Measuring Marketing Effectiveness in 2020
by Cole Geitner, on August 17, 2020
Ahh, 2020. This is going to be quite the chapter in future history books. Now that I think about it, it probably needs its own book entirely.
Even as people adapt to working from home or staying home all together, the marketing world does not stop turning. Marketing teams need to get clever, crafty, and think outside of the box to see returns and hit their goals. With this guide I am laying out, you will understand how you can use lead source attribution to measure, track, and ultimately improve marketing effectiveness.
Why is Measuring Marketing Effectiveness Important?
The digital marketing world is one of the fastest changing business landscapes today. Every day there’s new software, search engine algorithm updates, and an ever-changing competitive field. The only way you can ensure you are spending every dollar in the right place is by constantly measuring marketing performance across every channel and campaign. By understanding what channels are driving high quality leads at the most efficient rate, you can double down on those channels with higher budgets, more aggressive targeting, etc.
Other than that, discussing why measuring marketing effectiveness is important shouldn’t need much explanation. Every department has a single hub of reporting, performance tracking, etc. Marketing, however, has had identity issues since the beginning of time. With DemandJump’s industry leading features, we finally pinned down exactly what you need to focus on and help you cut out the rest of the distractions.
How to Measure Marketing Effectiveness
To accurately measure marketing effectiveness and be able to learn from its reporting, you must cut out all the noise. Today, many marketers just look at high level metrics across their campaigns and try to compare them to each other. It is impossible to measure marketing effectiveness by just looking at traffic driven, or even simply revenue driven. In order to accurately measure marketing performance and effectiveness, you must use a lead source tracking system that will measure the marketing influenced leads throughout the sales pipeline. Let’s dive a little deeper into this idea.
Imagine you are running a paid search campaign and a LinkedIn campaign. You may be spending similar amounts of budget on these two channels and driving a similar amount of leads from them as well. Does your team know exactly what deals are being influenced by these channels in the discovery, decision, and negotiation phases of the sales pipeline? It is no secret that once a lead is passed from marketing to sales, it is as if that lead never existed to marketing. In other words, the marketing to sales handoff is a black box.
Many systems, like Hubspot, Salesforce, etc. allow marketers to see the first and last touch a contact or account had before they converted on your website. This is known as marketing sourced revenue. It is the single source, or at least the most important source in the eyes of those CRMs. To take it a step further, DemandJump is not only tracking leads from a source perspective, but we are also looking at marketing influenced revenue. This differs from sourced revenue as it looks at every marketing touch an account had before the converted. DemandJump makes it so easy by allowing you to compare every major attribution model side-by-side, so you can see every version of your marketing story.
The Best Metrics/KPIs for Measuring Marketing Effectiveness
Total Opportunity Revenue
I probably sound like a broken record at this point, but we need to move past tracking vanity metrics (don’t worry, I’ll hit that in a bit). With DemandJump’s industry leading lead source attribution tracking, your primary metric should be the total amount of possible revenue from leads that marketing drove. These could be anywhere in the sales pipeline, but this metric is so important for understanding if not only your marketing campaigns are driving leads, but if they are driving leads that are likely to close quickly and efficiently.
Total Opportunity/Dollars Spent (Pipeline ROI/ROAS)
Can you see a pattern developing?
Just like I mentioned before, tracking the pipeline opportunity from marketing efforts is vital for company success. So, a great way to see what return you can expect from your leads is by dividing the total pipeline revenue driven by how much you are spending on your marketing efforts. This is a great metric to track when you use lead source tracking when you have a predictable sales machine. When you approximately know how much of the revenue will turn to closed won revenue, you can set goals to generate 4x the amount of pipeline as you are spending, for example. We do this at DemandJump and it is our main metric for marketing success
What to Avoid When Measuring Marketing Effectiveness
Vanity metrics can be defined as any metric that may look good, but is not core to marketing performance success. In other words, they are metrics that can give false positives of marketing effectiveness. Here are a few vanity metrics to avoid:
Impressions don’t bring in leads. Impressions don’t show any buying intent. Lastly, impressions are just a direct correlation of how much you are spending on your marketing campaign. There is this impression (see what I did there?) that marketers believe that the amount of people who see your ad will improve your brand awareness. Although there is a little validity in this thought for certain channels, such as YouTube video ads or Facebook/LinkedIn ads, for the most part impressions are incredibly overvalued.
So you are probably thinking if impressions are a vanity metric, then surely clicks are my team’s path to success. Well, we are going to be putting clicks right along with impressions as a vanity metric. Here is the problem with clicks -- Just like impressions, clicks are often just a direct correlation of how much you are spending on your campaign. Don’t get me wrong, driving clicks at an efficient rate is great.
Marketing Qualified Leads (MQLs)
Whoa whoa whoa, now you’re expected to believe that driving leads can be a vanity metric?
Yes. Hear me out.
First, let’s start with the definition of a marketing qualified lead. A Marketing Qualified Lead (otherwise known as an MQL) can be defined as any inbound marketing lead that is sourced from any marketing campaign. This could be from an email blast, paid search ad, or a review left on one of many review sites.
MQLs are absolutely a vanity metric. The problem with treating every MQL equally and putting them on a pedestal is that you may think that you are giving the sales team a gift but if they aren’t high quality, relevant leads, it will result in $0 of new revenue. That part of your budget was wasted. That is why a lead source attribution platform is so vital to any company’s success. It’s 2020 -- Move past just tracking MQLs as a measure of success. With DemandJump, you can truly get the whole story for what is moving your business forward.