Marketing Metrics Makeover

marketing metrics
A few weeks ago we discussed marketing metrics that impress your boss: customer acquisition costs, the marketing percentage of customer acquisition costs, length of time to recoup those costs, customer lifetime value, number of customers marketing has acquired, and the number of customers nurtured by marketing. While presenting these metrics to your boss is sure to impress, what happens if the actual numbers are disappointing? Once you have benchmarks in place, give your marketing metrics a makeover by improving them. Here’s how to fix disappointing metrics.

      • Customer Acquisition Costs – Does it cost too much to acquire a new customer? Look at the sales cycle to see if you can shorten or streamline it. Work with the sales team to define the criteria for qualified leads, examine marketing campaigns to identify those that have the highest return on investment, and focus on using higher ROI campaigns to reach the most targeted, qualified prospects.
      • The Marketing Percentage of Customer Acquisition Costs – If the percentage of your marketing budget that goes toward customer acquisition costs has gone up, that’s a signal that it’s time to reevaluate your strategy. Again work with sales to ensure a cohesive approach. Examine conversion rates, look for areas of underperformance, and find ways to qualify leads more efficiently.
      • Length of Time Required to Recoup Customer Acquisition Costs – Does it take an excessive amount of time before customers become profitable? A three-pronged approach can shorten this timeframe. Start by revisiting your pricing structure, possibly requiring higher payments upfront in order to become profitable sooner. Next, maximize the value of each customer by identifying upselling and cross-selling opportunities. Finally, evaluate the nurturing and sales process to find ways to shorten it which reduces acquisition costs in the first place.
      • Customer Lifetime Value (CLV) – This is related to the above, but it also stands alone. Again, you will need to evaluate your sales cycle and acquisition costs in an effort to reduce those. Finding additional opportunities can also increase CLV. In addition, reducing “churn” should also be prioritized. Churn refers to customers who are dissatisfied and leave your business. Evaluate product quality, customer service, renewal processes, and other areas that affect churn and address areas that need improvement. By reducing turnover, you can increase the number of profitable customers and increase CLV as a whole for each segment of customers.
      • Number of Customers Directly Acquired by Marketing – If the number of customers directly acquired by marketing has gone down significantly, reevaluate your lead management process. Are leads being nurtured properly? Are they being given the right information at the right time in the sales and nurturing cycle? While it’s tempting to buy more leads, it’s not helpful if your lead management system isn’t working to move them through the funnel toward a favorable buying decision.
      • Number of Customers Nurtured by Marketing – This metric involves the number of customers that the marketing department has assisted. If this metric goes down, it means that marketing is becoming less involved in the process once a lead has been turned over to sales. It’s smart for sales and marketing to work together to nurture leads, not as separate entities. It may be time to realign sales and marketing to ensure that leads are both generated and nurtured efficiently.

As with most performance measures, these marketing metrics will fluctuate. When the metrics above change suddenly or dramatically, it could be a red flag that needs your attention. Even without dramatic changes, you may want to work on improving each of these metrics to ensure a shorter customer acquisition cycle and a faster time to become profitable.

Lead Generation: Tips for Staying on Target

lead generation strategyEach year Beloit College publishes its annual College Mindset List detailing the cultural touchstones that have shaped the lives of incoming freshmen. It’s an eye-opener that reveals profound differences in the lives of the latest generation. For example, the class of 2016 has never needed an actual airline “ticket” and they prefer to watch television on anything but an actual TV set. To them, the Sistine Chapel has always been clean and bright.

What a difference a few years makes. While the College Mindset List is an interesting read, it provides professors with cultural context. It also has implications as far as lead generation goes. While you may not be targeting college students, all markets change, making it important to revisit your “ideal customer profile” frequently and modify it as needed.

Identifying your ideal customer is crucial. This allows you to target your marketing materials to the right people and ensure that your messages resonate with them. It also helps you understand and take advantage of opportunities. Here’s how to identify your ideal customer:

  • Create a list of five to ten of your best customers. Write down the qualities that make them your best customers. For example, do they have large budgets, are they profitable, do they send lots of referrals your way, or are they a joy to do business with?
  • Do the same for your five to ten worst customers. Write down the qualities that make them undesirable?
  • Analyze each group to see what qualities they have in common. In some cases, you may find that a single “persona” describes each group as a whole. Several personas may appear.
  • Classify the various customers by SIC (Standard Industrial Classification) codes detailing industry type, number of employees, annual revenue, and so on.
  • Identify why these customers chose to do business with your company. For example, was there a change that prompted them to switch providers? New regulations that required an investment in products like yours?
  • After looking at what each customer has in common within both groups, you should see distinct differences between your best and worst customers. Focusing on acquiring new customers with the same qualities as your best customers is a sure-fire way to attract more of the same and fewer of those with less desirable qualities.

Creating ideal customer profiles is an important initial step in any marketing endeavor, but marketers often fail to revisit their profiles and adjust as needed. Imagine marketing to this year’s crop of incoming college freshmen using the same messages you just used a few years ago. Not only could your products and services be irrelevant, the media that you use to deliver those messages could be completely wrong. Just a few years ago, social media was in its infancy. Today it’s the go-to destination for reaching many markets. Tomorrow may be a completely different story.

Not only must you continually revisit and refine your ideal customer, marketing messages, and marketing channels, it’s important to look for signs that your target market has shifted. For example, are your customers extremely loyal? As they age and their lifestyles change, they may still be attracted to your brand. However, the same ads that appealed to them as 20-somethings won’t be quite as appealing when they’re in their 30s and 40s. It’s important to recognize changes related to loyalty so that you can continue giving your most loyal customers a reason to return while attracting more of the same at the same time.

Lead generation is an ongoing process that requires your constant attention. Markets can change in as little as a few months, making it crucial that your campaigns reflect those changes.