Do You Know The Most Important Number In Marketing

Michael Brenner on Nov 8, 2011 in Marketing Strategy

inbound marketingEvery marketing department has its own unique way of measuring the impact of marketing activities. And most senior marketers rely on some common or standard measures of success.

But the world is changing fast. The rate of change is increasing. Marketers need to adapt to the new customer landscape. And with this new landscape, comes a new way to measure success:

Folks, the most important number in marketing today is the percent of your leads that comes from inbound sources such as your website, search and social media.

This number measures the extent to which the market is buying your marketing messages, content and strategy.

It tells you if you are helping your customers.

Lose site of this number and you will not be able to compete in today’s demanding business climate.

The Traditional Measures

I have spoken about measurement a couple of times before. I answered a question on how to measure the effectiveness of B2B Demand Generation using the 4 Vs:

  • Value
  • Volume
  • Viscosity
  • Velocity

I suggested that marketers should first try to measure the value of marketing through revenue and the pipeline value of opportunities. And while these are the most important measures they can be difficult to quantify and attribute across all your marketing activities.

So as a fall back, I suggested looking first at the “volume” category to count the number of clicks, visits, inquiries, leads, opportunities or deals and measure that against your past performance.

Next, many marketers measure conversion rates or the “viscosity” or amount of friction from each value measure to the next. And finally, you can look at the “velocity” of those conversions. How long does it take? Where are leads getting stuck and how can your systems and tools help nurture these opportunities into full blown closed deals?

In the New Marketing Accountability, I emphasized the need for all marketers to be accountable for results. I challenged marketers to measure their ability to:

  • Drive revenue
  • Look at Net Present Value (NPV) to determine which marketing activities will produce the most value
  • Focus on Retention rates and Customer Lifetime Value (CLV) as the ultimate measures of success.

Paying for Customers

It’s election day here in the U.S. and counting votes is on the minds of many Americans. But how many marketers count customer votes?

The best marketing is having a great product and then simply letting people know about it. Customers will share their excitement and become your marketing arm by helping you to gain new customers at no cost.

Apple has nailed this approach. Unfortunately, we are not all selling iPhones.

So what do we do? We setup a website. We explain our products in detail. And we hope that they will come. When we don’t see enough people “show up,” we start to pay people to show up.

We don’t do this directly of course, but whenever we sponsor a trade show, send out a direct mail, or pay for a Google ad because we are not showing up in the organic search results, we are essentially paying for traffic. Then we pay to convert the traffic. We use email, outsourced telemarketers, inside sales reps – all in an attempt to generate leads for sales and revenue for our business.

Ask any VC firm what they look for in a start-up and many will tell you that they are looking for businesses that can gain customers at a lower cost than the expense to acquire them.

The Customer Revolt

Customers, of course, are fed up with the daily barrage of interruptions. According to Hubspot, consumers are exposed to over 2,000 marketing messages a day. That translates to one marketing message every 20 waking seconds.

More than 200 million Americans are on the Do Not Call List.

And when buyers in the B2B space are ready to start looking for solutions to their problems, they wait longer and longer before they engage with vendors.  Some studies suggest they complete 60%, even up to 80% of their research before contacting solution providers.

As a result of all this, outbound marketing messages are becoming less effective. Email open rates, banner click-through rates, telemarketing contact rates are all down. In short, consumers are ignoring marketing messages at an increasingly alarming rate.

And how do we respond? With more email, more banners and more calls. We are rapidly reaching a breaking point where a majority of our outbound marketing will be cost-prohibitive. We marketers need to stop promoting our solutions and start helping our buyers.

And so, it is time for a new measure of success. And it is basically a proxy for customer satisfaction with marketing.

What Is Your % Leads From Inbound?

What percent of your leads are coming from inbound sources? This includes your website, inbound search and social media.

Sirius Decisions suggests marketers should see inbound leads contributing more than 50% of leads today and that this will approach more than 70% by 2015. That’s only 3 years away!

How are you measuring up?

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Let me know what you think in the comments below or on TwitterLinkedIn, or Facebook and Subscribe to the B2B Marketing Insider Blog today!

Michael Brenner
Michael Brenner
Michael Brenner is a globally-recognized keynote speaker, author of The Content Formula and the CEO of Marketing Insider Group. He has worked in leadership positions in sales and marketing for global brands like SAP and Nielsen, as well as for thriving startups. Today, Michael shares his passion on leadership and marketing strategies that deliver customer value and business impact. He is recognized by the Huffington Post as a Top Business Keynote Speaker and a top CMO influencer by Forbes. Please follow him on LinkedIn, Twitter, or Facebook and Subscribe here for regular updates.
Showing 6 comments
  • Elizabeth

    Would you count leads that come in through paid search in this number? On the one hand, this is a very obvious way that you are paying for website traffic. On the other hand, it does speak to your ability to understand what people are searching for and how to construct ads and offers that are compelling.

    • Michael Brenner

      Elizabeth, It is a great question that I was thinking about as I wrote this. And I concluded that it should be considered inbound because it is simply placing content in a place where buyers are looking. Same could be true for content syndication. Inbound.

      Same rules apply. The content has to be good. The buyer self-selects. Inbound. That’s my view but interested in others…

      Best,
      Michael

  • Another great post. In evaluating inbound marketing efforts, it’s especially importance to identify what we define as an “inbound lead.”
    To me, a lead is a person who has expressed some interest in a product or service that can eventually help solve their business problem. And that’s different from an email address submission for content, unless that email/name is scored or qualified. Of course!

  • Elizabeth Clor

    I think I agree. The PPC ad has to be compelling for the buyer to click the ad vs. the natural search. But it definitely crosses over into the higher-budgeted items depending on the keywords. Great post, though, and very thought-provoking.

    • Michael Brenner

      Thanks! Today’s post has an amazing infograph that shows PPC as an inbound tactic relative to others if you want to check it out.

  • kenny

    awesome post as usual. ( BIG Caveat i spend all my days in the IT world so this may not be valid for other areas)

    your number above is based on INBOUND and the cost prohibition of “numbers game” OUTBOUND.

    Why not get INSIDE the customers business and bring that all together INSIDE their dailyworkflow.

    An IT vendor who sells to IT buyers can integrate themselves into the buyers daily life in a permission based way and market, sell engage, learn, discuss, develop trust etc on the buyers terms and on their turf.

    you don’t have to drive traffic, pay for traffic etc you simply have a 24/7 presence where your buyers spend all their time and do their jobs.