Digital marketing is tough. Buyers’ behavior is in constant transition, and in addition to this, LinkedIn, Google and other platforms are constantly changing their algorithms in ways that directly affect your marketing programs. B2B leads are being bombarded by intricate content marketing programs from you and your competitors.
To make matters worse, marketing budgets are not increasing, so to respond to such changes often you need to divert budgets from the tried and tested marketing methods and reallocate money to new digital channels.
In order to make smart decisions you need to be able to measure and analyze your marketing program’s performance. But this is easier said than done. Lack of industry standards, the infancy of measurement platforms, and the complexity of defining and implementing a measurement strategy turns this challenge into a major obstacle in most of the B2B companies that we’ve met. After running more than 100 B2B marketing programs (one of the perks of working with multiple clients), we’ve had our share of mistakes and insights regarding what works and what doesn’t when it comes to B2B marketing and sales measurement.
Here are the key points we recommend for you to consider when measuring your B2B marketing operation. It’s not a definitive guide, but it includes all the key considerations that are not only important, but also timeless. These points will be relevant no matter how marketing tactics change over time.
1. Understand the different KPI types
There are two types of KPIs that you need to measure: channel and business KPIs.
- Channel KPIs are used to measure the performance of each channel (such as email, PPC, and inbound). The goal is to improve the performance of each channel compared to the previous period or industry standards. Good examples are online ad CTR, email opening rate, and landing page conversion rates. However, improving these KPIs doesn’t mean a thing about the contribution of marketing to the business – increasing email open rates from 10% to 40% won’t directly improve your business results.
- Business KPIs are used to link marketing to business performance. These are parameters such as qualified leads, opportunities per channel, revenues, and customer acquisition costs. These KPIs are the ones executives care about.
Implementation
- Define and track both types of KPIs in your measurement dashboard.
- Whenever you need to invest resources in improving channel KPIs, figure out how it relates to your business KPIs. Depending on the buying cycles of your industry, being able to attribute revenue to a specific marketing activity could take months or even longer.
2. Measure impact across the funnel
Ad click-through rate (CTR) is meaningless from a business perspective. In order to understand the value of your marketing activities, you need to track your leads across the entire funnel, from awareness (where possible) to revenue. In complex sales this is difficult to accomplish. However, with careful and thoughtful implementation of a CRM and Marketing Automation, along with the right strategy and processes in place, it is possible.
In order to make sense of these sales processes and connect them to marketing activities, make sure that you track your marketing qualified leads properly, and carry this tracking all the way through to revenue.
When this is done correctly, you will be able to create a set of KPIs per funnel stage. For example, for the awareness stage:
{Awareness → Anonymous website traffic → Known leads → MQL → SQL → Opportunity → won/lost}
This way you can identify the ratios between these stages and track the specific actions that generated your MQLs and more importantly, won opportunities.
Implementation
- Define the stages of your customer journey, from awareness to revenue, including all channels.
- Define KPIs per stage and how you will measure each one of them.
3. Measure what matters
There’s no shortage of data out there. You can measure an endless amount of KPIs such as time spent on site, bounce rate, and CTRs. In order to be both efficient and effective, the key is to measure what matters.
This means measuring KPIs you can control. Focus on measuring the data that enables you to analyze your performance and gain actionable insight. For example at PMG, we analyze the most effective way to convert anonymous traffic to known leads. The reason behind this is that our services require a long sales cycle, so we’d like to identify qualified leads as soon as possible and give them special attention. After careful analysis, we found that our #B2BTalks events are our best tool to convert anonymous traffic to known leads. Since we have the control to allocate additional budget to this activity, it makes sense for us to track that action. If we learned that we cannot affect the outcome, and therefore do not have control, then it doesn’t make sense to spend time measuring the data.
Implementation
- Per KPI, define what action you can take after measuring it. Without any action, the KPI is useless.
4. Data without context is worthless
Data is just another form of storytelling. Therefore you need to understand the meaning and narrative behind it. For every number you see, ask yourself how it can be evaluated. If the answer is that it can’t, it means this particular data point is worthless.
For example, you see in Google Analytics that your website has 80% bounce rate. Is this good or bad? Should you invest time and effort in changing that? Well, it depends. If you run a content site, 80% bounce rate is pretty bad. But if your goal is to convert paid traffic, it means that you have 20% conversion rate – pretty neat isn’t it?
Implementation
- When possible, find an industry benchmark per KPI.
- Track the history of each KPI and learn about your performance trends.
- Watch out for the seasonality pitfall. Many KPIs are based on time of year (including web traffic). For example, December could have below average traffic and conversion rates in the telecom industry, while it’s often the best month of the year for an ecommerce site. Make sure that you understand seasonality factors when interpreting your data.
5. Understand the fundamental difference between Google Analytics and Marketing Automation
I can’t stress enough the importance of marketing automation for B2B marketers. While Google Analytics is still an important tool, B2B marketers in complex sales environments can’t afford to rely on it alone.
Google Analytics is about how many people engage with us. We can track the online activities that occur in the first stages of the funnel, including the amount of website traffic and conversions.
Marketing Automation dives under the surface and tells us who makes up these numbers and how they engage with us; data that doesn’t exist in Google Analytics. Beyond the basic analytics, marketing automation gives us powerful insight about who engages with our content, and how on an individual level. We’re now able to see each and every touch point we have with a customer, across multiple channels.
For example, we can see the specific pages on our website a customer visited, and when. We can count how many articles they read on our blog and which articles they came back to. We can view which emails they’ve opened and which webinars they registered for but did not attend, as well as how they engaged with our paid ads. If integrated with a CRM, we can attribute their activities to a specific funnel stage, giving us a holistic and in-depth view of their entire customer journey.
Therefore, with the right implementation, marketing automation enables us to link our channel KPIs (email open-rate, landing page conversion rates, amount of website visitors) and our business KPIs (new opportunities, value of opportunities, a prospect stage in the funnel) – which together form the important part of your whole measurement strategy.
Implementation
- Implement your marketing automation platform. (I know it isn’t a walk in the park, but you can’t live without it. Believe me.)
- Identify the right KPIs that connect channel performance to business impact.
- Create daily reports in your CRM and marketing automation that track these KPIs.
6. Measure channel KPIs according to each channel’s responsiveness
- Paid media should be measured right after the initial optimization phase ends. This is the most straightforward channel to measure. Beyond the CTR of your ads, landing page conversion rate and exposure, you can measure the cost per lead (CPL) by dividing the media budget to the amount of leads generated.
- Email marketing should be measured 48–72 hours after campaign launch.It’s easy to measure the basic KPIs (opening rate, CTR, bounce rate, opt out rate).
- Inbound programs are a bit more complex to measure because it takes up to 6 months to fine tune each program, and the overall program cost includes the price to create the assets that bring value over time. We measure performance on an ongoing basis, but when it comes to CPL, we tend to wait until the whole program is in full force for several months before placing a number on this KPI.
7. Measure Business KPIs According to Your Buyers’ Journey
If your industry’s buying cycle is 9 months, you should evaluate your marketing program after a minimum period of 9–12 months. Otherwise you won’t be able to measure the revenue generated from this marketing program, as the sales cycle is still in progress.
If your buying cycles are longer than your fiscal year, the challenge is to find the best way to allocate budgets for your marketing programs without the ability to fully measure their ROI. In this case, you should define the dollar value of each stage of the funnel based on historical data.
For example, let’s say that your marketing and sales machine converts 10% of your leads to marketing qualified leads, and 10% of those to opportunities are won (yes, I skipped a couple of stages in the middle, but you get the idea). Also, let’s assume that your average deal size is $100K. That means that out of 100 leads, 10 are MQLs, and 1 deal is closed at $100K. In this case, even if your sales cycle is longer than 12 months, you can assume that MQL is worth $10K to you. Once you have your marketing automation platform in place, you will be able to attribute a specific channel per MQL, based on either their first or last touch point prior to converting. Then you can define which channels generate MQLs that cost you less than $10K. Once you figure this out, you’re able to choose how to spend your next dollar, focusing on optimizing this specific channel.
The Art of Start
I know, some of the advice here can take months to implement, but every fundamental business process takes time. You can’t put a price on the value of a proper end-to-end measurement strategy and the insight you will gain from following the seven principles outlined in this paper. As Walt Disney said, “The way to get started is to quit talking and start doing.” So start now – because you can’t afford not to.
Building a Data Driven B2B Marketing Organization
November 25, 2015
Kfir Pravda
Digital marketing is tough. Buyers’ behavior is in constant transition, and in addition to this, LinkedIn, Google and other platforms are constantly changing their algorithms in ways that directly affect your marketing programs. B2B leads are being bombarded by intricate content marketing programs from you and your competitors.
To make matters worse, marketing budgets are not increasing, so to respond to such changes often you need to divert budgets from the tried and tested marketing methods and reallocate money to new digital channels.
In order to make smart decisions you need to be able to measure and analyze your marketing program’s performance. But this is easier said than done. Lack of industry standards, the infancy of measurement platforms, and the complexity of defining and implementing a measurement strategy turns this challenge into a major obstacle in most of the B2B companies that we’ve met. After running more than 100 B2B marketing programs (one of the perks of working with multiple clients), we’ve had our share of mistakes and insights regarding what works and what doesn’t when it comes to B2B marketing and sales measurement.
Here are the key points we recommend for you to consider when measuring your B2B marketing operation. It’s not a definitive guide, but it includes all the key considerations that are not only important, but also timeless. These points will be relevant no matter how marketing tactics change over time.
1. Understand the different KPI types
There are two types of KPIs that you need to measure: channel and business KPIs.
Implementation
2. Measure impact across the funnel
Ad click-through rate (CTR) is meaningless from a business perspective. In order to understand the value of your marketing activities, you need to track your leads across the entire funnel, from awareness (where possible) to revenue. In complex sales this is difficult to accomplish. However, with careful and thoughtful implementation of a CRM and Marketing Automation, along with the right strategy and processes in place, it is possible.
In order to make sense of these sales processes and connect them to marketing activities, make sure that you track your marketing qualified leads properly, and carry this tracking all the way through to revenue.
When this is done correctly, you will be able to create a set of KPIs per funnel stage. For example, for the awareness stage:
This way you can identify the ratios between these stages and track the specific actions that generated your MQLs and more importantly, won opportunities.
Implementation
3. Measure what matters
There’s no shortage of data out there. You can measure an endless amount of KPIs such as time spent on site, bounce rate, and CTRs. In order to be both efficient and effective, the key is to measure what matters.
This means measuring KPIs you can control. Focus on measuring the data that enables you to analyze your performance and gain actionable insight. For example at PMG, we analyze the most effective way to convert anonymous traffic to known leads. The reason behind this is that our services require a long sales cycle, so we’d like to identify qualified leads as soon as possible and give them special attention. After careful analysis, we found that our #B2BTalks events are our best tool to convert anonymous traffic to known leads. Since we have the control to allocate additional budget to this activity, it makes sense for us to track that action. If we learned that we cannot affect the outcome, and therefore do not have control, then it doesn’t make sense to spend time measuring the data.
Implementation
4. Data without context is worthless
Data is just another form of storytelling. Therefore you need to understand the meaning and narrative behind it. For every number you see, ask yourself how it can be evaluated. If the answer is that it can’t, it means this particular data point is worthless.
For example, you see in Google Analytics that your website has 80% bounce rate. Is this good or bad? Should you invest time and effort in changing that? Well, it depends. If you run a content site, 80% bounce rate is pretty bad. But if your goal is to convert paid traffic, it means that you have 20% conversion rate – pretty neat isn’t it?
Implementation
5. Understand the fundamental difference between Google Analytics and Marketing Automation
I can’t stress enough the importance of marketing automation for B2B marketers. While Google Analytics is still an important tool, B2B marketers in complex sales environments can’t afford to rely on it alone.
Google Analytics is about how many people engage with us. We can track the online activities that occur in the first stages of the funnel, including the amount of website traffic and conversions.
Marketing Automation dives under the surface and tells us who makes up these numbers and how they engage with us; data that doesn’t exist in Google Analytics. Beyond the basic analytics, marketing automation gives us powerful insight about who engages with our content, and how on an individual level. We’re now able to see each and every touch point we have with a customer, across multiple channels.
For example, we can see the specific pages on our website a customer visited, and when. We can count how many articles they read on our blog and which articles they came back to. We can view which emails they’ve opened and which webinars they registered for but did not attend, as well as how they engaged with our paid ads. If integrated with a CRM, we can attribute their activities to a specific funnel stage, giving us a holistic and in-depth view of their entire customer journey.
Therefore, with the right implementation, marketing automation enables us to link our channel KPIs (email open-rate, landing page conversion rates, amount of website visitors) and our business KPIs (new opportunities, value of opportunities, a prospect stage in the funnel) – which together form the important part of your whole measurement strategy.
Implementation
6. Measure channel KPIs according to each channel’s responsiveness
7. Measure Business KPIs According to Your Buyers’ Journey
If your industry’s buying cycle is 9 months, you should evaluate your marketing program after a minimum period of 9–12 months. Otherwise you won’t be able to measure the revenue generated from this marketing program, as the sales cycle is still in progress.
If your buying cycles are longer than your fiscal year, the challenge is to find the best way to allocate budgets for your marketing programs without the ability to fully measure their ROI. In this case, you should define the dollar value of each stage of the funnel based on historical data.
For example, let’s say that your marketing and sales machine converts 10% of your leads to marketing qualified leads, and 10% of those to opportunities are won (yes, I skipped a couple of stages in the middle, but you get the idea). Also, let’s assume that your average deal size is $100K. That means that out of 100 leads, 10 are MQLs, and 1 deal is closed at $100K. In this case, even if your sales cycle is longer than 12 months, you can assume that MQL is worth $10K to you. Once you have your marketing automation platform in place, you will be able to attribute a specific channel per MQL, based on either their first or last touch point prior to converting. Then you can define which channels generate MQLs that cost you less than $10K. Once you figure this out, you’re able to choose how to spend your next dollar, focusing on optimizing this specific channel.
The Art of Start
I know, some of the advice here can take months to implement, but every fundamental business process takes time. You can’t put a price on the value of a proper end-to-end measurement strategy and the insight you will gain from following the seven principles outlined in this paper. As Walt Disney said, “The way to get started is to quit talking and start doing.” So start now – because you can’t afford not to.