Beyond Vanity Metrics: Marketing’s Impact on Revenue

Speaker 1: 00:00 
Hey, everybody. Welcome back to a new episode. For the next few episodes, actually, we're going to be talking about revenue driven marketing and why marketing should be focused on increasing revenue, not just brand awareness. Right. So for this first episode, we're going to dive into the topic of getting past, getting beyond vanity metrics and, and talking about marketing's impact on revenue. So as we dive in here today and talk about this a little bit, I just, I wanted to ask you guys, which marketing metrics have the biggest impact on revenue when we're, when we're talking about this kind of thing.

Speaker 2: 00:41 
Great question. Which marketing metrics have the biggest impact on revenue? You know, of course, of course those metrics that lead to conversions, right. That are valuable to the sales team, you know, ultimately that lead to either a product purchase or a closed deal, you know, but of course there are things like awareness, you know, metrics related to awareness and different stages of the marketing funnel.

Speaker 1: 01:13 
Yeah.

Speaker 2: 01:14 
So, Zach, or do you, Thomas, do you have any other ideas?

Speaker 1: 01:20 
Yeah, I think based off what you said, it's important to know what you're judging it on in terms of the marketing funnel. So there are KPIs for awareness and interest and consideration. Right. So knowing which part of your funnel might need to be improved is going to be what has the biggest impact on revenue. If you have a broken step in that marketing funnel, if there's a bottleneck where people aren't going right, maybe your awareness is lacking. So you don't have enough people, you don't have enough eyeballs that's going to trickle down and affect the whole, the whole podcast, the whole marketing funnel that you have built. So, yeah, it depends on where you're having issues. And then you have to break it up per the stage of the marketing funnel that you're trying to work on. So it might be a conversion stage, it might be your sales decks, it might be your communication at that part towards the bottom might be something at the very top where you're just not getting in front of people. It could be or, or anywhere in between where, where you're starting to lose people. So I'd say the biggest metrics that have impact on revenue are the ones that you're not doing a good job at. And what, where you're losing people in, in the marketing funnel that way is my takeaway there. And then, so when we talk about these metrics, it's easy to get lost in vanity metrics and, and to be swayed by like, oh, we got X amount of impressions and we're getting so many likes on, on Instagram or something along those lines, how do we know what's a vanity metric and, and what's an actionable metric? What, what's the difference and how do we know the difference there?

Speaker 3: 02:57 
So I feel that any metric that is not completely tied into the entire operation is vanity. So it needs to be quantifiable, testable, actionable. And saying things like we got more impressions or clicks without giving an in depth reason to me is vanity. So to truly know if you're getting the right metrics, you should be able to provide insights, you should be able to analyze those insights and you should have an action plan based on that. If you can't do that, the metrics are meaningless. So things like saying, well, we got more clicks this month. To me that's a metric, but it's vanity because you're not putting something to it. It's not actionable. So being able to differentiate between, you know, just sane metrics versus actually analyzing and providing action based on those, to me is the separation.

Speaker 1: 03:58 
Yeah, it's like you said, it's metrics that make you feel good, but if it's not tied to your funnel and progressing someone to the next stage. Right. That's a vanity metric when it's not tied to an action or anything like that. Love that, Seth. Anything else to add there?

Speaker 2: 04:18 
I was just going to say a common one we see is clients want to, for example, tell the CEO that traffic is going up. Okay, great. But what kind of traffic is it? The right kind of traffic. What is, you know, what is, what keyword is it some random keyword about something that's, you know, barely tied to your business or really not involved in, in the funnel. So that's just a real life example that some people might relate to.

Speaker 1: 04:46 
Yeah, they're, they're feel good metrics. They, they don't, they're hollow a little bit. Right. It's makes you feel good. But what, yeah, the question to ask yourself is like, what do we, what is this telling us? You mentioned web traffic. Is it the right web traffic? Right. You can, you can pull any kind of web traffic. Is it, is it your, your buyer Personas? Are you driving them to you? Great. Yeah, I love that. Next question I had when, when thinking about this is what are some of the marketing KPIs that really matter or at least should matter to the leadership team of an organization? What, what are those KPIs that, that the leadership team could be tracking?

Speaker 3: 05:27 
Yeah, I mean, I would say the different KPIs for marketing that really matter are the ones that are set from the business goals. So it's important for marketing to have crossover with the business goals because marketing to me is an objective based on that goal. So you have your goals, you have your objectives, you have your hows and then the target to achieve that. And those targets are what finalize the KPIs to hit those houzz objectives and the overall goal. So to me, when you're first starting looking at your business goals, you should tie in your marketing, your sales. Everything should be tied into that to really determine your KPIs.

Speaker 4: 06:11 
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Speaker 1: 06:47 
How specifically? When we're looking at our, our marketing approach and, and doing our strategic planning and things like that, when we're getting things prepared, how do we use data? When we're, when we're looking to create that strategy, when we're looking at how to approach our marketing, what, what, what role does data play there?

Speaker 3: 07:06 
I think if you have a lot of data, you can really build it. If you don't, if you are, if you feel like your marketing hasn't been going a certain direction, I typically break it down into a weekly cadence of reflecting on data, seeing what we need to implement or optimize and then just consistently tracking it. Basically you tracking, tracking and in some cases setting up those KPIs to objectives or goals. Once you've established that, then you can be making sure that all your metrics going forward, any data you're collecting is measured against those things. So if you're not seeing a difference then you can pivot. But you need to understand when to pivot, when to use data to change the marketing approach. It's very focused on what is currently happening in an organization and where you want to be. So incremental change for transformational growth is kind of how I view that you have incremental change, which is I think how you should be using data to change your marketing approach. You shouldn't just be looking at things to change all the time. It should have a purpose to it. So I think, like, when I'm talking about using data to really kind of push that narrative, it needs to have a purpose and it needs to be measurable as well as the risk that is involved in that.

Speaker 1: 08:32 
Yeah, we're lucky as marketers to live in a digital marketing era with so much data being available to us. Right. You can see if a marketing campaign is going to be successful pretty early on. If you send out a social media post, you can tell within the first 30 minutes, within the first hour, if that's going to be a successful post. You send out an email. Right. You can track that as it's coming in. You can get that data. That data is going to be your audience telling you if they're finding what you're putting out there, if it's valuable or not. And that's what we should be doing as marketers is focusing on providing value to our audience. And I think data is a great way to show us when things are working and when they're not working. So the data will tell you if your audience finds something valuable or not. I think when we're using data, when we're going through all these, we've separated our vanity metrics from our actionable metrics. We know how to interact our data to tell us that data will help us identify weak points in our marketing funnel. It'll help us say, our awareness is great. We're getting a lot of people into the top level of our funnel where we seem to be losing somebody, you know, this group in. In interest or in consideration or. Right. There are holes in this. In this marketing funnel. How do we ident. How do we look to find those weak points in that marketing funnel? How do we identify weak points there?

Speaker 3: 10:05 
I'd say identifying weak points, again, I like to break it down into cadences where you set your operation based on finding those weak points. Whether that's split testing, whether that's, you know, trying something new. I think to fix weak points, you always have to look at it. Is, is this incremental or is this transformational? Incremental. You might notice some changes while transformational. You know, fixing a transformational weak point, that's like changing your entire marketing operation. Like, that's a big risk, right? Yeah. So to me, fixing weak points is a risk, but it's also can be a solution. So I think, like, making sure they're always measurable. Making sure, like whenever you do want to fix something in your marketing funnel, there's data back it up, there's an analysis and there is an action plan and then you're able to turn that into something that's actually measurable instead of just saying, well we should try this because I don't think it's working. It should be a very thought out process.

Speaker 1: 11:12 
Yeah. When we're talking about revenue. Right. It, it's expensive to address weak points in a marketing funnel and that's that where that risk is if you're not being thoughtful about it. Yeah. There's a lot of wasted dollars that can happen there. But obviously there's. Right, there's a bigger risk to let it to just sticking with a broken funnel that's not, not producing leads in the way it should be.

Speaker 3: 11:40 
Yeah. And I think that's like a pretty common problem with a lot of like the bigger the organization especially because you can't just move one part of it. Like let's say you're a SaaS product and you're talking about, you know, fixing these weak points. You have to relay that to sales, you have to relay that to product. So it's, it's always making sure that everything's kind of moving. And I think that's just a little off topic. But I think that's why agile marketing is really picking up, trying to again make these incremental changes instead of just constantly pivoting. I think there's a lot of startups out there that you know, are constantly adapting. This, this fits into that perfectly. Like there's always going to be a weak point but you need to assess the risk before you continue.

Speaker 1: 12:25 
Yeah. And what's, what's the risk and reward. Right. Is if it's, you're losing everybody, you've done all this work and you've gotten someone to conversion stage and you're losing a ton of people there. It's pretty easy to make the business case of like if, if we were to increase, increase our close rate by 10%. Look at the right, look at the pipe. How, how that changes the pipeline and how that changes our forecast and, and forecasted income. Yeah, yeah, yeah.

Speaker 3: 12:53 
I love that part of the business ecosystem if you, you know, mess one part up or you change one part, it's going to affect everything else. So you know, the bigger the company, the more, the more dominoes that can fall when you're making these fixes.

Speaker 1: 13:08 
Yeah. And the bigger the, the potential revenue if you get it right. Right. Yeah. It, it starts to split apart a little bit there. So just to, to kind of put a bow on this and Wrap this all up discussion we're having today when we're, when we're talking about proving, trying to prove revenue as marketers, right. Especially in the B2B space can be challenging because it's not always immediate. But what, what are the challenges of proving revenue when you have that long, especially again in the B2B space when you have a long sales cycle. How do you, how do you prove what you're doing is working and, and that there will be a return on that? Sometimes.

Speaker 2: 13:52 
Yeah. So you know, here's where you have to, have to look, right? 12 to 18 months. Sometimes we're, you know, we're talking to someone where it's, their sales cycle is two years, so. Or any actual revenue comes in, you have to look at, you know, alternate metrics, right? Like things like Terminus actually has a great article on measuring metrics in ABM before you really get it rolling. That's kind of another concept, right. And, and it, the first metric they talk about is, is coverage, you know, which isn't a metric but it's, you know, you can think about how well is your program covering the target accounts, right. You know, and your addressable target market and then awareness, right. Something that you might normally consider as a vanity metric or something in between. You have to lean on that a little bit, right? Like okay, let's use awareness. We know this eventually leads to someone taking a sales call and then booking an appointment. But we have to start with awareness. And then you can, you know, get into engagement. Right? You can get into likes or clicks in outbound emails. You know, something that shows that a prospect is engaging reach and then impact. So there are different metrics you can use with a longer sales cycle before you get to that actual closed deal. And you know, just setting these indicators of success, agreeing on them, talking with the sales team like, hey, what happens before you close the deal? Make sure that marketing understands that. Yeah. So it's a process and it, and it involves communicating and educating the C level too. Like, hey, this might seem like a vanity metric to you, but it's an important part of the picture. Just. Yeah, please, please be patient. Right. This, this takes a while.

Speaker 1: 15:50 
Yeah. And there, there are a lot of parts of marketing too. I think one of them that's overlooked is trying marketers purpose. Part of it is, is to increase the lifetime value of a customer. Right. So it's not just closing the deal, it's keeping people around, keeping clients happy, not just having them retain for a while too. But can you make them advocates? Can you make them champions of your brand. When you do that, you increase the lifetime value of your customer, which the C suite should. You know, the leadership team of a business should understand why that's a valuable thing. Right. And if we're doing that well, then we can work that math backwards. We say, okay, our lifetime value of a customer is this. And we know our conversion rate is this. I like to work the math backwards. So start at the end. What's an average customer worth? Okay, what's our close rate? Maybe it's 50%. That'd be pretty good. So all of your leads that are sales qualified leads are about half of what your lifetime value of a customer is because your close rate is 50%. So you can start to put value numbers to lead to the stages of the funnel if you work it backwards. If you start at the end, what's a customer worth in the long run? Okay, now you can work it back. Okay, we closed about half of them. Right. So we can put a dollar value to about half that. Okay. Then you take it one step further. Right. How many people of the consideration stage are going to conversion? What's the rate there? It's pretty data intensive and not everybody has those things in place. But you can make that dollar argument all the way down to like, what's a social media follower worth in dollars? Or what's an email worth and a dollar amount. Then you can compare that to what you're spending and say, is this, are we spending too much? Is it not worth it? Or maybe you're right. Maybe there's a huge gap and it's making you a ton of money. Doing the math and getting the numbers and working that process backwards is a great way to prove ROI to the leadership team and say, this funnel is working.

Speaker 3: 18:05 
Yeah, I mean, you know, I'd break it off into like attract, gain, retain. And then the top of the funnel, middle of the funnel, bottom of funnel, each of those, and then the respective things you're doing inside of those need to have almost like very granular KPIs that do match up with that gain. Because I think what a lot of C level are looking for is, okay, well, how many leads turned into sales or how many new, you know, signups did we get? Instead of looking at our DAU increased, our MAU increased. However, this did not increase. This is why. Right. So when you're proving revenue based on where you are, it definitely involves the entire ecosystem and making sure that all of Those have respective KPIs so that if they see progress at the top. To me, it trickles down into the gain and the retained portion of that lifetime value.

Speaker 1: 18:59 
Yeah, absolutely. Well, thanks for that. Appreciate everybody listening and following along. We're going to keep addressing these revenue questions and marketing as we go ahead for the next few episodes. So thank you again for listening. And stay tuned. We'll see you soon.