Want to have successful conversations with your boss?
Understand and use these "Fab 5" Marketing Metrics, to prove to your boss Marketing is WAY more than the (highly insulting) so called colouring-in department and build a different relationship with the senior executives within your company.
1) Marketing Originated Customer Percentage
This shows you the percentage of new business driven by marketing. Obviously this is an important metric to track the effectiveness of your marketing team.
There is no ‘right’ answer for this percentage as the structure of different businesses and industry sectors mean the ratios varies widely. But measuring this over time and versus budget, gives you a leading indicator of improvements your team is making.
Specific detail of marketing’s share of your overall funnel "velocity," month by month, versus plan, should be included here.
- Visitors
- Contacts
- Marketing Qualified Leads (MQLs)
- Prospects
- Customers
2. Marketing Influenced Customer Percentage
A looser definition than the previous ratio – and therefore should be much higher. Marketing influenced customer percentage measures all new customers who marketing has interacted with along the way while they were leads. Like measuring an ‘assist’ in scoring a goal in football, this is useful as it gives the boss a clearer view of the bigger picture and how marketing is making an impact across the sales process.
3. Customer Acquisition Cost (CAC)
The total average cost a company spends to acquire a new customer. Simply, sales and marketing costs including all campaign spending, salaries, bonuses, commissions and overheads divided by the number of new customers. Good effective marketing should drive down this metric over time. Marketing Measurement
4. Ratio of Customer Lifetime Value (LTV) to CAC
This is a great way to understand the total value of your customers on average, as a proportion of the cost of acquiring them in the first place.
A higher LTV:CAC means a greater return from your sales and marketing team. Some care needs to be taken here though, as driving down your spending on sales and marketing too much could actually slow overall company growth. So looking at this ratio in conjunction with the other statistics and factors will give you a balanced view.
5. Marketing's Percentage of CAC marketing reporting
What's marketing's share of the overall customer acquisition cost?
Tracking this over time gives you an indication of potential problems in either your sales team’s performance (their commission costs are falling) or that marketing cost is increasing without seeing a matching increase in customers.
By focusing the whole marketing team on these core 5 marketing metrics, as a group will make better decisions that materially affect revenue and the growth of your business. Better still, team members will plan, build and execute in a way that naturally aligns around the sales process and this in itself creates greater efficiency.
Having a regular monthly dialogue with the boss around these core metrics will align marketing to the business in a relevant, measureable way. Requests for additional investment should refer back to these core metrics.
For example, how will an investment in a marketing automation platform improve our CAC? (The answer for those of you interested is about 60 per cent, according to HubSpot.)
What’s more, as marketing proves its contribution to revenue your counsel will be sought increasingly frequently and you will be able to position yourself as a key member of the management team. Which, let’s face it, is about time.
Find out more how you can get that seat at the boardroom and prove your contribution, with our 10 minute, easy to read eBook Measure your Marketing ROI – The Keys to the Boardroom Marketing Measurement
Or Contact Us today for a chat about this topic and get some tips and guidance on how to get taken seriously by the senior management team.