Marketing metrics: How to measure promotion activity

When having a conversation about marketing metrics with a fellow director he said to me, "Metrics are great, but you don't fatten a pig by weighing it."

I agree...kind of. There are a number of factors you have to get right to get good ROI on promotion spend, but, if you don't measure, how do you know what works and what doesn't? The answer is you don't.

It is too easy for business leaders to see marketing as a cost centre and the marketing community has to work hard to talk the language of the business - money.

So how do you feed the marketing promotion pig as it were? You feed it lots of different types of food and see what makes it the fattest.

Getting started with marketing metrics

Use your CRM or Excel to track each activity through the life cycle of its leads. If Excel, first column should be the name of activity, second a category type for activity (such as email, trade show with presentation, webinar etc) so you understand what type of activity works best, third the financial year it falls into and then one for each of the bullets below. Use the same format and you can easily compare year after year and there is nothing better than fact when trying to show value or justify budget.

For every activity you run you should track the following

• Expense to revenue ratio - for every pound you spend how many pounds of revenue are you getting back? Great for communicating to sales and finance.
• Expense to opportunity ratio - for every pound you spend how many pounds in opportunity are you creating? Great for communicating to sales.
• Number of leads created - the Hollywood stat; all sex and no substance! Sales teams in particular love hearing about high volume. Number of leads by lead rating is better if you are lead scoring.
• Number and value of opportunities created - good sign of quality leads is the creation of opportunity.
• Number and value of wins - the name of the game. If the activity isn't creating revenue then in the immortal words of Snoop Dogg "drop it like it's hot".
• Cost per lead, opportunity and win - you need to help finance understand the cost of sale and you need to try and drive these down year on year.
• Conversion of lead to opportunity, opp to win, lead to win etc - this will help you understand where you are having problems moving leads through the pipeline.
• Lead age - how long does it take for leads to move through the sales cycle? Useful for understanding what you want to run early in the year and what works better when you are trying to pull some quick deals in with Q4 looming.

The most important of these are the first two. Sort the spreadsheet by opp:revenue and then opp:opportunity ratio - you now have a stack rank of your best performing marketing activity. Over years this will be your guide to what you should spend your money on and what you should avoid like the plague.

Make sure you only count opportunity and revenue that you can confidently say is as a result of marketing activity. If you lose credibility once in front of sales or finance all of your metrics lose credibility. As an aside, it is worth tracking what percentage of the pipeline you have helped influence e.g. 50% of all deals closer or in the pipe engaged in a marketing campaign.

Communicating marketing performance

My advice is to pull together high level stats at the end of each month and send to sales and business leaders. You should also get a slot at regular sales meetings to chat through results as well as future activity. On a one to one basis it is important that you ensure individual sales person understands what you have contributed to their pipeline and wage slip.

Show the value you are creating and show where you failed, but learned some valuable lessons. Whenever talking about activity talk about the metrics as well as some qualitative information. Talking about what percentage of total pipeline and closed business marketing accounts for is strong. Make sure that marketing's contribution is recognised in deal win emails to staff as well as sales.

Don't get obsessive about working out the stats every week, after all you don't fatten the pig by weighing it, once a month is fine. A bigger quarterly report might be a good idea to dig into what is working in more detail.