By Sweta Patel
Marketing gone wrong can cost a business big time. Then there are those business owners who don’t participate and also miss out on the big profits. Over the years I’ve experienced marketing for all types of businesses. The best experiences stemmed from those companies which were actually successful at it after my help.
Today’s average business owner may feel as though marketing won’t make or break the business. However, sales mean everything and more to the business owner. Sales will get you started and off the ground, but when it’s time for growth and scaling, that will be one tough call.
Every time a new company has hired me, I’ve always been asked, if I gave you more money, what can you do for me? I would always answer that I’d start by validating the marketing campaigns. Why? This will show the company what the budget could do for the company and how it would impact its bottom line directly.
Most passionate entrepreneurs bypass the most important aspect of their business, which is the initial validation. How do you know if your product, service or marketing campaign is going to be the success you are dreaming of? You don’t know and you are just hoping something will stick. This is why qualitative, quantitative and persona-based research is necessary. It is simple.
First, pick a sample size and make sure it is diverse. For the majority of the companies I work with, I pick somewhere between 2,500 and 3,500. The next part of the process is to split test between phone interviews, surveys and paid advertising. If your best customers are not online, then better to focus on outbound research such as phone interviews and surveys.
The next step is to focus on your competitors. You may want to start out with direct survey Facebook ads to your competitor’s customer base (the buyers of their products and services). Sometimes it is hard to find out if a customer is a real customer or if they just “like” a page. For example, if I was Hubspot and I wanted to survey Marketo’s user base then I would partner with CMO.com.
Now, what should you ask in the survey? You can incentivize the survey by giving customers a chance to win an iPad or another product of their liking.
Here are the questions you want to ask:
- What do you like most about (the competitor)?
- What are the most important benefits of (the competitor)?
- How responsive is (the competitor)?
- How do you feel about the customer experience?
- Would you pay more for this product or service?
- What would it take you to switch over?
Best Practice: Monitor your competitor’s @replies by setting up a simple search on Twitter. Another way to monitor would be to use Mention and set up an alert to find out positive or negative sentiment about the competitor. The last thing would be to look through their reviews and find out what others are saying about them. Then see how you can improve what their customers are not fond of in your own business. You may want to use Typeform to conduct your surveys.
ROI The Right Way
This reminds me of working with a large plastic surgery practice. They spent millions of dollars in marketing to learn one thing. The only thing they learned from this mistake was what they should not measure. They were hiring marketing consultants and filling director of marketing positions with people who kept track of the vanity metrics. They also measured the activity metrics and cost metrics. What is wrong with this approach?
The problem with all of this was that they were not measuring the correct metrics! The correct metrics begin with a solid sales process (top of the funnel, middle of the funnel and bottom of the funnel). Here are the metrics you do not want to measure because they do not correlate with your bottom line.:
- “Vanity Metrics” — These are metrics like pagerank, page views and Facebook likes that do not focus on actual business outcomes. They sound great but can hurt a business’s credibility.
- “Activity Metrics” — This one is my pet peeve. Most marketing consultants load up their clientss with a laundry list of activities. In reality, measuring activities means nothing; it is all about measuring results. Make sure you are only measuring the items directly impacting revenue.
- “Costs Metrics”— This is when the business focuses on costs versus measuring returns. For example, they focus on things like cost per lead and cost per return.
Best Practice: Keep it simple and measure the performance of every marketing program. The ROI should be compared on a yearly basis. If a business owner tries to measure it on a monthly basis then it would like comparing apples and oranges.
Marketing Is Math
Have you heard the saying “it’s all in the numbers.” Successful business owners focus on numbers as drivers for their marketing. One well-known software-as-service company I was working with had no idea what their numbers were but they were focused on how their website looked, what their business cards looked like, how their headshots looked, etc. They were concerned about the surface appeal because that is what they thought they should focus on in terms of marketing. Wrong! The company made its first mistake by hiring an outside branding and PR firm versus hiring salespeople. The company was not scaling and they spent over half a million dollars on branding and PR. When I came in, I created a systematic sales process they could leverage to bring in cash. I made sure the pipeline was large enough to feed the sales team.
Here were the exact parameters measured:
- Inside sales quota — Our quota for the company was around $350,000. This may change according to the different variables.
- Revenue per customer — What amount does the customer pay to use the product? This company’s figure was $10. Usually this number runs from $5 to $100,000.
- Sales per year — How many sales did you make based on the revenue per customer. How many sales will the sales people have to close to meet this quota? We had about 35 sales per year for our company.
- Lead-to-close success rate — This measures two things: how effective the sales team is at closing the leads and how qualified the leads are before they reach the sales team. This was 20 percent for this company.
- Total leads required per inside sales representative — This is the total amount of leads required by the sales person to meet the quota for the business. This was 177 for our company.
- Marketing lead contribution — How many leads are you receiving from marketing? This number is usually around 20 percent to 60 percent depending on your company. Ours was 25 percent.
- Annual amount of marketing qualified leads per salesperson — What is the gross lead count for each sales person to achieve the quota? This was 89 for our company.
- Marketing qualified lead sales per salesperson per month — How many leads will marketing generate this month for your company? For ours it was 74 leads per month.
Marketing is all about the numbers. Have you discovered this yourself? I’ve made a few million-dollar mistakes by thinking that marketing is an art. It could be an art but at the end of the day it comes down to the numbers.
Sweta Patel is a San Diego-based marketing entrepreneur whose company is Global Marketing Tactics.