Building a Data Driven Marketing Team
Defining the Metrics and Key Performance Indicators of the Marketing Team at Beamery
Last week we continued with our new blog series Building a Data Driven Organisation at Beamery with how we built a data driven sales team. In this weeks post we intend to present — in the same manner — the culmination of our research from both external sources and internal interviews to give an extensive and detailed list of the metrics and KPIs of interest to a marketing team.
A High-Level Overview of Marketing Metrics and KPIs
To generalise, the Marketing team requires data to track the revenue cycle. They have Leading Indicators which include Lead Creation, Source of Leads, MQLs (Marketing Qualified Leads) inclusive of the sub-field Programs that are creating those MQLs, and Lead Velocity. Lead Velocity is effectively how long a lead takes to become “qualified”. The Marketing team also have Indicators which include Opportunity Creation, Pipeline Creation, and Revenue. Revenue should additionally have the ability to be broken down by program / channel (e.g. trade show).
Low-Level Descriptions of the Marketing Metrics and KPIs
Operations Specific Metrics
Cost per Acquisition is the total cost of acquiring a new customer via a specific channel or campaign. While this can be applied as broadly or as narrowly as one wants, it’s often used in reference to media spend. In contrast to Cost per Conversion or Cost per Impression, CPA focuses on the cost for the complete journey from first contact to customer.
Cost Per Acquisition is also differentiated from Customer Acquisition Cost (CAC) by its granular application i.e. looking at specific channels or campaigns instead of an average cost for acquiring customers across all channels and headcount.
To calculate the Cost per Acquisition, simply divide the Total Cost (whether media spend in total or specific channel/campaign to acquire customers) by the Number of New Customers Acquired from the same channel/campaign.
Channel or Campaign CPA Calculation
Media Spend Calculation
Cost per Lead / MQL / SQL by Channel:
Leads are individuals who have indicated they are [potentially] interested in the product.
Marketing Qualified Leads, commonly known as MQLs, are individuals who have indicated they’re more interested than other leads, but not quite ready to fully commit. Ideally, one should only allow certain, designated forms to trigger the promotion of a lead to the MQL stage, specifically those which enter the bottom of the funnel, offers like demo requests, buying guides, and other sales-ready calls to action.
Sales Qualified Leads (SQLs) are individuals that the Sales team has accepted as ready for a direct sales follow up. Using this stage will help the Sales and Marketing teams stay in sync regarding the quality and volume of leads that one is handing over to the sales team.
by Channel refers to the specific medium in which the Lead, MQL, or SQL can be attributed to. A channel may be broad such that one refers to a conference or a recommendation, for example, but it may also be more granular such as LinkedIn or Google adverts for example.
The Cost per Lead / MQL / SQL by Channel therefore is the total cost attributed to acquiring a Lead / MQL / SQL split by the channel said Lead / MQL / SQL came from.
Marketing Return On Investment (Marketing ROI) sometimes referred to as Return on Marketing Investment (ROMI), is the percentage of profit gained by investing in marketing. Marketing ROI shows the viability of marketing and how marketing contributes to a company’s bottom line.
The basic calculation for ROI is:
This formula can be applied to marketing in a couple different ways. The most common high-level metric is to subtract the Average Monthly or Annual Marketing Investment from the Average Monthly or Annual Gross Profit, then divide it by the Marketing Investment. Since MROI is usually displayed as a percentage, one will want to multiply the result by 100.
Alternatively, one could calculate MROI for a specific campaign or replace Gross Profit with Customer Lifetime Value (LTV). The latter would look like this:
Where LTV, is the Average Revenue a Single Customer is predicted to generate over the duration of their account. For a SaaS company, this is defined as either:
Or
For a more precise MROI, one might want to use Net Profit instead of Gross Profit.
Brand Specific Metrics
Brand Recall is the percentage of individuals who can recollect the brand. Usually, this percentage is calculated by sending out a survey and measuring the results of the respondents. This more traditional metric can be split into two different types — Aided Brand Recall and Unaided Brand Recall.
Aided Brand Recall, also referred to as Brand Awareness, has a consumer identify the brand from a list of competing brands. Unaided Brand Recall provides a category for the product or service and the consumer responds with whatever brands come to mind for that category.
To calculate Brand Recall, simply divide the Number of Survey Respondents who Correctly Identified or Suggested the Brand by the Total Number of Survey Respondents. Then multiply the result by 100 to convert it to a percentage.
Press Clippings are a measure of how many times the brand name has been mentioned in press mediums such as newspapers, magazines, television or online media.
Press Clippings are generally calculated as the volume of press mentions of the brand over a given period of time e.g. per month or per quarter.
For online press mentions one can use a tool such as Google Alerts or Mention.com to track them. However, for offline press mentions in hard copy newspapers or magazines one will need to use a press clippings service. This — potentially — can be far more expensive.
Social Media Mentions are a measure of how many times the brand name has been mentioned on social media channels such as Facebook, Twitter and Instagram.
Social Media Mentions are calculated as the volume of mentions of the brand on social media channels over a given period of time e.g. per month or per quarter. One can use a social media monitoring tool such as Mention.com or HootSuite to track online mentions.
Viral Coefficient is the number of new users an existing user generates. This metric calculates the exponential referral cycle — sometimes called virality — that accelerates company growth. Virality is the inherent incentive for customers to refer friends or colleagues to the company.
In order to calculate the viral coefficient of the product or service, one needs three numbers: the Number of Current Users, the Number of Invitations Sent (referrals, shares, or whatever best represents an invitation to use the product/service), and the Average Conversion Rate of those invitations. Then multiply those three metrics and divide by the number of current users to get the viral coefficient (often referred to as the ‘k’ value).
Or
Website Specific Metrics
Average Session Length measures the average duration of a visitor’s website session.
Bounce Rate is the percentage of visitors to the website who navigate away from the website after viewing only one page.
Branded Search Traffic is the volume of traffic that comes to the website via branded keywords on search engines such as Google, Bing, Yandex and Baidu.
Branded Search Traffic is calculated as the volume of visits to the website that arrived via a branded keyword on a search engine over a given period of time e.g. month or quarter. It is generally looked at as a trend over time, to give an indication of how one is growing brand awareness. One can use Google Analytics or Google Webmaster Tools to measure Branded Search Traffic from Google, which is the major search engine in most of the world.
New Visitor Sessions are the number of new unique visitors on the website.
New Session Percentage is the percentage of sessions that are from new users.
Page Views / Page Sessions are the average number of page views per session in the given time range.
Website Conversion Rate [broadly] shows the percentage of website visitors that take a desired action on the website. This action converts them from visitors to leads (or customers). The desired action might be downloading an ebook, signing up for a trial, completing a purchase, subscribing to a course, downloading a mobile app, booking a demo, or something else.
Calculating the website conversion rate is straightforward as long as one knows or has defined what a ‘conversion’ is for their site. Simply divide the Number of Conversions by the Number of Website Sessions to determine the Website Conversion Rate.
If one has multiple conversion opportunities (e.g. downloading an ebook, signing up for a webinar, or subscribing to an email list), then one can calculate this metric two different ways:
- Separately for each conversion using only the sessions from the specific page(s) the offer is listed, or
- All the conversions combined using all the sessions for the entire website
Website Traffic Growth measures the increase or decrease in visitors to the website typically, either month-over-month or year-over-year.
One can calculate the website traffic growth by first subtracting the Number of Sessions Last Month (or Year) from the Number of Sessions this Month (or Year), then divide the result by the Number of Sessions Last Month (or Year) and multiply the outcome by 100 to convert to a percentage.
Whilst the Cost per Acquisition [CPA] is a very powerful metric, it is better to measure the Cost per Lead / MQL / SQL by Channel. This is because the attribution and deal cycle is too complex to calculate CPA with any real accuracy without dedicated attribution software, such as Bizible.
Whilst brand specific metrics such as Brand Recall, Press Clippings, Social Media Mentions, and Viral Coefficient are perfectly valid marketing metrics, they are not particularly relevant to us here at Beamery.
The website specific metrics such as Average Session Length, Bounce Rate, Branded Search Traffic, New Visitor Sessions, New Session Percentage, Page Views / Page Sessions, Website Conversion Rate, and Website Traffic Growth whilst useful metrics to track, are seen more as vanity metrics and really don’t do much aside from boost ones ego.
The Key Dashboard Metric for the Marketing Team
As highlighted in our quote from Chapter 6: Metric Design of Carl Anderson’s book, Creating a Data Driven Organisation:
A data-driven organization needs to set out a clear strategy, that is, a direction that the business is heading, and then determine a set of top-level metrics — key performance indictors (KPIs) — to track whether the business is indeed heading in the right direction and to monitor progress and success. Responsibility for driving those top-level KPIs flows down to divisions or business units where they may define additional KPIs specific for that business unit. Ultimately, this ends up a set of operational and diagnostic metrics that monitor tasks, programs, tests, and projects that drives the KPIs.
one needs to differentiate between top-level company metrics, also known as key performance indicators, and those which are additionally defined by the individual business teams. The key performance indicator for the marketing team, and the one that will allow the C-level team to monitor their progress and success is:
Pipeline Created
The remaining metrics as set out above will be used by the marketing team themselves to monitor their own progress and success on a more granular level.
To Be Continued …
The next post in our series will be defining the metrics and key performance indicators of the customer success team.
The primary external sources used in our research for the marketing metrics and KPIs were articles posted by GeckoBoard. Some of the definitions have been copied verbatim, where this is the case, every reasonable effort has been made to provide a link to the original source material.
