“Is our marketing working?”
This is the question that makes CMOs squirm, cringe, or sit up in their chairs with glee (if the answer is yes). But how do you even know if your marketing is working? Are you measuring conversions, sales, website traffic, clicks, sentiment—or any number of other metrics which may or may not be of utmost importance to your organization?
To help figure out this maze of marketing metrics, I recently spoke with Brian Kardon, CMO of Fuze, a cloud-based unified communications provider. As the former CMO of Lattice Engines and Eloqua, Kardon was an early adopter of martech and remains an evangelist for the science-side of marketing. In our conversation, he reveals what metrics matter most to him, specific details on the cost per marketing qualified lead, his testing approach and the acronym most boards cherish – the CAC ratio.
What are the metrics that matter to you the most?
There is this tendency of marketers to spew out hundreds and hundreds of numbers that have no meaning at all but focus is a key theme here. Because you can’t focus on 50 or 100 metrics, it must be fewer rather than more. You also have to share them with sales and your CEO and your board. The most important metric to me is: how much of the net new pipeline did marketing source? I care about pipeline sourced, marketing influenced, and what percentage of the bookings that closed were sourced by marketing.
How often are you looking at performance data?
I’m looking at campaign performance all the time. So, while I can’t figure out whether a campaign delivered closed business, I can know whether the campaign was successful in providing a marketing qualified lead (MQL) and then a sales qualified lead (SQL). I’m looking at early indicators.
Let’s get into the weeds on MQLs and SQLs.
In the course of a year, we run a couple of hundred campaigns. A campaign could be an email campaign, it could be a physical event, it could be any number of things. But we’re always looking at measurements of the campaign and we’re looking at the cost for an MQL all the time, so we have a pretty high cost per MQL. I daresay it’s over three hundred dollars for a marketing qualified lead. All these things sort of come together. I’m always looking at the performance of my campaigns, cost for MQL and conversion rates from increased MQL, MQL to what we call a “discovery call” which is sort of an SQL to SQO (Sales Qualified Opportunity) to the pipeline.
Where are you regarding attribution modeling?
We think we have world-class attribution, as good as it gets. It’s not perfect. And so, we’re looking at all the deals and what content they touch at what stages. So, we tag all our content whether it’s top of the funnel, middle of funnel, the bottom of funnel. We also have some exciting things on our website now. If it’s an unknown prospect we use reverse-IP lookup, so we’ll know what company they’re from—assuming they’re not calling in or using Comcast or Verizon from their home but they’re at their company.
Can you give an example of what specific web behavior means?
Sure. If they’re looking at a pricing page or a product page, it would imply they’re further down the funnel. If they’re downloading content about the future work or something very high level, they’re not as interested. We try to follow up with content based on the buyer stage that we infer from their web sessions. We tag different pages on our website and different content for a particular buying stage, which is something I think a lot of companies don’t do, but it’s valuable for us.
Do you test a lot of variables?
Yes. On our website, for example, we probably have 40 A/B tests going on right now. Little things; size of buttons, the color of buttons, calls to action, placement on the page. So, every time you refresh a page, it will look slightly different, and people will be presented with slightly different pages each time. We test for things like session length, bounce rate, click through rate.
Are there different metrics that matter when you’re presenting to the CEO and the board of directors?
They care a lot about the CAC ratio—the cost of acquiring customer over lifetime value. They also care that sales and marketing as a percent of revenue is declining. They want to see the productivity of sales and marketing such that every nth dollar is driving incremental bookings or incremental sales. So, we want to try to show the productivity and a big part of a growing company is scaling. They want to see that your product is scaling, engineering is scaling. As you grow, you spend a lower percentage on that department.
What else besides the CAC ratio do board of directors like to see?
I also do conversion metrics from different stages that I share. I generally find, though, that most boards that I’ve presented to do not have anyone in that room which has a marketing background. They’ll have a finance background, there’ll be investment bankers, VC background, they’re sort of spreadsheet people. It might be a salesperson who is always helpful, but there won’t be someone with that real in-depth knowledge of a marketer’s world. I see their eyes glaze over very often when you start talking about a lot of the marketing metrics. Marketing usually has a few slides on most board decks. The critical thing I think is to show proper alignment with sales. Very often they’ll ask me a question either as a salesperson or a sales leader question. They want to make sure we’re talking the same way; we respect each other. Sales and marketing should both be in the same room when they’re talking about sales and or marketing.
How do you know how customers perceive the brand and how prospects perceive the brand?
Two ways. One is we have Net Promoter Score for our product amongst customers. You like our product, you like our service. So, after someone calls us for a support call, we rate all those things you do to have a Net Promoter Score. The other thing is to measure a prospect’s satisfaction with the sales and marketing process, so we do win-loss reporting. Every quarter we have a third-party interview 20 deals that we’ve either won or lost. It’s usually about 15 that we’ve won, five that we’ve lost. Loss deals are less likely to talk to us but won deals will. We ask questions like how did you find out about us? Were you aware of our brand before? What were your perceptions? But it’s not quantitative. It’s only 20 in-depth interviews but it reveals fascinating things, like the first salesperson was not helpful. We learn all these things, and I would encourage marketers to use a third-party and not to do it themselves.
How do you deal with micro measurements versus the big measurements when you close a sale?
I would be disingenuous if I said we’ve got this one nailed, but we do have campaigns for the whales, for the big ones. There are the top hundred accounts that we care about and we’ll spend a lot more money for meeting with them than much smaller companies. An MQL could end up in a 10-billion-dollar deal or a fifty-thousand-dollar deal, but we treat MQLs the same. I would be willing to pay more for an MQL if it delivered a more significant deal, but it’s challenging to do that.
So, what do you do?
What we do is we segment by the size of account and total available market (TAM). How big are these companies and how much money could they spend? It’s much more bespoke for the top hundred accounts in the world that we care about. We’re nurturing them. No salesperson is going to be able to maintain relationships in more than two or three contacts at that account. What marketing can do is broaden out the relationships. We would then add maybe 50 or 100 different contacts at different levels and we would do nurture campaigns to all those different titles because very few people are buying by themselves. It’s all committee buying, buying by teams, or buying things where there’s a lot more collaboration. That’s how we look at it, segmenting things in different ways.