Marketing Metrics

OK, so I’ll admit it – my background is that I’m an Electrical Engineer.  I basically have a math minor.  And then when you combine that with my MBA and finance classes, I’m a HUGE proponent of metrics.  I like to measure just about everything I do.  And I also throw stones at metrics all the time so people understand the assumptions they are built on.  Too many decisions are made from faulty assumptions.  And that is absolutely stupid.  If you can’t understand math, you shouldn’t be in charge.  Get out of the way.

Getting back to metrics, often, our systems, processes, or lack of resources make it difficult for us to make accurate measures or be able to measure what we REALLY want to measure.  Both CRM and marketing automation systems are still evolving.  And we need to learn how to live with this.  At my last two employers (both B2B software firms), common problems on tracking leads to revenue were:

  • the name on the PO was the purchasing agent, not from the lead(s) you generated
  • several people at the firm were involved in the purchase decison (which leads get credit for the revenue?)
  • the lead from the webinar/download/whitepaper/trade show/etc. isn’t the person who purchased; they passed it along to a colleague

So I’ve come to the conclusion that any honest attempt to measure and assign ROI to marketing activities is going to have to be built on assumptions.  Not a problem there but you need to understand that.

What did we do?  At both firms, we did something very similar.  Once a sale was recorded, we took that revenue and assigned it back to the marketing activities that (assumption) lead to the deal.  And we based it on the purchasing site.  That was the key.  You may sell to some huge firm like AT&T but when we went back, we would take the purchasing location (say, Chicago) and assign that revenue back to leads from that location.

How did we assign?  We  would take all leads over the last six months (assumption on the buying cycle – may be radically different for other firms) and divided the revenue among them.

Example:  $100k sale; 4 leads (2 webinars, 1 whitepaper, 1 streaming media piece).  Each action got $25k in “revenue” for ROI analysis ($50k webinars and $25k for both whitepaper and streaming media).  Simplistic example but basically what we did.

So, if a person downloaded a whitepaper and his firm bought w/in 6 months, that whitepaper got credit even if the guy/girl’s name wasn’t on the PO.  At my last firm, we called that “Marketing Influenced Billing (MIB)” and that was our marketing ROI measure.  We had several other tweaks to it – didn’t include the top customers; didn’t include software renewals (both of which I didn’t agree with), but the gist is there

At the end of the day, you could take a trade show or whitepaper (or any content item), and assign some measure of revenue to it.  Not perfect but adequate.  And way more than most firms do.

Problems with this include:

  • what if it’s a really big firm w/ centralized purchasing?   (all revenue would be assigned there)
  • what if your marketing activities from outside the six month buffer brought the revenue in?
  • what if the leads had nothing to do with the end purchase? (may have been an existing  customer or someone who never generated a lead like a sales cold call)

Food for thought.  My point is that you really should have metrics but you should know the assumptions they are built on.

Now an aside and maybe a promotion for my next blog entry: What you need to understand is that your buyer goes through your marketing-to-sales funnel at their own pace based on their BUYING habits and style.  You cannot dictate how they are going to buy.  You need quality content to drive them along – a whitepaper, a webinar, a streaming media piece, a download.  And you need to measure your content to see if it is working.  I think that will be my next blog.  Another marketing topic I’m passionate about…

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2 comments so far

  1. Matthew Quinlan on

    I couldn’t agree more Greg. The lack of math & statistics knowledge in many marketing departments is a real concern when so may decisions are now made based on the interpretation of those metrics. I highlight some more aspects of this issue in my recent interview with the Funnelholic : http://tinyurl.com/kpysbl .

    Matthew Quinlan
    LoopFuse, Inc.

    • gregdonahue on

      Great interview! I like your “mature” lead idea – not all leads are equal. And if I mentioned the words “standard deviation” at my last employer, I’m sure I would have seen cringing! Lastly, thanks for the comments on RSS. This is one area I have not done my homework and hence, am not using it to its potential. Now I have the impetus to dig deeper and learn…


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