Marketing Automation is on its way to the peak of the hype cycle. People start adopting software because it’s cool, not because they know what to do with it. The result: inflated expectations.
However, there are a couple of B2B Marketing experts who understand how to avoid inflated expectations. One of them is Megan Heuer of SiriusDecisions. Together with Craig Rosenberg (aka The Funnelholic) of Tippit she presented a webinar called The 9 Metrics Every Marketer Must Track. This webinar shows how to focus on the correct metrics rather than on gimmicks.
My recommendation: use your Marketing Automation project to improve these 9 metrics and you have a good chance of avoiding disillusionment (and pleasing your CEO).
Key Performance Indicators
Some long-standing VPs of Marketing seem the best marketers of their own performance: by staying vague about results and telling a good story they can hold on to their jobs for quite a while. However, the truly effective VPs of Marketing promote transparency and have an intense focus on improving the few metrics that matter. The strongest metrics show how marketing contributes to bottom-line revenue.
In the webinar, Megan mentions the following key performance indicators:
- marketing sourced pipeline
- marketing influenced pipeline
- investment-to-pipeline
- investment-to-revenue
The first two focus on the influence of marketing on the sales pipeline, and the last two give an indication of the ROI. Obviously, #4 (investment to revenue) is also dependent on the performance of the sales team (whether they are effective in closing deals). You can watch the webinar to get benchmark figures for these KPIs.
Key Metrics
Updates to the KPIs from the previous paragraph take some time to show up, because inquiries first need to turn into opportunities. Megan suggests 5 metrics to keep an eye on this process. These metrics are starting to get broader adoption, so I encourage everyone to standardize on these stages:
- Measure Inquiries
- Marketing-qualified leads (MQL), definition should be established together with sales
- sales accepted leads (SAL), formally accepted by sales
- sales qualified leads (SQL), evolved into an opportunity
- closed/won business
An inquiry could be any new lead, also someone who dropped off his business card at a tradeshow, or a download of a whitepaper. An MQL is also called a sales-ready lead. Usually some kind of Lead Scoring is used to determine whether a lead is ready to be passed on to sales. For more details and benchmarks, watch the webinar.
The cool thing about these metrics is that you can update them more frequently, so you know immediately whether you are on the right track. This is your Lead Management Thermometer!
How Does Marketing Automation Fit Into This?
Marketing Automation is a tool. It’s supposed to improve business results. In my previous post, I suggested to look only at increased revenue to measure success of Marketing Automation. These metrics are a great way to see if you’re on track.
More practical: how does Marketing Automation influence these metrics? Just some examples: continued lead nurturing turns more inquiries into sales-ready leads; lead scoring shows when leads are sales-ready; lead scoring gives quick feedback on the quality of various lead generation programs. But ultimately, the features of the Marketing Automation are only valuable when they are used well, and improve the above-mentioned metrics.
What is your favorite Marketing Automation metrics? Let me know in a comment…
Couldn’t agree more with your comment “People start adopting software because it’s cool, not because they know what to do with it. The result: inflated expectations.” Process is key to seeing results with a ‘cool tool’.
I also agree that today, more than ever, metrics are becoming more critical for a marketer. Marketing sourced & influenced pipeline, as well as contribution to revenue is what really matters in the end. Many marketers, however, find that difficult to measure.
So, in addition to Marketing Automation being a ‘tool’ that helps improve these metrics, the right Marketing Automation tool can also help you capture these metrics accurately.
That said, a ‘cool tool’ is not the silver bullet… you need the right processes adopted and ‘good marketing’ to improve marketing’s influence on revenue.
In our experience, the three metrics that BtoB marketers tend to prioritize are: Number of leads generated (quantity measurement); qualified leads as a percentage of leads generated (quality measurement); and cost per lead (effectiveness measurement). Of course, these metrics are not mutually exclusive. For the marketing-qualified leads (MQL), metric, we agree 100% that before starting any campaign, marketers must work with their sales team to agree on how to define qualified leads. As experienced marketers know, number of leads alone is not enough. Qualified leads are a quality measurement for campaigns that can be used early on, in conjunction with the quantity metric (number of leads). These two metrics together help to project the impact that the marketing campaign(s) will have on company revenue. Determining criteria for lead qualification helps organizations better understand which leads should move through the qualification process (and eventually into the sales pipeline), helping to determine early cost-per-qualified lead calculations.
Rhonda: good point, Marketing Automation makes it easier to collect the right metrics
Kristin: thanks for sharing the Neolane experience!
Nice post, Jep. SiriusDecisions has a great approach.
Too many times companies buy marketing automation without thinking through their content and processes.
For real success, they need remarkable content mapped to personas and buying processes and they need a formalized process like what Megan and Craig explain.
Later this month we’ll have a new eBook entitled “Prospect-Driven Marketing” which will explore this in more detail.
Bravo on a great article with some clear recommendations on metrics relevant to the sales pipeline.
But when it comes to marketing automation, I recommend caution. I’ve seen too many marketers crash and burn because they believed that by “automating” all of their lead gen problems would be over. They forgot to first set a strategy that carefully targets prospects with relevant messaging. Automating the “garbage in, garbage out” marketing approach benefits no one.
Marketing automation tools are the future, I believe. Before you pull the trigger, don’t forget to:
* Define the target audience/personas
* Craft a positioning statement that maps to the target
* Develop the “story” that you want to unfold through the course of the campaign
* Plan your moves with a “marketing blueprint” that links your activities and offers together in a way that’s meaningful and relevant. Now you have the ingredients that can be automated. And, with confidence!
With these best practices in mind, marketing automation will work its magic. The ROI will be evident in the metrics laid out in this blog post.
My favorite marketing automation metric is Marketing Funnel Value. This is normally 8-10 the sales funnel value and truly reflects the value of marketing to an organization.
The problem of backing into the sales funnel to determine marketing’s contribution means that marketing’s value will always be LESS than what is sold. You’ll be lucky to get credit for 25% of closed business.
Dale – EchoQuote
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