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Marketing leaders: How do you measure the effectiveness of your marketing efforts? How do you define goals and what sort of success criteria do you define for your team?

I'm looking to understand how marketing leaders invest, make decisions, and measure their effectiveness.

  • JA

    Justin Adelson

    over 1 year ago #

    How much time do you have?

    I'm going to give you the Justin Cliff Notes version since this can be a very broad topic; I am going to focus on digital outbound marketing.

    Measuring: Every campaign usually begins with an experiment and a hypothesis. For example, an online t-shirt company that is starting a paid social advertising campaign is trying a new acquisition channel and wants to increase their t-shirt sales by 10% at 33% of the cost of the lifetime value of a customer. The key performance indicator and measurement of the effectiveness of this campaign is the cost of each conversion. I can easily get conversions through paid advertising, but the real measure of efficiency is making sure that I am getting a positive return on my investment.
    There are dozens of SaaS platforms out there that help track paid and non-paid conversion, but you can generally get all the data you need from the ads platform or Google Analytics.

    Goals: My goals are determined by the length of the sales funnel. In my experience, low-priced products like consumer goods have shorter sales funnels and require fewer steps to make a sale (bottom-funnel goals): ad click > view product > add to cart > checkout. In that scenario, the goal of the marketing campaign is to drive sales. Mid-to-high priced products like B2B services and luxury goods may require additional steps such as demos or lead nurturing to make a sale (top-funnel goals). Whenever I start a new campaign, I generally start at the top of the funnel and work my way down to ensure that what I am doing is the most efficient, which I measure using KPIs for that specific funnel step.

    Success: By default, my main indicator of success is Cost/Goal. Cost can be monetary, time, or energy. The goal could be a sale, lead generation, or just brand awareness. The important thing to keep in mind is establishing what the main conversion is prior to starting the campaign or you will look for anything to justify the investment and results (i.e. "Yeah...we lost $5000, but we have 200 likes now!").

    I'm expecting a variety of great responses to this question - I hope what I've provided helps.

  • AP

    Alex Pyatetsky

    over 1 year ago #

    This is a huge question, but I'll give you the 1 heuristic that I use to evaluate all marketing

    #1. Does it pay its own rent?

    Everything else details.

  • AH

    Alex Holmes

    over 1 year ago #

    Every successful company where I've worked had one thing in common - about 20 to 60% of every key metric was driven by direct or 'brand' traffic. What does this tell me? Its important to look at overall growth and cohorts of users for every month where you've run marketing campaigns - not just individual campaign success.

    How do you do this AND still drive leads and figure out which channel, message, audience, campaign is the best?

    I do a combination of two things. I have my lead gen budget and my brand budget. I have two tracking categories. I have campaign specific tactics where I look at the exact effectiveness of the campaign assets, and then I have the overall metrics.. growth by month, churn by cohort, etc.

    I think its really important if you're leading growth to think about both of those things. Yes, you want individual campaigns to perform, but the most important metric is business growth and setting up the rest of the business for success, so its good to think about both.

    In terms of setting up a team for success, you should be thinking about both metrics with them as well. Each person should own at least one metric that contributes to overall business success, but they should also be thinking about setting up the rest of the team/business for success. A bunch of ppl working in silos won't drive long term success IMO.

  • SM

    Shane Murphy

    over 1 year ago #

    There are 2 General approaches. The first is a "rule based" approach such as last click, first touch, time decay etc. these all make a decision on what weight to give each marketing touch in the customers path to conversion. The problem here is that rules are not based on data analysis. They are kind of finger in the air. That's where algorithmic approaches come in. This is where you use data analysis to look at which of your marketing channels are truly driving an uplift in customer conversions. The main method of doing this is by creating hold out segments who you show a dummy ad to. You now can see how much higher the conversion rate was for people who saw your ad versus those that saw the dummy ad.

  • SM

    Shane Murphy

    over 1 year ago #

    The other question for B2B companies is how to understand marketings impact relative to sales. The above is purely looking at marketing and ignores sales touches in the path to conversion. I just wrote this piece about how to handle that quandary. https://www.adroll.com/resources/guides-and-reports/sales-and-marketing-attribution

  • AJ

    Alan Jou

    over 1 year ago #

    At the very basic level, you want to ensure that ROI > Marketing dollars spent per average customer (obviously).

    This then expands into a rather complex problem:

    (1) You need to define both sides of the equation. First, how do you measure ROI? In its simplest form, it's your user lifetime value or how much you predict your user to pay you and for how long. You can add layers of complexity to this model as you see fit (i.e. potential they'll refer a friend, be upsold, etc).

    (2) Next, how do you determine how much you spent exactly to acquire a specific user? You'll need to determine your attribution model and how to assign credit to your marketing channels.

    (3) Even with the above equation figured out, it's difficult to have that be the only guideline for success for the team. You'll need to determine: What's your marketing strategy? What areas related to your product have the lowest hanging fruit for increasing ROI or decreasing spend needed to acquire customers (maybe it's your sign up flows, maybe it's user churn problem)? What's the best mix of channels that works for you/hits your target audience? How do you scale up on your spending, which can break once you pour more fuel on the fire? These questions start to get pretty company specific but are all things to think through to continually ensure that... ROI > Marketing spend :)

  • MS

    Manfredi Sassoli

    over 1 year ago #

    The question is a bit too broad to be answered properly unfortunately. That is partly why the answers you got so far differ significantly. Unfortunately some people have also taken the opportunity to sell their product here.

    I think a good analytics framework is what makes companies learning / growth machines. There can be no growth without good analytics in place. In his book Avinash advocates that it's people who make the difference and not technology, so it's about how good your analysts are rather than how good your tech solution is. Avinash suggests investments should be 10:1 towards people to tech. I tend to think he is more or less right.

    Once you start to dig into analytics you find it's like finding out how deep the rabbit hole really is - sophistication never ends and here we can go into the world of big data. Having worked with a number of very large and sophisticated advertisers I can tell you that it's an ongoing process, you get continuously more accurate, but you are never 100% accurate. be at peace with this.

    Then it's about setting KPIs, which is easier said than done. As we learn in Lean Analytics, apply the 1MM, or the one metric that matters...if you have more than one metric you will eventually get conflicting results and making decisions will be difficult.

    Incrementality is often important when thinking about marketing investment. When deciding where to invest it is not about how efficient a channel is, but if you could get an additional sales more effectively elsewhere. e.g. your aid social CPA may be £120, while display is £100, but that is the average. It may be that the next sale in display costs you £140 CPA and so you might be better off investing in paid social ads.

    Finally we must talk about statistical significance. If you are not familiar with the concept you might want to look it up. The way to apply this is generally to optimise for speed. You are better off being 80% confident and running four times as many tests than 95% confident with 1/4 of the learnings.

    I hope this helps

  • DB

    Davis Brown

    over 1 year ago #

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