This posting by Doug Scudder (Randall-Reilly) reminds us of the importance of marketing metrics, and the three basics that he (and I) believe should be in any marketer’s repertoire. However, I think you’ll see that while these strategies are easy enough to establish for straightforward higher-volume residential construction trades, they can be more challenging when you move into the ICI and large-project world.
The definition of a lead is different for every company. If your fleet is using your website to generate applications from drivers you are trying to recruit you probably count form submissions or phone calls as leads. If you are a construction dealer trying to get traffic into your dealership you might only care about potential customers who actually visit your locations.
Once you have defined exactly what a lead is you need to figure out how much that lead is worth to you. This is a simple calculation, and once you have that number you can know exactly how many more leads you need to generate in order to hit your company’s financial goals.
Fair enough. But what if you are an architect or engineer who designs $3 million schools? Do you count as a “lead” anything that you discover in public bidding sources or do you need to refine things a bit more?
If I generate a given number of leads how many of those will turn into sales? Generating a ton of leads is great, but if those leads aren’t qualified you just wasted a lot of time and money. Content marketing, with all it’s strengths, has to be targeted. A white paper about how to monetize a mobile app is perfect if you want to reach mobile developers. But if your target audience is companies looking to advertise on mobile devices, you might not end up with contacts that are going to be interested in spending money with your company.
Don’t just track overall close rates. Make sure you know what your close rate is per lead generated from each channel that drives traffic to your landing pages and forms.
Side Note: Don’t be too quick to blame your sales department for a sub-par close rate. We all know salespeople are the critical last step in the lead generation process, but a truly great lead will already trust your company and will be looking to purchase the product you sell. Salespeople will close good leads; it is why they come to work every day.
This for most AEC businesses and practices is somewhat easier to calculate, at least if you measure your success in winning works for which you have submitted RFP/responses/quotes. You certainly can calculate how many of your submissions turn into jobs.
The challenge here is the somewhat obvious assertion: “The fewer jobs you bid, the better your close rate will be.” Duh. Obviously, if you only bid/quote on work you are absolutely certain to win (repeat work, for example, from enthusiastic clients) you’ll have a near 100 per cent score. The challenge is to figure out where and when to take risks and stretch things to grow your business or practice (and how to avoid desperate efforts to stretch yourself into places you don’t belong.
Finally, there is:
Return on Investment (ROI)
This obviously is the most important magic bullet within marketing, but again it has complications
Return on investment is the mother of all metrics. Everything your marketing department does comes down to ROI. If I spend $X on marketing, I will get $X back in revenue. To really get a solid ROI number you need quite a few flawlessly tracked metrics like the lifetime value of a customer, the value of the time of each member of your marketing team, and a detailed accounting of every cent spent on sponsorships and advertising.
Don’t assume that the expensive PPC ad you just invested $30,000 in generated more than that in sales. You might have generated a ton of leads that led to sales for your lowest profit margin product. You also might have just driven a ton of traffic to your website that only resulted in an impressive looking number of visitors. ROI is your guiding light and your best friend. Don’t leave home without it.
Tracking all of these numbers and processing them into useful reports might seem like a daunting task. But if you don’t actually know how successful your marketing department is, how secure is the future of your company? How do you know you are properly spending your budget? How secure is your job? Make every decision guided by properly tracked metrics and watch your value to your company skyrocket.
In practice, if you are in a situation where you are evolving from a pure passive word-of-mouth/referral/repeat business model to one where you engage in active marketing efforts, your ROI will decline. (If your marketing budget is near zero, then your ROI in theory is near infinity high). Initial learning costs can be quite high if your marketing stretches beyond low-hanging fruit (enhanced referral/relationship, website and follow-up techniques), and there are plenty of people out there ready to take your money to “try” to solve your marketing challenges.
However, if you do things right, there comes a point where the effort pays off. You have a systematized, measurable model, where you can test assumptions, try out new things and adapt and improve as you go along. But who said this was easy?
I’ve written some articles about marketing metrics for the SMPS Marketer magazine. If you want to receive free copies of these pdf files, please connect with me through this blog’s contact form, or write a comment (or better, do both). This will become one of my metrics for this blog’s success.