Marketing automation metrics: How to get the measure of successby
There are many hoops that organisations need to jump through to make a successful marketing automation programme. Breaking down organisational silos. Addressing internal politics. Effecting cultural changes. But perhaps surprisingly, research indicates that none of these are considered to be the most challenging aspect of marketing automation. That dubious honour belongs to measurement.
In a recent Gleansight research report, 54% of respondents reported that agreeing on the right metrics to monitor was the most difficult task they faced during a marketing automation project. And there are many reasons why measurement is proving such a headache.
“One of the challenges we get asked about a lot is how to measure ROI, and what types of KPIs and dashboards should be developed to see if it’s making a contribution or not,” says Chris Fletcher, research director for enterprise applications at Gartner.
“We find that many companies still continue to count leads that a marketing team generates. Everybody realises it's a relatively meaningless number because it really depends on not the number but the quality and what the ultimate results of the leads were. But because those tools for analytics reporting are always in place or they're difficult to develop, we find that marketing teams have tended to gravitate back towards the ones they can develop, even though they’re meaningless.”
Gerry Brown, senior digital marketing analyst at Ovum, also fires a warning about measurement of marketing automation. “You have to be a bit careful with metrics, because it’s easy to get dazzled by them,” he notes. “For instance, there are lots of technical terms around metrics which mean nothing to people outside of the users of MA and other marketing systems.”
Steve Messenger, CEO at RedRoute International, believes that marketing automation metrics broadly fall into two types.
“Some are easy but just measure the obvious, whilst some are more difficult but actually worthwhile,” he suggests. “The easy metrics are things such as cost per contact; sales response to promotional measures; incremental sales and profits. These are the types of metrics that will be used to measure short term effectiveness and ROI. These are valid measures but are actually only half the story.
“The best metrics are the ones that are more difficult to measure. The impact on customer numbers - are we getting more customers? Are we getting more repeat customers? Is customer satisfaction and recommendation growing?”
Fletcher strong recommends that businesses resist the temptation to fall back onto the less meaningful easy-to-measure metrics.
“Rather than count a lead and be much more interested in what the yield is of leads we've generated, think about what the closure rate is,” he advises. “Once you've got that you can go into your tool and say what the values of those leads were and then compare that back to how much you’ve spent on a particular campaign to generate those leads – and that gives you some level of marketing ROI.
“Depending on the industry you’re in, you also want to know the lifetime value of the customer. This is particularly relevant to the financial service industry for instance. If you’re an insurance company trying to sell life insurance, you're not as interested in how much of something a customer bought this year when they signed up for a new policy but you're really interested in how much they’ll spend over the next 20 years because you want to keep that long-term customer relationship. So those are the types of metrics that should ideally be captured to measure progress or lack of progress in marketing.”
Cory Eidon of HubSpot suggests there are four basic types with which any company interested in implementing marketing automation should be concerned – activity metrics, response metrics, efficiency metrics and value metrics.
Having invested in marketing automation technology, it is of course important to ensure that it is being used. Two metrics you can use to determine how your team is using the software are number of emails sent (if they aren’t sending mails through the software it is an indication there is a problem) and quality behavioural triggers (this will identify whether the team are only using MA to merely make simple email sending faster, rather than basing it on customer or lead behaviours as they should).
It is important to measure how your automation is resonating with your leads and customers. While you should continually ask for feedback from your leads and customers on your emails, offers and content, some quick metrics to check at a glance how well received your campaigns are include open and clickthrough rates, unsubscribe rates, site traffic and reconversions.
If your marketing automation is being used appropriately and effectively, Eidon suggests you should see the following metrics impacted:
- Cost per customer – used properly, marketing automation will lower cost per customer as more leads at the top of the funnel will be nurtured to the point that they can be utilised by the sales team and converted into customers.
- Marketing qualified leads generated through lead nurturing – a good indication that your marketing automation is being used well to nurture leads is the number of your MQLs will increase.
- Sales-accepted leads – if your marketing automation is creating more reconversions you will have better lead intel to better inform sales about the leads in their funnel. It will also generate more educated leads that are nurtured further down the funnel, which sales are more likely to close. Therefore, a good sign that your MA is working well is that the number of sales-accepted leads is increasing. However, if your sales-accepted lead or MQL numbers are still low, it may be an indicator that either there is a problem with sales-marketing alignment or that you have a lead scoring problem.
Ultimately, effective marketing automation will impact your bottom line. Eidon recommends the following metrics to track this:
- Revenue generated – how much revenue is attributed to MA? Ensure you monitor both whether you’re closing more deals, as well as whether the average sales price is increasing.
- Cost of investment versus revenue generated – how does the revenue generated compare to the total cost of ownership?
- Close rate on marketing-sourced leads – if marketing can demonstrate that the leads they are providing via MA are closing at a higher rate, then they have gone a long way to proving its value.
Sam Davies, the lead consultant and training course developer at Zoober Digital Training, believes that the beauty of marketing automation is its ability to allow you to measure every step of the customer lifecycle – all the way from awareness to familiarity to consideration to decision, then to acquisition and then the early stages of customer adoption and onwards. And the clarity it provides therefore makes it quite easy to establish MA’s return on investment.
“Marketing automation gives you the ability to measure and analyse how effective your content marketing and the content of the digital assets you’re producing are being,” he says. “Once it is implemented and you want to really measure whether it is working effectively for you, there are ultimately three criteria you need to start measuring – the number of visitors to the site, the number of leads that are being generated, and then how many of those are being converted into customers. Whatever organisation you’re in, those are the three criteria to measure – I suppose it is prospect and lead conversion and then lead to customer conversion.
“You’ll always generate an ROI because you can always say that an average sales order would be, say, £1,000 and we’re spending £500 on marketing automation and at the moment it is helping us convert 5% of our business into leads and 5% of our leads into customers, so this month compared to last month it is generating us an extra four customers, which is £4,000. Taking into account the cost of ownership you can then calculate your ROI. So it is quite easy to monitor from that point of view because you can measure every step of the customer process and customer journey.”
Aside from the standard important metrics mentioned above, it is always important in any project to establish from the outset what the key goals are specific to what you want to achieve. This then enables you to set targets and metrics that are aligned with your main goals and track performance against this.
“The important thing is to define the goals of implementing marketing automation and to define the key metrics that mark the degree of achievement of those goals,” advises Martin Smith, head of marketing, Neolane, an Adobe company. “Some simple metrics might include increasing opening rates, or clickthroughs or the return on campaign investment. But it could equally be about speeding time to market, increasing customer lifetime value, improving customer loyalty, raising Net Promoter Scores or reducing customer churn. CMOs often talk of not just return on investment from a purely financial perspective, but talk of return on marketing investment, which is about the degree of achievement won across all of marketing’s goals.”
So, while there are stock metrics that you should apply to your marketing automation investment, it is always worth dedicating time to tailoring some specific metrics to your particular project.
As Brown notes: “I remember hearing an apocryphal story of a company in the United States that had one metric that ran the whole company, and it was the amount of stock they had at the end of every day. Having done all these iterations on all these metrics they worked out that if they had that at a certain level then the business would be profitable and successful. It takes quite a bit of time to work out the trigger metrics which really align properly with business processes and business strategies, and that are meaningful for a wide audience. But that is what you really want to do - to be able to focus on a small number of metrics that are well understood and that represent the levers of business success and revenue and profitability.”
He concludes: “I always suggest you keep it simple in terms of metrics - so you may have a taxonomy of metrics and you might have 20 or 30 metrics down the bottom but they should scale up to three to five key metrics that enable senior management to ultimately evaluate the effectiveness of the system.”
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 20 years, including Internet Works, CXO magazine and Business Management. He joined MyCustomer in 2007.