I have a confession. I like to think that I’m a pretty hip guy but if I’m really honest, I’m pretty nerdy at my core. I like to read biographies of 19th century business leaders. The majority of my wardrobe is free corporate swag. I subscribe to This Old House magazine and am fascinated by genealogy research. These are not the activities of the “Cool Kids Club.”
Another nerdy obsession I have is with marketing. I LOVE marketing, but not for the reasons that most people love marketing. At its core, marketing is all about identifying what people want, feel, and need and then equipping them with resources that pique their interest while empowering a sales team to meet those needs. Most people that I know love marketing because within that framework there is a lot of freedom to explore creativity. While I do love a good creative endeavor, what really gets me jazzed is compiling tons of data and using it to spot trends, make informed decisions, allocate resources, and determine new courses of action.
As I talk with executive business leaders about marketing and measuring success, I’ve found that there’s frequently a “definition gap” when people use various terms. If people are using the same words but they have different meanings in their mind about what the term means, it’s going to lead to confusion and tension. This is especially true for sales and marketing teams who need to work in harmony to drive the revenue engine of the company. When people are communicating with different expectations, trouble is on the horizon.
In order to remove confusion and provide a primer for those just wading into the marketing measurement arena, I thought a “Marketing Dictionary” could be a useful tool.
To start out, here’s a few considerations to keep in mind:
Define what you’re trying to accomplish.
Depending on the type of organization and the primary objectives of marketing function, the definition of success will vary from company to company. Your primary goals should influence how you think about measurement. For example, if your objective is to bring brand or channel awareness about a new product or service, you’ll need a different plan than an organization that has an objective of building demand generation or maximizing cross-sell/up-sell opportunities. Your objectives should drive what you measure.
Assess where you’re at.
Before engaging on a robust measurement journey, take a moment to check out the current state of the data you’ll use to measure success. For example, if you have a CRM, is the data clean? Is it normalized? Are you missing crucial pieces of information? Are there tons of outdated records? You might need to spend some time getting the data into an acceptable condition before you can measure anything.
Additionally, you will want to look at the tools that are in place to facilitate your marketing activities. Do you have the right tools? Could you be using the tools that you do have better? Are you able to get the data you need out of your marketing tools so it can influence decision making?
Taking time to evaluate your data – and putting the effort into making any needed adjustments – is a critical first step to measuring success.
Take note of the difference between tactical and revenue metrics:
There’s a distinct difference in the types of metrics that marketers need to track. Both are of vital importance but serve different functions.
Tactical metrics are used to determine effectiveness of marketing activities. Examples include: Number of website visitors, email click-through rates, LinkedIn followers, ad impressions served, and number of form submissions. All of these measurements help the marketing team get a handle on how specific marketing activities are performing. These are not the sorts of metrics that should be reported to executive leaders. Many marketing leaders are asked for updates on how marketing is doing, and these are the data points that get reported to leadership. Don’t make the mistake of providing tactical metrics when the CEO is really looking for metrics that move the revenue needle.
Speaking of revenue metrics, examples of data that executives want to know about are: ROI by channel, best performing channel by revenue spend, marketing sourced revenue, pipeline velocity, and pipeline forecasts.
When the marketing team is able to provide the business leaders with this type of information, it allows for better decision making and improved allocation of resources.
Now, let’s jump into defining some terms so everyone can be on the same page. Here are some of the more common terms that need to be defined in order to remove confusion and reduce frustration:
Target vs. Lead vs. Inquiry
These three terms are frequently interchanged, but they mean very different things. Coming to an agreement on how you use these two words will remove a ton of confusion in conversations between sales and marketing.
A Target is anyone you have information on in your database. You may have obtained lists of people from list vendor or from a trade show you attended. These people have not shown any interest in your product or service but seem to be sorts of individuals you would like to be talking with. The marketing team needs to work to get these people interested in your business.
As a Target starts to take notice of your products or services, they move to becoming an Inquiry. An Inquiry is simply an identifiable person (or account) who shows even the smallest amount of interest. Sometimes they are referred to as a “hand-raiser.” These are individuals who are interacting with some aspect of your marketing tactics. They are demonstrating some level of interest but are nowhere near ready to be handed over to a sales team.
A Lead is an inquiry that has been “qualified” through some set of criteria. Sometimes that means they have passed a “scoring threshold” that assigns points based on quantity, frequency, recency, and type of interactions. Sometimes that means a BDR/SDR has spoken to this individual and taken them through a BANT exercise. Sometimes it means they’ve confirmed an appointment with a sales representative. Whatever your criteria, a Lead is a person (or account) who has shown real buying interest and should be given to a salesperson for follow-up.
One note, CRM systems add confusion to this by referring to Leads as Contacts. I will discuss that in a different post.
I mentioned that a Lead is an inquiry that has been qualified. One of the ways to determine if a lead should be qualified or not is to use a Lead Score. A Lead Score is either a numeric value or an alphanumeric value that gets assigned based on interactions with marketing activities. Normally, a marketing automation tool is used to generate a lead score.
When lead scores hit a certain threshold, another action occurs – send the lead to sales, add the lead to a new campaign, mark the lead as unresponsive and try a different tactic to re-engage them, etc.
For more about creating a lead scoring program that works for your business, check out this article.
Your Sales Pipeline is the process through which a prospective customer moves from being unknown, to known. Moving along the sales process, to finally becoming a customer and onto an advocate for your brand. Some organizations have a very complex sales pipeline that has multiple steps with feeders from several different areas. Just because a pipeline is more complex does not make it better. Focus on creating the least number of steps that make sense for your business. Keep in mind that each step should have well defined criteria about what’s required and when it’s appropriate to move an opportunity so that it’s clear to everyone about how and when to advance an opportunity.
Stages are simply the steps within your sales pipeline. At each stage there should be agreed upon thresholds that an opportunity must pass in order to advance in the sales cycle. Certain enforcement criteria should be in place for each stage but not so onerous as to be inflexible.
- For example:
- No opportunity can be moved to Sales Qualified without a dollar amount attached
- A Marketing Qualified Lead must be picked up by the assigned sales rep within 4 days
- No opportunity can sit in the Sales Accepted stage for more than 14 days
When everyone agrees on the rules for each stage, you remove confusion and get a more accurate account of your true sales pipeline, something that’s vital for determining how the business is doing (and will do in the future).
Velocity refers to the amount of time it takes for an opportunity to move through each of the stages in the sales pipeline. Most B2B organizations have longer sales cycles due to more complicated sales structures and additional decision makers to get onboard. By keeping tabs on your sales pipeline velocity, can start to predict when future revenue will be received and look for places where opportunities are ”stuck” or if there is “leak” in your funnel, where opportunities frequently fall out as lost or abandoned. If you spot these instances you can take measures to address what’s causing the problem.
Return on Investment (ROI) is the metric that gets asked about the most yet is one of the hardest to measure for most marketers. Earlier, I mentioned it’s important to know what you’re trying to accomplish. If your objective is to build brand and awareness, measuring ROI is going to be tougher than if your objective is pure demand generation. That’s not to say it’s impossible to measure ROI on brand building exercises, just more difficult. Set appropriate expectations with leadership so everyone is on the same page about how your efforts will be measured.
If you are focusing your efforts on demand generation, you begin to measure ROI by keeping track of all your expenses broken out by which channel you’re spending them on. Additionally, you will need to record which channels are generating what inquiries. This is called “first-touch attribution” and is the simplest way to begin recording ROI. As the organization becomes more sophisticated, you might consider moving to a “multi-touch attribution model.”
After recording how much you spend and where your inquiries are coming from, you can start to do simple math to figure out how much each inquiry costs per channel. As those inquiries become leads and move through the sales pipeline, you make note of which ones close. This allows you to calculate the cost per win per channel.
As you add more data, and keep this process up over time, you will start to notice patterns around where your best leads are coming from and which channels are producing cost efficient leads for the organization. This allows you to point resources toward the channels that are going to give you the most bang for the buck.
That is just a handful of some of the marketing terms that you may encounter. If your organization uses terms that I didn’t define here, it’s a good exercise to come to agreement around, and document, what common terms mean so that everyone in the organization is speaking the same language. Then when you’ve mastered these tactical and revenue metrics , you’re ready to get more advanced.
Happy measuring, you marketing
nerd cool kid!