/ Marketing

Ratios matter in marketing (redux)

Following up my post, Why ratios matter in marketing, here are some of the ratios I regularly monitor.

  • CAC:LTV. The so-called "magic number" for SaaS businesses. If you're not familiar, this SaaStr podcast with Dave Kellogg is a must.
  • Lead:MQL conversion. I use conversion ratios through the entire funnel, starting with the number of "raw/unqualified" leads who enter the pipeline and who then become MQLs.* The results show in very clear terms the effectiveness of the marketing activity that moves the needle.
  • MQL:Closed/Won conversion. As marketing becomes more involved in all stages of the funnel, I like to know how many MQLs become revenue generating business. (There is an argument that marketers should carry revenue targets in their compensation. That's for another day.)

Other important metrics

  • Lead Velocity Rate (LVR). Depending on the business model, how quickly I qualify a lead is important. As a general rule, I would rather qualify a lesser number leads more quickly and more frequently, than a larger number of leads over a proportionally longer period of time. Speed wins.
  • Revenue/Visitor. A reason that marketing could/should carry revenue in comp plans, is that it guarantees tight alignment with the sales org. Revenue generated per site visitor is interesting in that it directionally tells me whether a wide range of on-site activities are working.
  • Revenue/Lead. Similar to the MQL:Closed/Won ratio, the actual revenue generated per lead is helpful in ensuring the marketing org is focus on the metric that matters most to business. Revenue.**

Ping me on Twitter @robertcollings if you think there's an important ratio I missed.

* I actually start measuring the number of site visitors and ratios to bounced, to engaged, etc. In other words, as soon as a visitor hits the site I measure.

** Revenue vs. Brand ... Brand is built over a lengthy period of time by delivering a consistent message to market. By keeping our promises. By not hyping (lying about) our solutions. By being honest, engaged and caring for our customers. If as a marketer I deliver revenue generating activities with this in mind, brand takes care of itself.

A caveat on "brand takes care of itself." There are obviously activities you can do to build brand: deliver thought leadership, engage with the community around your product, have a clearly defined and unique voice, ensure all customer engagement is a seamless, fun experience. I consider these fundamental to modern marketing, but just in case they needed to be stated.



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