Proof Week: How Marketers Can Measure What Matters
September 17, 2018
We’re kicking off Proof Week today with an in-depth blog post that will examine a crucial question: What should marketing be measuring, and how?
Marketing teams everywhere feel the pressure to show that they are not a cost center and to demonstrate their value in contributing to the bottom line in real, tangible terms. Accomplishing this goal requires focusing on the business impact that marketing delivers. It also demands taking on more challenging metrics and moving past last-click attribution and click-through rate and other quantity metrics in favor of quality metrics.
Let's start with a metaphor. What’s more important: The first down or the touchdown? The base hit or the run scored? The goal in net or the ultimate victory?
Those small and singular accomplishments within a sport, often reflected by personal statistics, represent only incremental (sometimes indirect) steps toward the true objective: winning. The best athletes and coaches recognize this, staying focused on the long game and the actions most directly tied to their desired outcome.
It’s high time for more digital marketers to start doing the same. While simple and basic numbers — in this case, vanity metrics — might look nice on the stat sheet, they don’t tell us much about the true business impact of our efforts.
The emergence of deeper metrics provides an opportunity for marketers to better prove their value and earn more budget. These insights aren’t always as easily attained as classic mainstays like click-through rate and impressions, but as the old saying goes, “Sometimes the right path is not the easiest one.”
The Insanity of Vanity Metrics
If you’re in the business of marketing, you surely recognize its importance in the revenue equation. But knowing something and proving it are not the same. Year after year, marketers point to demonstrating ROI as one of their greatest challenges.
Vanity metrics aren’t the answer. In fact, they are among the driving forces in this pervasive organizational disconnect.
A study run by Viant earlier this year, entitled Closing the CMO-CFO Digital Divide, found that more than one in three Chief Financial Officers and Chief Marketing Officers are concerned about their companies continuing to rely on vanity metrics, which might look good at a glance but don’t communicate anything of real substance.
So, a lot of people saw your ad? And a certain percentage of people who saw it clicked through? That’s nice, but who were they? What actions did they take next? Without this additional information, the data rings hollow.
If you’re still presenting these vanity metrics as a form of proof, you’re at risk of losing credibility. We need to become more sophisticated in our marketing measurement.
How to Measure What Matters
We aren’t saying vanity metrics don’t have their place. Awareness and visibility are key considerations for any business. Metrics like impressions and click-through rate can help with campaign optimization and high-level analysis. But they don’t show tangible and direct impact on the pipeline.
Those who still lean heavily on such traditional measures shouldn’t feel like they are hopelessly behind the curve — not yet, anyway. According to LinkedIn’s research, 80% of marketers report they are still using CTR to gauge their program effectiveness, while only 14% say they have the ability to measure real sales impact.
The same research tells us that only 18% of marketers believe they accurately and successfully measure ROI. Obviously, there is much room for improvement.
Measuring what matters requires a fundamental shift in mindset and turning our gaze more toward the lower end of the funnel. It won’t necessarily be fast or frictionless, but few worthwhile changes are.
Here’s how you can get there:
Step One: Make a Firm Decision and Commit to It
This is no time for half-measures. In order to embrace revenue-based metrics, you need to get marketing leaders on board and ready to spearhead the movement. When they fully understand the rationale, it shouldn’t be a difficult sell.
Everyone wants to feel credited and validated in their work. Adding sophistication to marketing measurement offers the clearest path in our current environment.
Step Two: Establish a Process and Determine Your Metrics
Which measures will you be shifting your focus toward? This will vary based on the company type and specific objectives, but it’s critical to ensure your metrics are directly tied to business outcomes — i.e., conversions and marketing-attributed revenue. Once you’ve developed metrics, set up processes for tracking and make sure you have people equipped to properly analyze the data.
At LinkedIn, our concentration has been empowering marketers to prove their value. Tools like Conversion Tracking, which illuminates what happens after someone clicks (or even views) an ad, and Website Demographics, which helps answer the “who” as opposed to simply the “how many,” are geared toward this very purpose.
Step Three: Start Evangelizing this Shift Internally
Ideally, over time, everyone within the organization will start aligning around these new KPIs and treating them as the so-called “true north.” Transparency will be pivotal to making this happen. If all members of your marketing team (and beyond) understand what the metrics are and why it’s beneficial to prioritize them, you aren’t likely to encounter much resistance.
Step Four: Reposition Your New Metrics Above the Old Ones
As we suggested earlier, vanity metrics shouldn’t be eliminated entirely. They have their place, but that place should be below revenue-based and sales aligned metrics. By this point, your analytical reports should be highlighting those advanced measures and your marketing strategy should be tailored to optimize for them.
Next, let’s dive deeper into three major problems that may be hindering your marketing measurement and your credibility in the C-suite:
- A focus on metrics that measure quantity (e.g., impressions) over quality (e.g., closed/won deals)
- Overreliance on click-through rate (CTR)
- Use of last-click attribution
The Quality Metrics vs. Quantity Metrics Debate
Do any of the following directives sound familiar?
- “This campaign needs to grow our opt-ins by 25%.”
- “We want to double our followers on social media by the end of the year.”
- “The sales team will need at least 20% more leads this year than they got last year.”
These are all great aspirations when planning any sort of campaign, but are they really the best core outcomes to be chasing?
On one hand, these are important metrics to report back on, showing you were able to engage people and get them to act (whether it be social media follows, signing up for your newsletter, etc.).
But the tricky part comes into play when we acknowledge that these actions ultimately serve one purpose: generating sales (typically via actionable leads for your sales team).
We like to celebrate form submissions and inquiries, but we don’t always do the qualitative analysis to determine what they are worth. For example, some subscribers might only sign up because they want to win a prize, and then quickly unsubscribe or unfollow when the campaign closes. Or, someone might find your blog via search while doing early-stage research for a solution you offer, and then decide to sign up because they want updates that might aid their decision. Each counts as a new subscriber, yet the active searcher is much more likely to become a paying customer than the passive prize seeker.
A lead – whether we’re talking marketing qualified or sales qualified – is a term that should be defined explicitly within your organization. Depending on your answer, the path to achieving quality may need to be adjusted accordingly.
The sales team will need to invest time on each lead, and if it doesn’t pay dividends, that’s time they could’ve spent prospecting or working on another deal. So essentially, low-quality leads aren’t just a waste of marketing spend, but also a waste of sales resources. The cost per acquisition (CPA) needs to show that your efforts delivered on their promise with a significant return on the investment, which can be ad spend, time consumed, or any other factor that costs your business.
A hypothesis: Might the key to effective B2B lead generation be… fewer leads?
What is Quality?
“Quality is never an accident; it is always the result of intelligent effort.” — John Ruskin
The concept of striving for fewer leads can seem counterintuitive, but it might just be the corner your sales and marketing teams need to turn. Racking up a high quantity of leads can actually harm your business if they aren’t researched, qualified, and reasonably likely to convert.
You won’t hear anyone say they want to compile fewer leads, but marketers today would do well to adopt that type of mindset, and leaders ought to be instilling it. Volume, while important, is not the top priority. Quality is. Only once quality is confirmed should we look to crank up quantity.
It’s a Numbers Game
Let’s draw up some basic math. These arbitrary numbers are designed to illustrate the folly of a narrow focus on lead quantity:
Example 1: Quantity
(#1) Lead-gen campaign = $10,000
(#2) Leads received = 100
(#3) Leads converted = 2
(#4) Total sales = $20,000
Cost per lead: (#1 /#2) = $100/lead
Conversion rate: (#3 /#2 x 100) = 2%
Average value of lead: (#4/#2) = $200
Cost per sale/acquisition: (#1 /#3) = $5,000
Return on investment: (#4 /#1 x 100) = 200%
Example 2: Quality
(#1) Lead-gen campaign = $10,000
(#2) Leads received = 50
(#3) Leads converted = 5
(#4) Total sales = $50,000
Cost per lead: (#1 /#2) = $200/lead
Conversion rate: (#3 /#2 x 100) = 10%
Average value of lead: (#4/#2) = $1,000
Cost per sale/acquisition: (#1 /#3) = $2,000
Return on investment: (#4 /#1 x 100) = 500%
What do the numbers in this wholly fictitious example tell us? Although campaign costs were the same in both instances, the more qualified leads brought in more sales, better ROI, and exponentially higher conversion rates.
Takeaways for B2B Lead Generation
Obviously, real-life marketing is not always so cut and dry. At the very least, this scenario should provide food for thought to marketers and executives who still prioritize quantity over quality.
Spend more time gathering intel and building out prospect profiles. As the examples above suggest, it’s way more valuable to have 10 high-quality leads than 100 weak ones that will go nowhere, especially because you’ll waste much less time exploring dead ends.
How can you do this?
- Review your pipeline. Analyze your best leads and most valued customers. What attributes do they share? Look at audience segment, company size, seniority level, job function, etc.
- Use this ideal customer profile to direct and filter your lead generation process.
- Continually refine and improve, then watch your conversion rates climb.
Above all else, keeping track of qualitative metrics is an important step in determining whether you’re providing your sales team with the right leads.
Rethinking Click-Through Rate
Are click-through rates still important when reporting campaign analytics? Let’s consider the bigger picture and what CTR really tells us.
In certain business models, clicks are an essential currency. For instance, if you’re a news or media organization, primarily interested in having your content consumed, click-through rate can serve as a be-all, end-all measure of success.
When it comes to marketing, though? We should be seriously rethinking our reliance on such vanity metrics, which are rarely helpful in assessing whether a campaign or marketing initiative is fulfilling its true objectives.
What’s a Click Worth?
For marketers and the companies they serve, driving clicks to your strategic destination is only one piece of the puzzle, and hardly the most important. Are your ads and assets moving people toward the next step, and ultimately a completed sale? CTR provides very little visibility into real business impact, or B2B marketing ROI. A million clicks mean little if they don’t ultimately produce any revenue.
We’re not saying you should discard all vanity metrics. Tracking clicks, as well as social media likes, impressions, page views, and so forth can certainly serve a purpose, showing how your content and campaigns are performing at a high level.
But there are far more informative and actionable metrics to report on where the bottom line is concerned, and these should be weighed more heavily when shaping your strategy.
Let’s take a deeper look.
The Lowdown on Click-Through Rate
Again, the argument here is not that click-through rate is a useless metric. Obviously, marketers want people to click on their links, especially in brand awareness or thought leadership campaigns. Keeping a close eye on these engagements can be helpful for day-to-day optimization, A/B testing, and ensuring that ads are gaining an audience’s attention.
But on its own, a high CTR isn’t all that telling as an ROI indicator, and when marketing positions this metric front-and-center it can cause a disconnect with results-oriented executives.
As my LinkedIn colleague Jason Miller puts it, “Vanity metrics can’t be linked to any meaningful business goals, aren’t actionable, and therefore aren’t relevant. If you mention them in front of a CMO or CEO you will be laughed out of the room.”
CTR is better viewed as a complementary measure, adding context and clarity in combination with others. For example, you can look at CTR along with conversions to gauge whether and where people who click are dropping off. (We’ll get into this a little more below.)
The availability and accessibility of vanity metrics often fuel the temptation to emphasize them. Most analytics dashboards will readily provide CTR with no extra legwork required. But, trust me, the extra legwork is worth it.
Consider Focusing on These Marketing Metrics in Addition to CTR
In all cases, your marketing analytics mix should be framed around the objectives of your campaign or overall strategy. But in general, we encourage a heightened emphasis on these metrics.
Bounce Rate/Time on Page. A strong CTR indicates that many people clicked on your link. But, upon doing so, did they find something that was not at all what they expected before making a quick exit? Bounce rate and time on page offer visibility in this regard, and may provide a prompt to alter your content.
Average Sale. Did they sign up? Did they buy? How much did they spend? Not all conversions are created equal. Some campaigns are better at attracting ideal, higher-margin customers than others. It’s advisable to use unique tracking links for different channels so you can determine where each conversion originated.
New Business vs. Renewals. Did this campaign generate new customers or did it incite repeat purchases from existing customers? This is an interesting indicator because it will help inform future uses of similar campaigns and how to classify them in your overall strategy.
So while CTR has its place, only by looking past such vanity metrics will our marketing efforts truly click.
Have We Seen the Last of Last-Click Marketing Attribution?
When your company relies on you to help drive new business and more revenue, it’s vital to understand which of your efforts are paying off and which ones to alter or abandon. Though marketers have long been held accountable for their results, the pressure is rising as measurement grows more nuanced.
B2B prospects now engage with more touchpoints, more channels, and a longer (more self-driven) journey to purchase. When you’re running multiple campaigns across multiple channels over an extended time, it can be challenging to determine what specifically influenced each closed deal.
Moreover, the buying journey often involves a multitude of decision makers and influencers. Determining marketing’s impact along the purchase path means taking into account the entire buying committee’s actions and interactions with your organization.
Yet the majority of organizations still call upon single-touch attribution models, or none at all. In other words, they’re not addressing the complexities of today’s buying structure.
Single-Touch Attribution Oversimplifies the Buying Journey
It’s easy to attribute a conversion to the first or last marketing touch that occurred before a prospect converted. But just because it’s easy, that doesn’t make it right. First- and last-touch attribution models are flawed by definition as they are based on the premise that a single point of contact leads to a conversion. In reality, it takes — on average — seven to 13 touches before a buyer becomes a qualified sales lead.
In fact, single-touch models are highly inaccurate because there is no clear correlation or causation between the metric and the revenue goal. Most of them are used to determine cost per lead (CPL) rather than the truly telling metric of revenue per lead. In the meantime, you might be overlooking other more important activities and measures, and optimizing away from your longer-term goals. As a result, it turns out no attribution at all is better than single-touch, because the latter leads to such misleading insights and conclusions.
Say you’re using first-touch attribution and you see that certain prospects received an email promoting a free trial of your company’s software before subsequently signing up for the trial. The email campaign would receive sole credit for those conversions. But this ignores every other step of the journey the prospects took along the way. For instance, they may have seen display ads for your company four times before seeing that email. While those initial display ads exposed those prospects to your brand and primed them to engage with your content, they receive no credit for their role in the sales cycle in a single-touch attribution system.
Similarly, certain prospects might see your LinkedIn Sponsored Content post, then later visit your website, and then receive a LinkedIn InMail, at which point they convert. Last-touch will tell you to invest more in InMail campaigns even though multiple factors contributed and may be worthy of further investment.
Simply put, the single-touch model doesn’t give you any sense of which other marketing tactics impacted buyers on their way to purchase. So how do you know where to allocate future marketing investments? And how do you know what you can do to more quickly move the most promising prospects through the buying cycle?
It’s Time to Embrace Multi-Touch Attribution
You can better answer these questions with multi-touch attribution. Instead of giving all credit for a conversion or sale to a single marketing tactic, multi-touch attribution gives credit to all touches and actions along the buyer’s journey.
That said, even multi-touch attribution isn’t perfect. Offline marketing tactics impact this process too, but these are not as easy to track. Plus, other factors beyond marketing- and sales-driven activities influence an eventual purchase, from pricing to politics within a buying organization.
Then there’s the effort and time required to put such a system in place. This includes determining the multi-touch model that makes most sense for your business and aligning marketing with sales. At this point it’s a matter of aggregating all relevant data across channels and accurately determining attribution scores.
As you add more channels and tactics, the model gets more complex. You need to track touches throughout the purchase cycle across a large enough number of buyers to arrive at meaningful calculations. Since some B2B purchases can take months or even a year-plus on average, you must have the time and patience to watch the results unfold.
We’re not saying it’s easy to develop a multi-touch attribution model, but we are saying it’s necessary – especially if your organization is trying to establish a culture of sales and marketing alignment while pursuing account-based marketing (ABM). Multi-touch attribution makes it possible to fully understand how well your combined marketing and sales strategy is paying off – and to adjust as needed.
How to Successfully Transition to a Multi-Touch Model
Multi-touch attribution is not new – savvy marketers with large budgets have used complex attribution models for some time. The fact that companies are willing to pour a ton of resources into developing rules-based or algorithmic attribution models signals the value of the insights they deliver.
Almost any type of multi-touch attribution model is preferable to a single-touch model in terms of getting one step closer to understanding true marketing impact. Plus, the means to enable multi-touch attribution are now more accessible to most marketers.
To make this transition, you might start with the simplest version – rules-based – and test more than one multi-touch model. At the same time, consider testing the models in a scaled-down fashion against a subset of elements to make the process manageable. Once you get comfortable with multi-touch attribution and initial results, you can introduce more elements, including additional channels, business units, geographies, and more.
You may also find that you need to call upon more than one model depending on the buying cycle scenario, channel mix, and complexity. In all cases, you should continually test and re-assess which model helps you make smarter decisions. Give yourself ample time to evaluate each.
While this process may seem daunting, it’s well worth your time and effort. Once you’re using a multi-touch attribution model, you can more easily and accurately determine the impact of your digital marketing tactics and more confidently decide how to optimize your future marketing spend.
Going for the Win with Deeper Marketing Metrics
OK, marketers, congratulations on reading this far. Let's return to the opening metaphor. In the end, nobody wants to be that baseball player bragging about his three hits in a game where the team got blown out. Similarly, you don’t want to be that marketer touting the impressions an ad campaign scored while sales laments the lack of meaningful results it produced.
By making a firm commitment to measuring what matters, you’ll be better positioned to definitively show your value as a marketer, while collaborating more effectively with other business units and driving more clearly attributable revenue for your company.
For more insight into proving the value of your marketing, visit the Proof Week microsite today.