The continued growth in digital marketing is providing much greater access to data capturing details on marketing-generated behaviors and engagement. With the addition of marketing automation, marketers can leverage this data in their campaign planning and reporting. But are metrics derived from this tracking data enough? In research published by Lenskold Group and the Pedowitz Group earlier this year, we found that just 22% of lead gen marketers indicated they receive a “strategic level” of support from their marketing automation (vs. tactical or process levels of support as shown in the full report). While one might believe more behavioral data and broader metrics should help marketers become more strategic, it’s possible that instead, tracking-based metrics are driving decisions to a more tactical level.
Let’s first agree that metrics based on tracking data are valuable for improving marketing effectiveness.
The big three categories of metrics that drive ROI are conversion rates (driving sales volume), customer value (driving total revenue) and cost per sale efficiency (minimizing cost). Marketers are doing a good job at managing and optimizing conversion rates primarily to outcomes other than sales, such as engagement, click-through or response rates. This is driven by the fact that not all companies can track contacts to a closed sale and even those that can are challenged with how to attribute credit for each sale across many marketing contacts. So marketers do their best to improve tracked metrics, which keeps optimization at the tactical level.
Marketing organizations now have an opportunity to go beyond tracking metrics and tap into this rich data to generate strategic insights and optimize marketing performance on the outcomes that really matter – sales and revenue. To understand where strategic measurements are needed, consider these critical insights that get missed with tracking metrics alone.
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Incremental Contribution
How do the impressions or engagement from one marketing contact increase the outcomes of other marketing contacts that follow and how is this contribution identified? (And conversely, how do we identify where past tracked results are not replicable without those other marketing contacts?)
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Marketing Integration
How do we identify when a certain series of tactics timed to work together can generate greater results than those tactics working independently?
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Path to Purchase Roles
How do we assess the strengths of individual tactics based on their role in the path to purchase while also ensuring that the contribution carries through to result in incremental sales?
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Engagement Path Optimization
How do we best inform strategies that align the timing, order and mix of marketing contacts to the buyers’ journey and truly optimize sales and revenue outcomes?
We can use some common situations as examples, starting with Paid Search advertising. In many of our client measurements we have found high ROI from Paid Search given the low, action-based cost and the high correlation to sales. However, this is a marketing contact that attracts buyers late in their path to purchase after exposure to brand awareness and engagement marketing earlier in the decision cycle. Without those other marketing contacts, it is very likely that the click-through rates for Paid Search would be much lower. So a decision based on tracking data alone – which would suggest reducing budget for early stage marketing and increasing Paid Search – would actually decrease results over time.
Another example is in lead generation marketing where all tactics are typically compared on the same metrics. Tactics may be evaluated based on the quantity of leads generated, cost per lead or even net sales conversion (attributed to the first or last contact). However, this neglects the fact that there were many touch points during the buyers’ path to purchase. The comparison also does not acknowledge that different marketing contacts play a different role in supporting the buyers’ journey. It’s logical that different tactics are needed for attracting potential buyers, delivering content to educate and engage, nurturing contacts and winning the sale, yet basic tracking does not reflect this. Therefore, optimizing sales outcomes requires marketers to adopt strategic measurements that will maximize the effectiveness of the total marketing mix.
Here are key measurements I recommend to generate the insights needed to close the gaps noted above.
Strategic Market Testing
- The same methodology applied for commonly run A/B testing of tactics can easily be applied to evaluate strategies. The goal is to assess more complex strategies across multiple tactics and identify higher-performing alternatives. This is done by changing the measurement objectives and evaluating the impact on customer behaviors and sales outcomes.
Marketing Mix Modeling
- Advanced statistical analyses, such as marketing mix modeling, provide a more accurate measure of the true incremental sales contribution from each marketing channel. Modeling looks past the tracking data and takes into account lag time to capture the impact of early marketing contacts on engagement-oriented marketing contacts. The results can guide budget allocation and spending levels across marketing channels.
Engagement Path Analytics
- This rich marketing data set has enabled more robust analysis of the engagement path, providing insights into the mix of tactics needed at different points in the buyers’ journey. The analysis guides strategies for integrating the series of marketing contacts and behavior-triggered marketing that can optimize the collective mix based on sales and revenue.
Tracking metrics will always be the core resource for guiding marketing decisions based on having fast and easy access within marketing automation reports. However, strategic measurements need to be an integral part of the overall measurement plan as well. Those marketers ready to leverage this expanding data set for more robust strategic insights will be better positioned to demonstrate and improve marketing contribution to sales and revenue.