growth, marketing is a growth driver. -Then you enter and track your budget plan -as invoices come in from your financial system, you can map them to line items -you can also map your Marketo programs to specific budget categories or line items -you can track planned, forecasted and actual spend, and indicate whether forecasted spend is committed or optional
- #36 Explain
- #37 We create a ton of content… go to marketo.com/resources
- #45 Step 1: Important to track all touches
- #46 Step 1: Important to track all touches
- #48 Different pipeline allocations – first / even
- #49 Here we see what works for Marketo (over the last 12) 58% of pipeline from Inbound activities
- #50 Here we see what works for Marketo (over the last 12) 58% of pipeline from Inbound activities
- #51 Here we see what works for Marketo (over the last 12) 58% of pipeline from Inbound activities
- #52 Here we see what works for Marketo (over the last 12) 58% of pipeline from Inbound activities
- #55 Many marketers think of marketing ROI as reporting on the outcome of their programs. But the best companies measure ROI to find not just what worked, but what works better. They focus on “improving ROI,” not just “proving ROI. Planning for marketing ROI involves three main activities: Establish targets and ROI estimates up-front: With ROI goals in place, the CFO will see not just costs going out the door, but also exactly what benefit is expected to come from that cost. 2. Design programs to be measurable: As part of planning, you should answer three questions: - What will you measure? - When will you measure? - How will you measure? By planning this upfront, you’ll be sure to include the variance necessary to measure relative lift. 3. Focus on the decisions that will improve marketing: You’ll deliver the best ROI when you move past backward-looking measurement to forward looking decisions. Your highest-ROI decisions will often flow from strategic questions about offers, messages, target segments and geographies – not simply “pass/fail” assessments of specific programs or tactics.