What is the first thing you need to be in business? A customer. Until that occurs, you are a project manager or building out your start-up. In the beginning, customers come from referrals. Eventually, you need to create a systematic way to attract customers. The economics of your sales funnel becomes more and more critical as you grow.
Building sustainable lead flow is hard work. Regardless of a company's size, marketers today use websites, blogs, social media and offline activities to attract and nurture prospects, prioritize the strongest performing programs, integrate content consumption with sales force automation and streamline reporting of results. "Engagement" is just a small piece of the effort.
The only factor you really have control over as a marketer on a daily, weekly or monthly basis is your prospect deal flow - your funnel of opportunities. The markets and products in your business plan are given assumptions, at least in the short term. Understanding the predictability, cause and effect of your marketing and sales activities, along with the contribution of an incremental lead to the financial performance of the firm are critical for building a sustainable business.
For example, what does a lead cost to generate and what do you get for each dollar spent on lead generation? If you spend $1 at the top of the funnel to generate a lead, what drops out at the bottom? Do you get $3, $5 or $10 when you make a unit sale?… How long is your sales cycle? This represents the length of time your marketing dollars are tied up. A good marketer or entrepreneur can do this math in their sleep and will quickly adopt new marketing techniques as opportunities arise and a business case is determined.
Unfortunately, most marketing professionals cannot identify the ROI on their content or social activities. As one recent report notes, "Despite the prevalent use of analytics tools, 70% of marketers surveyed say they still cannot quantify the ROI of their social media efforts.”*
Around here, we have a saying,”engagement is for weenies,” because while measuring engagement, likes and retention are all helpful metrics, sales pays the bills. It is all well and good to employ research techniques to evaluate the engagement of a social media outreach effort, but that is not really part of our world here at Austin Lawrence Group. We're b2b marketers and our primary mission is to help clients sell products and services.
When we read reports like this one from Market Profs, we cringe, as it's just so hard to imagine justifying significant expense without some kind of ROI. Check out the chart at right... what do you think?
How do new methods like Inbound Marketing change the economics of your funnel? The answer will influence your go-to-market strategy and allocation your marketing budget.
We have a great eBook on six marketing metrics that the CEO and CFO really care about, and you can get it here. These metrics will help you as a marketing professional defend and grow your marketing budget. Statistics like engagement may seem important (along with traffic and keyword ranking), but when push comes to shove (money gets tight), the CFO will happily trim or axe budgets that can't be tied back to sales success. We know where we'd rather be on that day... what about you?