Uncommon Marketing

Bringing sarcasm, humor, and common sense to this mess of marketing and business.

Part V: Demand Generation Readiness

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Section 4: Goals, Budget, & Key Performance Indicators

In part IV, section 3 covered the resources you will need to help you launch and execute an ongoing lead and demand generation practice. I covered the following topics:

Section 3: Resources

  1. Sales Resources
  2. Technical Resource
  3. Creative Resource or Agency

In Part V, I will cover the very important component of Budget, Goals, & KPIs:

  1. Budget
  2. Goals – What Does Success Look Like?
  3. Define KPI’s – Key Performance Indicators

11. Budget

I touched on budget above in goals, but it does require a certain level of investment to “do demand generation,” and do it right. First, there are the hard costs. You’ll need to finance the individuals on your team handling these duties and you’ll need to invest in the tools necessary to execute and maintain momentum. In addition, to get the most out of demand generation, you’ll need a budget to invest in programs such as PPC, re-targeting, content syndication, sponsorships, display, mobile, social, etc. – you’ll want to be ready to be present anywhere your target market may be. Without a budget, it’s really hard to drive the kind of volume necessary to make your initial investment in tools and resource profitable. There are plenty of ways to drive demand with minimum investment, such as with social, SEO, and content. But those tactics will only reach so far into your market. To make real traction, you’ll need to examine your goals and determine what level of investment is required to meet them, then spend very, very wisely.

12. Goals

Goals could arguably be the first item on the list, but if you have a minimum viable product, an awesome search-engine optimized website, content, and creative resources to produce your assets, before jumping into execution you need to identify the goals and decide whether they are realistic. If you hire a marketer, and you’ve not established the goals, this will be the first place to start with your new hire.

What are the goals for your business, revenue, sales, and demand generation that you’ll need to achieve? Based upon your average selling prices (ASP), do you know how many sales you need to meet revenue goals every month, quarter, or year? If you know your sales goals, do you know the sales team’s current close rate? The rate at which your sales team currently closes deals will tell you whether you can meet the revenue, deals, or contract goals you set. The close rate and revenue goals will also dictate the requirements for the opportunity pipeline, and the conversion rate of qualified lead to opportunity will tell you how many qualified leads you need to drive. Lastly, your conversion rate from inquiry (webform submissions or phone calls) to qualified lead will provide the number of inquiries to drive.

All these conversions and goals together will dictate a certain level of investment – your budget – required to drive those numbers; to be really smart about it, understanding what you’ll get in terms of visits and inquiries from tactics in which you invest will indicate whether the investment is enough. Configure these rates at worst-case scenario level (the minimum of what you can expect) with awareness that a demand generation marketer will cook up a strategy that drives higher inquiries, higher conversions, and higher quality leads that close at a higher rate. To explain more about the process, here is a mind-numbing blog post from Full Circle Insights that explains the gory details.

13. Key Performance Indicators (KPI’s)

Key performance indicators (KPI’s) for your lead and demand generation marketing plans are specific metrics to track, measure, and report upon that give you insight into how well you’re progressing toward your defined goals. Watching your KPI’s weekly provides you with data-driven insight to help you make decisions on the changes you should make to ensure incremental improvement toward your goal(s). You’ll want to start with a goal for each metric that ultimately ensures you’re driving the volume of leads you need, and sales is closing deals at a level to ensure meeting revenue goals.

Some of the metrics you’ll want to track are the obvious ones: number of leads, sales revenue, number of deals closed, cost per lead, and cost per acquisition. To execute a more successful demand generation marketing program, there are a few KPI’s you’ll want to add to your report. If you’re tracking the right KPI’s for your business, you’ll be able to make informed decisions and adjustments for everything from programs to budget to how sales “works” a particular type of lead. If you’re not tracking the right KPIs for your business, or your industry, you could be making decisions on poor information that actually harms your efforts rather than helps.

In order to keep this shorter, I will do a brief explanation of each and in a separate entry expand upon the details. In addition to sales revenue and number of leads, here are a few other metrics you’ll want to add to your reporting.

Website conversion rate. Some may call this traffic-to-lead ratio. Regardless what you call it, if you spend a lot of money on driving traffic to your website, but only 1% become leads, then you need to make some significant changes. Increasing the conversion on your website results in more leads for sales, and ultimately more conversion to revenue. It’s kind of like email – I like to measure the conversion rate of an email based upon the open rate. After all, if you can’t get them to open it, you can’t sell them anything to begin with.

Cost per lead. Do you know how much it costs to obtain a new lead? You have to consider all your expenses to drive that person to your website, as well as anything you invested in to entice them to become a lead. For instance, if your incentive is a white paper, did you pay someone to write that white paper? There are different costs to account for depending on the method, whether from inbound marketing or outbound marketing, but starting with a benchmark of your real expense will help you begin to optimize the programs that are working, and to cancel the ones that are not.

Lifetime Customer Value, or Customer Lifetime Value. It costs more to acquire a new customer than it does to keep a good customer. Don’t take a customer for granted, communicate and continue to nurture them regularly to ensure they return again and again. And by all means, keep them happy! Depending on your product, your customer’s lifetime value could mean thousands, making that cost to acquire not be so bad after all.

Lead to Sale Conversion Rate. Measuring how well the leads your driving are converting to a sale can provide you with insight into the quality of the leads your programs are driving. There are two metrics associated with this – sales qualified leads (they basically meet all the ideal criteria, or BANT), and sales accepted leads, the ones they convert/change to your “opportunities.” These metrics will answer the question, “Am I driving the right kind of leads?” If these conversion rates aren’t meeting your goals, you’ll need to make a change in your inbound programs or potentially investigate whether the criteria you’re using to define your quality leads needs changing or improvement.

There are many more metrics you can use to identify if you’re lead and demand generation programs are performing where you need them to be. But these are some of the basics to get you started with looking and thinking about your numbers.

Continue reading the final section, Tools of the Trade.

Author: Leslie A. Kuykendall

Versatile results-driven marketer with 20 years' experience in integrated digital marketing and B2B demand generation. Visit http://www.austindigitalmarketer.com to learn more.

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