Posts Tagged ‘reporting’

Three big marketing metrics Managing Directors care about

Friday, May 31st, 2013

Have you ever presented a marketing report to your Managing Director filled with great looking graphs and stats only to be greeted with a look of scepticism and doubt? Was the report filled with terms such as engagement, reach or eyeballs? These are some common metrics that marketing has dealt in for years but they don’t reflect an understanding for what senior management, especially managing directors and chief executives, care about. These are three of the big metrics that marketing teams should focus on when presenting to the board:

Customer Acquisition Cost (CAC)

In the simplest form, this metric concerns itself with answering one question: when all costs are considered, how much have we spent acquiring each new customer. It’s a simple metric and one that is critical to understanding the effectiveness of sales and marketing programs.

How to work it out
Choose a time period, say the financial year 2012/13, and add up all of the sales and marketing costs. Be sure to include salaries, bonuses, media buys, agency fees and any other associated costs. Now take the total number of customers gained in this period and divide the total costs by the number of new customers.

Sales and marketing costs ÷ total new customers = customer acquisition costs

Example

Why do bosses care?

This tells you the average amount you are spending on acquiring new customers. Monitoring this over time allows your boss to see how effective sales and marketing is and whether the standards are slipping or if the market is becoming increasingly competitive. A low average CAC is good for business and shows the sales and marketing teams are doing something right.

Marketing % of Customer Acquisitions Cost (M%CAC)

This is where the boss gets to see the value of the marketing team specifically within the customer acquisition process. It is good to monitor this for your own department’s sake as you can quickly identify whether your sales team are letting the side down or whether your marketing department is in itself spending too much for too little in return.

How to work it out

Take all of the marketing costs and divide them by the total sales and marketing costs used to calculate the CAC. This means including all of the media buys, the salaries of the marketing team and the agency fees but removing the sales team costs such as salaries and commissions.  To get the percentage of CAC, multiply this figure by 100.

Total marketing costs ÷ total sales and marketing costs x 100 = M%CAC

Example

Why do bosses care?

It shows how the marketing team’s performance impacts the overall customer acquisition costs. While we are not in the business of trying to pitch sales and marketing against each other, this metric can help to identify which team is letting the side down. High M%CAC can imply several things such as an investment phase involving lots of media buying (something that should be planned for and expected) or it can suggest the sales team are under-performing as their commissions have been lower in this period.

Marketing Influenced Customer (%)

In order to effectively measure this metric you have to have two things: a clear method on tracking marketing generated leads (such as with inbound marketing) and a process of asking all new enquiries where they first heard about your business. By tracking this you will not only gain insight in to which channels produce the strongest leads for your business but also just how effective marketing really is in the sales process. One of the biggest gripes amongst executives about marketing is that they struggle to demonstrate it’s effectiveness. This metric helps to address that issue.

How to work it out

Take all of the new customers generated in a specific period and identify how many of them had an interaction with marketing while they were a lead. Divide this figure by the total of new customers in that period and multiply by 100.

Customer who interact with marketing at lead stage ÷ total new customers x 100 = MIC%

Example

Why do bosses care?

This gives a clear indication about how important marketing is to the buyer’s decision making process. When the percentage is high, senior decision makers will be reminded of the importance of spending that extra money creating compelling content for marketing campaigns rather than cutting budgets back.

Conslusion

When speaking to the senior decision makers in your business you have to speak to them on their level. Understand their motivations (revenue and profitability) and make your reports relevant to that. Speak their language and show that you are working to the same goals as them and don’t convince yourself that the light, fluffy metrics such as likes, shares and retweets will be enough to satiate the demands of managing directors or shareholders.

By Martin Broadhurst