In my previous blog, I highlighted how to assess your overall marketing capabilities and conduct a marketing audit. In this one, I’m covering a wide range of metrics, and providing guidance on how to determine which ones matter most.
CMO’s today operate in very data rich environment, and there’s a plethora of tools for measurement, analysis and reporting. The biggest challenge is which ones matter most and to whom? As a 5X CMO, I’ve learned it depends on your audience, so I like to bifurcate the task. First, figure out what you need to and can measure to run your marketing operation and seek to continually optimize. Second, get buy-in from key stakeholders, e.g. fellow execs, board members, and investors, on which ones they care about. For the former, share within marketing, for the latter, share with the key stakeholders.
Lets’ start with the ones that likely matter for both audiences, and then we can explore ones that are more important for marketing teams and other stakeholders. For SaaS companies, here are some of the most important ones I recommend tracking: CAC (customer acquisition cost), CAC to LTV (lifetime value), MRR/ARR (monthly, annual recurring revenue), ARPU (average customer revenue), ROMI (return on marketing investment), NPS, Churn Rate (soft and hard), conversion rates at all funnel stages (from lead to close), and key Web vitality metrics (traffic, bounce rate, unique visitors, page views, form fills, hand raisers, SEO rankings, etc.).
For CMO’s and their teams, I like to create both a dynamic list of measures, as well can a CMO dashboard with the most salient metrics, both leading and lagging ones. What I don’t track are activity-based metrics, like emails sent, or events produced, because outcomes, or contribution to pipeline, are the most important to demonstrate marketing’s impact on the business.
There are a number of pipeline efficiency, or funnel metrics, to track as well, and I would argue, it’s important to track by customer segment, sales team, region, or whatever cohort provides insights into ongoing marketing performance. Some of these include CPL (cost per lead), full funnel conversion rates (from lead to pre-qual to qualified to close), along with win rates and ACV (average contract value). I also like to track campaign, channel or tactic ROI to optimize the mix of marketing investments that will produce the greatest overall return, and given dynamic markets, these tend to change over time, and by industry and market segments (e.g. SMB, mid-market and Enterprise).
For cross-functional alignment, it’s also important to have one agreed-upon set of metrics to track the health of the business and the pipeline, so we know what good looks like and can foster agreement on what to do about gaps and shortfalls. For example, in most B2B markets, there’s a pipeline coverage multiple of 3-5x (depending on industry) needed to ensure the company can achieve its target bookings and revenue. But simply achieving the multiple is just the first step. It’s also important to analyze stage level conversion by segment or sales team, to see if pipeline conversion is pacing according to average days in each key sales stage or falling short. If the latter, aim to get agreement on a mutual action plan with Sales and SDR organizations on how best to action any part of the funnel that is slowing. I also like to look at performance metrics for both new customer acquisition and existing customer expansion. If you blend the two, you could get false signals or a false sense of achievement if one area overcompensates for the other. Existing customers growth should be much more efficient and less costly than landing new customers.
My favorite metrics to focus on are funnel conversion by stage and overall marketing ROI. For example, if a company is creating enough top of funnel leads and overall opportunities, but not achieving the closed-won volume and value predicted in its budget model, it’s critical to diagnose the gaps and action how to get back on track. Also, if marketing can demonstrate a solid ROI, it’s can become a compelling business case for incremental budget. I think a 15:1 program ROI is ideal, meaning marketing is creating $15 in pipeline for every $1 invested, but every company will have a different target based on budget allocation, pipeline and Sales efficiency (e.g. conversion) and other factors.
Remember that the specific metrics to track may vary based on your company’s goals, business model, and stakeholders. It’s essential to identify the key metrics that align with your company objectives and regularly review and analyze the data to make informed marketing decisions, optimize spend and continually improve results.
For more inspiration on metrics and advice from three super savvy CMO’s, check out this the top-rated podcast for CMOs from Drew Neisser of Renegade: Marketing Metrics that Move the Needle
Happy measurement! #CMO #MarketingMetrics #The ROI of Everything
CMO Mentor 