How do you measure marketing productivity?

In business there is a saying that turnover is vanity, profit is sanity and cash flow is reality. It’s similar in marketing; there are a lot of vanity metrics that end up clouding the view of what is actually happening. In this post my aim is to give you a few, very meaningful, metrics that will make it much easier for you to measure your marketing productivity.

If you’re tight for time, bookmark this page and come back to it when you’ve got a spare 10 minutes to truly digest the information in this post.

Here’s what we’ll be covering in the post:

• What should you be measuring?
• Do you need to measure everything?
• Which high level numbers should I track?
• Why marketing qualified leads?
• An example of an MQL
• Identifying your ratio metric
• Stop drowning in numbers

What should you be measuring?

Ideally you want to focus on a few high-level metrics that will give you a good overview of how productively your marketing is working. You also need to be sure that they’re actually metrics that your marketing team can be directly responsible for. Yes marketing can be directly responsible for revenue, but only if your company has no sales team.

Here’s a few metrics that you might be measuring in one form or another:

• Social interactions
• Website visits
• New contacts
• Leads
• Marketing Qualified Leads
• Sales Qualified Leads
• Pipeline Value
• Revenue Generated
• Cost Per Lead
• Cost Per Acquisition

One way of making more sense of all the metrics that you could track and use to measure marketing productivity is to put them into a table similar to the one that I’ve created below.

Doing this helps you to organise the metrics and identify ones that have the best potential to show you the information that you need. 

Do you need to measure everything?

Yes you should measure everything you can, here’s why.

In this day and age collecting data is very cheap. You can collect most of the metrics that I’ve outlined above using the free versions of tools like Google Analytics and Hubspot. You’ll have a small cost in getting these set-up, but after that you can have zero running costs to collect and store the data. 

If you want to go a stage further you can add additional paid-for layers of tools, so that you can measure almost every aspect of your marketing. In the grand scheme of things, these are all pretty inexpensive. 

The challenge doesn’t lie in the collection and storage of the data. The real challenge for smaller businesses is extracting value from the data. 

So, how do you get value from all the data you're collecting?

By understanding and prioritising improvements you can make, taking action and then measuring whether what you did actually worked. You could call this running “improvement experiments”. 

And how do you identify the improvement experiments to prioritise? By tracking a small number of key metrics, then diving into the underlying, deeper numbers when you want to make an improvement to one of them.

When you measure everything you can, you’ll have those numbers to explore in more detail when you need them.

Which high level numbers should you track?

You want to find numbers that have the most meaning to you as a business and your business goals.

I’m going to use a common scenario that we help with here at LexisClick - generating leads that convert to new customers. 

When we’re doing this we have a lot of numbers that we could track and report on, but it makes everyones’ life easier if we keep it to just a few very meaningful numbers. 

For us we have 2 numbers that are the most important for marketing, which are:

• Marketing Qualified Leads Generated (MQLs)
• Cost per MQL

Why Marketing Qualified Leads (MQLS)?

MQLs are leads that meet a specified criteria to be passed to sales. These criteria are agreed with sales and receive regular feedback, by using a Sales Qualified Lead scorecard process, so that lead quality can be constantly reviewed and refined. 

For marketers responsible for generating leads, MQLs are the most meaningful category of lead for three reasons:

• They have measurable value to the business, because they meet the defined criteria to pass to sales
• Marketing can hold complete responsibility for them
• The cost per item can be accurately measured and levels out earlier discrepancies in different costs per channel by passing everything through the MQL filter

An example of an MQL

Let’s say that you’re a software company selling financial management reporting software. Your target audience is European businesses employing between 20 and 500 staff, looking to grow, employ a Financial Director and use one of the cloud based accounting solutions like Xero or QuickBooks. 

In this example a Marketing Qualified Lead would be:

• A business employing 20 to 500 staff
• Has a financial director
• Is a decision maker or holds an influencing role (Financial Director, Management Accountant or Bookkeeper)
• Has responsibility for producing management reports
• Is interested in automating high quality reports to take action on
• English speaking

As you can see all of these criteria could be qualified by marketing through various different activities. 

Almost all of them could be captured in form fields, by offering potential prospects value that they’d be willing to hand over their details for. Examples of these offers include things like:

• Webinars
• Ebooks
• Reports
• Detailed how to guides
• White papers
• Free or even paid for training

You can be as strict as you want on these MQL criteria. The most important thing is that they are all items that marketing can be completely responsible for qualifying.

When you define MQLs in this way, you create a filter metric that marketing can be completely responsible for.

The benefit of creating a filtered metric is that you've normalised it. Which means that it doesn’t have scope to vary widely depending on the channel through which it was generated, making it a critical ingredient of successfully measuring marketing productivity. 

Now that we have one of the essential ingredients for measuring productivity, what else do we need?

Identifying your ratio metric

Productivity is a ratio and is typically measured as inputs vs outputs.

We’ve just explained why an MQL is a good measure of a marketing output. Now we need a corresponding input to create our ratio. When measuring marketing productivity the most useful input will be cost. 

For marketing costs, I’d also include time based costs (effort) and cash costs, because time based costs can often make up a significant proportion of total marketing costs. 

For example blogging carried out by an employed team member, might have a very low cash cost, but a relatively high time cost. If you assign a time based cost like a cost per hour, then you can get a true cost per MQL that is normalised across all of your channels. 

When you measure your inputs (marketing costs) vs outputs (MQLs), then you’ll have a powerful ratio metric: cost per MQL.

With these two metrics, MQLs generated and Cost per MQL, you’ll be able to see at a glance how your marketing is performing and the productivity of your marketing at any point. 

If you have any issues here, you can then dig deeper to understand the most likely causes and prioritise your actions.

Stop drowning in numbers

One of the challenges of having so many marketing metrics available is information overload. With so much information available seeing the wood for the trees can be difficult, which then impacts on taking meaningful action.

When you distil things down to just two numbers:

• MQLs generated
• Cost per MQL

You can immediately see how your marketing is performing at a meaningful and normalised level. You're measuring a metric that has been defined by the business and is agreed as valuable by your sales team. Your costs are normalised across channels for both time and cash cost, meaning that you can accurately compare them. 

Now you can put the rest of that data to good use. 

• How are your various marketing channels and initiatives performing against these metrics?
• Which are underperforming and need closer attention?
• Which are performing well and could be made more of?

The chances are you’ll have a bit of work to measure your MQLs and cost per MQL accurately. Hopefully I’ve convinced you that the effort will be worth it. 

If you have any questions on this feel free to reach out to me on LinkedIn.