As we begin 2010, think of ways you can create points of reference within your organization where you can create standards.  Then evaluate and compare against past performance to ensure you are improving your overall marketing effectiveness.

Standards should be created in each of the four disciplines of the Demand Lifecycle™ – lead management, contact management, campaign management and marketing effectiveness. 

To get you started, Eloqua Best Practice recommends the following standards for measurement to create a baseline for evaluation and comparison.

Demand Lifecycle(TM) Recommended Metrics for Benchmarking

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VP Sales: You marketers are all the same!  Your campaigns always look so slick.  You always are producing lots of “stuff”. But, when it comes to the tough questions, you never have answers!

Marketer: You want answers?

VP Sales: I think we are entitled to them.

Marketer: You want answers?

VP Sales: We want THE TRUTH!

Marketer: Pshh…You can’t handle the truth.  We live in a world that requires interest in our products and solutions and that interest must be strategically generated by people with elite skills. We have a greater responsibility than you can possibly fathom. You scoff at the marketing team, you curse our big budgets; you have that luxury. You have the luxury of not knowing what we know – that while the cost of business results may seem excessive, it builds customer loyalty and scales revenue. My very existence, while grotesque and incomprehensible to you, allows us to create a revenue-producing machine. You don’t want to know the truth because deep down in places that you don’t talk about at your pipeline forecast meetings you want me on that call; you need me on that call.  We use words like engagement, relevance, and calls-to-action.  We use these words as the backbone of a life spent building long-term relationships and creating demand. And you use them as a punch line. I have neither the time nor the inclination to explain myself to people who rise and sleep under the very blanket of genuine interest that I provide and then question the manner in which I provide it. I would rather you just said “thank you for finding that deal” and went on your way. Otherwise, might I suggest that you stop questioning me and close the deal I just sent to you, either way; I don’t care what you think you’re entitled to.

VP Sales: Can you prove how much revenue you impacted last year?

Marketer: I did the job I was hired to do.

VP Sales: Can you actually prove how much revenue you impacted last year?

Marketer: You’re darn right I can.

———————————–

Can you handle the truth? The truth is I see organizations continuing to FAIL in 2010. Fail in understanding what mix of marketing and sales strategies actually drive the business to its revenue and growth targets. I believe this is because we all continue to isolate sales and marketing instead of evaluating performance within context of the entire integrated sales and marketing funnel. We continue to judge the effectiveness of marketing by eyeballs that hit our website – and NOT revenue. We look at sales efficiencies without the context of inbound demand and how it is currently managed. We aren’t putting in service-level agreements and holding both functions accountable for the greater short-term and longer-term objectives.

I am looking for MORE than a few good marketers in 2010. I am looking for the elite sales and marketing professionals that are driving change in their organization and developing a CORE COMPETENCY in Demand Generation for their business. And, when I say core competency, I mean those organizations that have established a revenue machine. Stay tuned as I track them down and share insights from the front lines of those that are adopting the principles of The Demand Lifecycle and dominating their markets.

A Few Good Marketers will succeed in 2010. Will you be one of them?

**And, thank you to Alex Shootman and the clever Eloqua team for letting me steal the movie reenactment idea.

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Question: if a lead inquires on a campaign in Q1 2010 and counts towards your marketing metrics for conversion; when is that prospect eligible to be counted again as another inquiry?

The Miriam-Webster definition for inquiry is as follows:
Main Entry: in·qui·ry; date: 15th century
1 : examination into facts or principles : research
2 : a request for information
3 : a systematic investigation often of a matter of public interest

The marketing definition of an inquiry is still not as well defined as it needs to be.  Some say it is when a prospect “raises their hand” as a point of interest, and many marketers define that action as a campaign form submission in a given period of time. However as long as you stay consistent with how you define an inquiry, ongoing analysis should provide actionable  insight.  One question that is unclear as you look across longer periods of time, is when can you count that inquiry again?

Multiple Funnel Theory

A funnel represents a buying process that is initiated by a lead.  As that lead expresses more and more interest it will move further down the funnel, eventually being passed to sales and if all goes well turn into a customer.  I would say it is best practice to measure multiple funnels with a time frame that is easily aligned to marketing activities or campaigns (i.e. months, quarters).  The reason is if you are performing analysis on a funnel, you can better correlate the conversion and results to what you did from a marketing perspective.

Your “Dead Pool of Leads”

But what if the interest of that lead goes completely away to zero?  Does the lead really stay part of that Q1 2010 funnel…FOREVER?  I believe the answer is no.  Because on top of all of your quarterly funnels is a “Dead Pool of Leads” that have zero interest, and don’t belong to any “buying process at all” (another interesting article on inactive leads).

Codynamic^TM Lead Scoring Again?

So if you have multiple funnels, and a dead pool of leads on top of these funnels – how can you accurately determine when a lead is back in the deal pool and available to inquire on a future funnel?  The answer is Codynamic^TM Lead Scoring.  If you recall Codynamic^TM Lead Scoring tracks both the profile fit (company and contact data) and level of engagement (online activity and interest) of a lead.  It is best practice today to have your lead scoring program decay the level of engagement over time when there is no activity.  So if a lead inquires in Q1 2010, but then has no activity over a period of time, that lead will eventually fall to “zero interest” and should be  in your “dead pool of leads”.  So if at some point in the future you were to target them with a campaign, and the lead inquires on that campaign – they should count in a new funnel (Q3 2010).

How Do You Get to Zero Interest?

A common thought is that the rate of decay should be related to the length of your sales cycle, however I would disagree as sales cycle is much deeper in the funnel, where a lead has more commitment to the buying process. To find out more, check out Part 3 on lead scoring decay coming soon.

For more on how to target leads in your dead pool – check out this post by Steve Woods on how VFA re-engaged their dead leads.

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Conversion rates? Effective rates?  Averages of rates?  How about the difficulties of calculating conversion as a lead moves from inquiry to qualified lead to opportunity to a deal?  What if you have multiple funnels?  

When tackling some of the campaign analysis that is required to look at response rates, ROI or funnel conversion, the math can get quite complex.  Let’s look at some golden rules, and see if we can find some answers.

Rule #1. Work Backwards, From the Results That Would Make Sense.

There are many different ways to calculate rates, and there is some debate on the best way to calculate an average rate (Open, Click-Through, Conversion, etc.).  Two methods seem to be most prevalent, so let’s look at an example using each method and see where we should land.

Campaign 1 – 100,000 visitors to the landing page, 100 forms submitted, 0.1% Conversion Rate
Campaign 2 – 1,000 visitors to the landing page, 100 forms submitted, 10% Conversion Rate
Campaign 3- 1,000 visitors to the landing page, 100 forms submitted 10% Conversion Rate
Campaign 4- 1,000 visitors to the landing page, 100 forms submitted, 10% Conversion Rate

• Method 1: Calculate the rate for each campaign, then average all of the rates, so in this case your average conversion rate would be 30.1%/4 = 7.5% conversion
• Method 2: Sum the data for all campaigns, then calculate the rate to get an average, so in this case it would be 400/103,000 = 0.4% conversion

These two methods produce very different rates, which would have very different resulting actions.  If you look at the raw data, it would be obvious that Campaign 1 performed poorly compared to the other campaigns, but if you used Method 1 to calculate averages – it may not be obvious you have a problem with conversion in one of your campaigns.  Method 2 however would clearly indicate something has gone wrong – and may lead you to delve deeper and find the campaign(s) that is driving the issue.  That would be the “Result That Makes Sense”, and therefore by “working backwards” I would choose Method 2 to calculate averages of rates.

Try using the principle when you come across other “debatable” marketing calculations.

Stay tuned for Part 2 – Double Counting Inquiries, and Part 3 – Conversion by Deals or Revenue?

Divide and Conquer Your List

• The Average Group: 29,000 contacts received 5 emails over the last 5 months
• The Oh Oh! Group: ~ 1,000 have received more than 6 emails
• The Lonely Group: 37,000 contacts received 1 email

The Average Group
At first glance, you may feel that 5 emails is way too much to send in 3 months (you also may not feel that way).  But really it gets down to analyzing your response rates?  Are they decreasing? increasing?  The average Eloqua customer sends 4-6 emails per quarter last time I checked, and really you need to further segment your list to make a call on whether it is too much or too little.  But as long as this isn’t 1 or isn’t 15, you are probably good as long as your response rates are not declining.

The Oh Oh! Group
This is the group that people worry about the most.  But in reality it often is a very small part of your list.  Also, when you look into individual email history, most of the time they are either company employees or partners.  What I advise customers to do, is to take one contact and examine the emails that were sent to them, and ask themselves – should they have gotten those campaigns?  Out of the 50 or so times I have done this with customers, the answer usually is – yes, they should have gotten all of those communications, some were support, some were reminders for an event, etc.

The Lonely Group
You pay way too much for new leads, why only communicate to leads you already have in your database < 1 time per quarter?  This is the group you need to pay special attention to, and here are some steps to take.

1. What is the lead score of this group? and if you are not lead scoring yet, just open a report of them in excel and scan them to see if there are some quality names in that list
2. How new are those leads? If they are new – you really need to investigate implementing a “Welcome Program“, which is a lead nurturing program targeted at new leads to your database.  If they are not new – are you seeing any response activity that would warrant an increase in communication frequency?

So there you have it – email frequency is not a simple issue to work through, but if you take the right steps, you can debunk the myth that there is a magic number per month to send, and maximize the potential for generating quality leads, from the database you already have.

Regular, disciplined testing strategies are critical to transitioning to a results-driven marketing culture. Unfortunately, starting out with testing can seem about as daunting as starting a new exercise routine. Its too hard. I need a Personal Mathematician to really figure it out. We don’t have enough time – we just need to get campaigns out the door.

Well, I am here to tell you that it is time to get in shape – no more excuses. When budgets are tight and resources stretched – now is the time to get serious about optimization testing. Anne Holland (Founder and Former President of Marketing Sherpa and now behind Which Test Won?) shows us that the conversion rate of a typical campaign landing page can be increased up to 40% (on average) with a few well-designed tests.

Get started with a simple split test. Testing should always answer specific questions. For example: Are we asking for too much information on this form? Which email layout drives the highest conversion? Would I get a higher webinar attendance rate if I shortened my promotional timeframe?

Which image drove a landing page conversion of 48%?

4 Elements Worth Testing

- Email From Lines: One client that I was working with saw a 36% increase in open rates by simply adding the company brand name to the from line of their communications.

- Layouts: Layouts should effectively guide our eyes whether it is an online or offline asset. Simple layout changes or location of images help us take the right actions. And, do not let your layouts get stale – variation keeps people engaged.

- Imagery: Images are the visual cues that tell us to pay attention to the content. The important thing to consider is – are the images emotionally supporting the value proposition or just there for the sake of design? Check out this free resource Fivesecondtest.com.

- Timing: Many clients are experimenting with time as elements in their campaign. Try decreasing the frequency between touches on a nurturing program. Add urgency to a promotion with an “offer ends” or “limited availability”. One software vendor decreased their Free Trial from 30 Days to 5 and saw product purchases increase by 28%.

Make It Count

Testing shouldn’t be for the sake of testing – it should be about improving results. Determine the metrics that will clearly indicate the success or failure of elements being tested. Be sure to look at both short-term conversion metrics as well as the bottom line to gain deeper insights into performance.

And, testing shouldn’t be seen as a “one-time” event – adopt it into your every-day campaign methodology. People change, online behavior is evolving, and new ideas will continue to emerge across your team. With a testing strategy in place – no idea is a bad idea if its effectiveness can be proven!

What has your team learned from optimization testing? What will you focus on learning in the second half of 2009?

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Doing the same thing over and over and expecting a different result is the definition of insanity. Ever heard that saying?  Well, I can’t tell you how many marketers when asked, “What results have you received?” They answer with, I don’t know or I can’t track or report properly.

So if you execute marketing programs and do not know what to expect, but keep executing, are you insane?  No, not necessarily.  Before marketing automation, my day-to-day professional life was the definition of insanity.  Every day I repeated the same actions and expected a different result…or at least hoped for a different result.   I expected my funnel to improve, but had no ability to measure the results.

Once I implemented marketing automation I had the ability to measure results. From there I was able to make sure I didn’t spend my time executing programs that didn’t make sense.  We figured out what worked and what didn’t work based on lead source tracking from inquiry to opportunity close.  We created personas and marketed to them based on tracking activities and behavioral criteria.  We did more of the things that worked and less of what didn’t…therefore we were more efficient and effective.

Insanity no more!

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The analysis indicates on MarketingCharts.com however, the only metrics marketers are using include: increased traffic, conversion rates, click-through rates.  In addition to these metrics, you should also track “net new” web visitors, known vs. unknown visitors and form abandonment rates.

But what do these metrics tell you? What should you focus on improving? With any metric, there should be an action based on the result. What are these actions?

• Increased traffic
  Track volume spikes or peaks to your landing page or website based on when campaigns are launched and overall trend on an ongoing basis.
• Conversion rates
  For web metrics conversion rates we typically track form submission from suspect to inquiry, however, you should also track conversion rates from other stages of the lead funnel – we need to understand which key words bring in the closed deals vs. which bring in researchers.
• Click-through rates
  It’s important to understand the increase traffic number and then one level deeper is the click-through rate, how many people clicked on an email or a web link to then get to your landing page or website. This tells you how many people raised their hand to your offer. So it’s a metric that helps you understand if your message was relevant to the audience.
• “Net new” web visitors
  Having increased web traffic is one thing, but are you bringing in “net new” web visitors from your campaigns? This metric needs to help you understand if you are bringing in leads at the top of the funnel or helping you convert leads already in the funnel.
• Form abandonment rate
  This metric helps you track how many clicks convert to prospects and how many prospects are not completing the form. This helps you decide whether you need to re-think your form (how many questions are you asking), do you have too much friction? Does your offer not resonate? Or perhaps your key word is not relevant to the offer?

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Remember, you are looking for trend points to make educated bets on campaign optimization. Ultimately, the demand generation team that can demonstrate and confidently predict, in terms of revenue, what happens when they spend a single marketing dollar earns the right to ask for increased budgets and resources. Data points actually give you the confidence to try new campaign approaches, test messaging, and focus on ways to sustain and build long-term relationships.

Automation and systems integration can sure make the entire process less time consuming and may even increase accuracy. These elements, however, are certainly not required. As long as your lead capture systems are getting what you need to report on in the front end – then you can always export the pipeline data from your CRM systems and, with your sales team, tie the data points together – it just takes more time and effort. Once your process is documented and in place, automation and integration can really help to facilitate time to results. And, integration between sales and marketing systems helps facilitate building detailed reports and dashboards that both organizations can believe in.

All metrics need to be considered within the larger context. Your marketing ROI should facilitate the right set of conversations around what is working, what is not, so that you can make identify what to test and optimize. And, once you have a baseline of performance metrics over a period of time, then you can set goals to decrease cost per conversion and increase conversion ratios to realize year over year improvement in marketing campaign performance.

Get started today. Clearly benchmark what your campaign conversion ratios look like on average. You will need to define “conversion” for your organization and the types of campaigns you are running. But, define it nonetheless and document what your baseline is today. Next, benchmark where you are in terms of ability to influence revenue. How you define “influence” will be largely determined by that attribution method that you have adopted. And, if you do not know what the total influence really is – your benchmark today is 0%. The good news – it should be easy to improve upon if you can get your measruement definitions and processes in place! Then, as you adopt more sophisticated campaigning techniques – you can start to really deomonstrate marketing effectiveness improvement. Wouldn’t you like to show trend lines like the following image?

Demonstrating Marketing Effectiveness Improvement

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Myth #3 – The data will provide us with a “perfect path” of events required to convert a customer. Reality Check – The Magical Dashboard DOES NOT Exist.

If this were X-Files, I would be Scully on this one. Stop your quest for a magical dashboard that unveils the perfect sequence of events, universal temperature, dash of salt required to generate predictable revenue. The reality is that the perfect path will be unique by your individual buyers.

What we can do is analyze trends from direct revenue and influenced revenue models to better understand which campaigns work better and when – and then to optimize by improving over baseline performance. This requires us to get black and white in our reporting so that trends can be identified. At the same time, getting black and white does not mean evaluating one campaign and making long-term decisions based on performance off of that one data point – context is always required.

For example, your organization invests in an expensive tradeshow but no immediate sales opportunities result from participation, does that indicate that you should cancel all tradeshows for the rest of the year? Maybe. Maybe not. What it means is that you need to evaluate that event within the context of prior tradeshow performance as well as other campaign types, to understand what was going on. Was it this particular show (i.e. attendance was poor, bad booth location, etc.)? Was it how we prepared for the show (i.e. did we forget send out the invitation to our customers with enough notice, etc.)? Or, maybe it is in exact alignment with the past 4 shows we have done and therefore the discussion becomes how much of the total marketing mix we willing to allocate for next year. Perhaps we do fewer tradeshows and better use our resources elsewhere.

Getting black and white helps you to trend and compare the data so that you can have the right discussion on which campaigns are having the greatest impact on revenue and how that affects planning moving forward.

And to conclude our series, Myth #4: Analyzing marketing ROI is not worth the effort required.

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