The Chief Marketing Officer of a Fortune 100 company was quoted saying they spend over $50 Million on their marketing every year and 50% of that marketing works…. He just doesn’t know which 50%!
Regardless of how large or small your marketing budget is, everything you do in marketing should be tracked and measured and evaluated. Access to free or very inexpensive tools, provides the opportunity to quickly and easily measure everything we do in our marketing and sales effort.
The responsibilities of marketing within your company may range from increasing brand recognition to generating leads, so, where should you start? I recommend you start by clearly defining your marketing goals and how those goals impact your sales success. Many of the companies I work with utilize both their sales personnel to prospect for leads, and their marketing effort to generate leads. So, let’s keep it simple and talk about leads.
Marketing Metric 1: Lead Volume
Begin by calculating how many quality leads your marketing activities must produce to adequately feed the sales funnel. In addition to the number of leads you need, be sure to work with your sales team to define what a “quality” lead is. Is it a person who provided their contact information when downloading an ebook from your website, someone who signed up for a product demonstration or a person requesting a quote?
Even if you only have one person in Marketing and one in Sales, getting those departments to effectively communicate about goals and expectations is one of the keys to increasing the ROI (Return on Investment) of your marketing budget.
Work with your sales team and follow this process to determine how many leads per month you need to hit your sales goals. Let’s assume you need 10 sales per month to reach your revenue goal. To close 10 sales, you need to produce 20 quotes. To produce 20 quotes, you need create 40 quality leads. So, 40 leads per month would be one of your marketing goals. Take some time to map out each step of your sales process and the conversion rate for each step. The conversion rate is the number of leads that move from one step of your sales or marketing process to the next. The 50% conversion rate in my example may not be the same as yours, and the rate may be different for each step.
Once you understand how many quality leads you need to produce, you can start to build your marketing strategy and budget based on data, not a best guess.
Marketing Metric 2: Lead Sources
Understanding which marketing activities create the highest number of quality leads, opens up a huge opportunity to increase the ROI of your marketing spend. I recommend you use a CRM (Customer Relationship Management) such as Salesforce.com, Pipedrive, Zoho or Insightly to keep track of all your leads. A CRM provides many functions that help you keep your marketing and sales processes and data organized. At minimum, track the marketing source for every lead, which stage of the sales process each lead is in – including won or lost, and the value of each deal. This type of information will quickly help you understand which marketing activities are producing leads that most often convert into sales.
Review this information on a monthly basis so you can determine where you should focus your marketing budget and resources, and where you need to make adjustments. Keep in mind that some marketing activities take longer than others to produce results. For example, an email campaign offering a limited time discount may have instant results. While it may take 3-6 months before you see the impact of improving the SEO on your website.
Lead volume and lead sources is just a place to start. By tracking the leading indicators in your marketing and sales efforts, you can spot what is working and repeat it and identify activities that aren’t doing so well and make changes quickly. And in doing so, you’ll increase your success rate and grow your business faster.