Chapter 13
Make Better Marketing Decisions

If you're like many marketers, you already have a very long “to do” list: buying e-mail lists and sending out e-mail blasts, hiring telemarketers, hiring/managing PR firms to call magazine editors about your press releases, managing and attending trade shows, developing marketing campaigns, and so on. If you want to run before you walk with inbound marketing, then you'll need to cross the least productive outbound marketing items off your to-do list and add a few of the new inbound marketing items (e.g., content creation), measure the results for a while (e.g., three to six months), and then continue to eliminate the least productive old-school tactics at the bottom and replace them with new and more productive channels/campaigns. After a year or so, much of your marketing to-do list will end up being inbound activities; on average, inbound marketing leads are 61 percent less expensive than outbound marketing leads.

How do you decide which “to-do's” to cross off and which to add? Your first step is to create a living, breathing sales and marketing funnel to help you make marketing investment decisions. The inputs at the top of the funnel include all of your channels/campaigns that drive leads into your business, such as e-mail marketing, trade shows, seminars, sales relationships, telemarketing, cold calls, branded organic search traffic (e.g., searchers who use your company name), unbranded search traffic (searchers who use industry terms), paid search traffic (if any), traffic from social media sites, and traffic from blogs and other websites, among others. These tactics all drive targeted and untargeted prospects into your funnel—and generally, not all of these prospects come out at the bottom as paying customers, which is why you must grade, qualify, and nurture your leads. We call it a funnel, rather than a pipeline, because it is shaped like a funnel—there are a lot more inputs coming in the top than customers coming out the bottom.

Levels and Definitions

The first step in creating your funnel is coming up with a list of sources/campaigns/inputs at the top of your funnel that create prospects for your products and services.

After you have determined which sources/campaigns/channels drive prospects into the top (prospect level) of your funnel, you then need to figure out a definition for the second step of your funnel. Let's call this the leads stage for lack of a better term. A lead might be anyone a salesperson (or you) qualifies as being eligible to spend at least an hour with, showing your product or discussing your service. After you have figured out the lead stage definition, you then determine the definition of the third stage of the funnel, which we'll call the opportunity stage. At this stage, the potential customer has an internal champion within a company advocating for a purchase of your company's product or service this quarter. The last level in the funnel is the “customer” step—someone who has purchased your product or service. The key is not to over-think this exercise—limit your team to a one-hour meeting to make decisions on the funnel stages and definitions. You can hire an outside consultant and spend hundreds of thousands of dollars to come up with funnel definitions, but you can do it yourself if you are decisive. The key to an effective sales funnel is not the decision criteria—it's that you have a funnel (see Figure 13.1) and that you consistently measure it.

Now that you have your levels (prospect, lead, opportunity, customer), you measure the size of each level on a quarterly (or monthly) basis. Once you have the size of each level, you can measure the conversion rate between each phase plus the total yield of the funnel—the percent of prospects that turn into customers (see Figure 13.2).

Campaign Yield

The key piece of information you get from this exercise is the shape (ratios) of the funnel per campaign/channel. For example, you might look at your branded organic search (people using your company name during a Google search) funnel. How many prospects last quarter did you get from branded organic search, how many leads did you get from that channel, how many opportunities, how many customers, and what was the overall yield (prospects over customers) of that channel? How did those numbers change relative to the previous quarter?

You should also determine ROI (return on investment) per channel. For example, you can compare the cost per channel, per quarter, with the revenue that channel produced per quarter.

This campaign yield and ROI information should influence which items you cross off the bottom of your marketing to-do list, and which tactics should get additional resources. The better the yield and higher the ROI, the more resources you should pour into that channel. The low yield and low ROI campaigns should be replaced, even if they are sacred cows. A typical sacred cow is the annual trade show that “everyone” goes to, but never results in any business because “everyone” includes competitors and job-seekers, but not potential customers.

As this book is on inbound marketing, we suggest that once you get this framework in place, you cross off your bottom two channels and add two new inbound channels (e.g., a blog and Twitter).

Tracking Your Progress

This chapter is about measurement: measure your monthly prospects, leads, opportunities, and customers per channel over time as well as the ratios between the levels over time. Use this information to help you decide which programs to double down on and which to eliminate.

To Do

Define all of your marketing campaigns/channels.
Define your funnel stages.
Measure each stage by channel.
Measure the yield by channel.
Measure the ROI by channel.
Replace poor performing outbound channels with new inbound channels.
____________________________________________________
____________________________________________________
____________________________________________________