A lot of companies are investing heavily in digital marketing these days, hoping for specific kinds of returns. But what happens when those returns don’t materialize for a long time? CEOs and senior marketing executives have to make choices about what to do next, often difficult choices.

I’ve heard CEO’s lament that they can’t see the results of digital marketing. They wonder if they should keep trying, change tactics or even change marketing leadership. Marketing leaders often struggle with a new digital landscape that feels like foreign territory. The analog strategies and tactics that used to work are no longer enough. But building a successful digital marketing plan often feels like gazing up at a star field and picking points of light to see the constellation. The picture is not obvious.

One of the biggest problems with digital marketing is understanding what’s working so you can repeat it. The obvious KPI is new clients and revenue. But we all know that this is the end of a process that often has many steps that precede a client signing a deal. What do those intervening steps look like in a digital world and how can you measure them to understand the effectiveness of your digital marketing? I’d like to share with you the 5 KPIs that we use to measure the effectiveness of digital marketing.

Key Take-Away:

I believe the big goal for digital marketing is to pull an ever-increasing number of organic ideal prospects through the sales funnel so they become clients and generate meaningful new revenue and profits.

You Miss 100% Of The Shots You Don’t Take

Before I lay out the five KPIs, I want to make a statement and explain four key concepts. All of the KPIs are based on some terms that have a very specific, and not entirely obvious, meaning. Once you understand the terms, the KPIs become pretty clear.

Here is the statement. You can’t give up. You can’t quit trying. Yes. The digital marketing landscape is chaotic and fragmented and often frustrating. It seems like there is some new trick, tactic, tool or hack every single day and most of them probably don’t work. But you know what? Some of them will work. Over the last several years, digital marketing is the only strategy that has worked for us.

Abraham Lincoln was criticized during the American Civil War because he would give audience to any crackpot inventor who claimed to have some new weapon or strategy that would end the war. But you know what? Some of those inventions did work and they did end the war.

I believe we live in the early stages of digital marketing and things are changing very quickly. This reminds me of the dot-com era here in the Silicon Valley. The dot-com business models were overhyped, overvalued and ultimately most went bust. But that era also gave us certain businesses that have forever changed commerce as we know it today: Amazon, Google, Yahoo, Netflix, AOL, Facebook, LinkedIn, Twitter, Instagram.

My point is simply this. Every era of great change has great opportunities and great disruptions. When is the last time you went to a video store to rent a VHS or DVD? The big winners during periods of disruption are those who figure out how to create value of out chaos – how to see the constellations in the star fields.

If you give up, if you stop innovating and trying new things, you’ll miss the opportunity for first-mover advantage. You’ll be years behind the competition and may not catch up. I’ve seen this happen.

But I also know from a business perspective it is untenable to throw good money after bad. You have to have some KPIs and some metrics that are reliable indicators that your marketing function is moving in the right direction. Before I discuss those KPIs, I want to introduce four concepts that are foundational to measuring effectiveness.

 

The Four Concepts

Before you can start scoring the game, you need to understand the playing field. There are four key concepts I need to explain so we’re all on the same page and know what to score.

  • The digital inbound journey
  • The digital sales funnel
  • Ideal clients and ideal prospects
  • Organic prospects

Let’s briefly look at each of these. You can also check out our blog-site for further explanations of each of these concepts.

First let’s talk about the digital in-bound journey. In today’s digital landscape, great new clients don’t just show up on your doorstep and say “hey I’d like to do business with you.” Instead, those people go on a journey where they are looking for someone who offers the kinds of products and services that you sell. What does their journey look like?

One of the only ways you can know the answer to this is by having a true marketing automation system in place that allows you to see every touch point of every user in your system. After analyzing the digital footprint of literally thousands of users across both our and our clients’ marketing automation systems, we have identified four stages to the inbound journey:

  • Anonymous – where they surf your website and sample your content without identifying themselves.
  • Acknowledged – where they register for a content asset and submit their personal information.
  • Engaged – where they spend time thinking about your ideas and how you can help them.
  • Leaning-in – where they request to enter dialogue with your sales team to discuss a specific need or opportunity.

That’s what the digital inbound journey looks like. But just because someone takes that journey, that doesn’t mean they’ll become your client. For that to happen, you have to successfully manage the digital sales funnel. The inbound journey is what the world looks like from your user’s point of view. But the digital sales funnel is what the world looks like from your point of view. Here are the five stages we see today in the digital sales funnel:

  • Awareness. Ideal prospects become aware of your brand, services and content.
  • Consideration. Ideal prospects sample your content to see how you can help them.
  • Interest. Ideal prospects engage in serious dialogue, requesting a proposal.
  • Evaluation. Ideal prospects evaluate your proposal against their needs and competitive offerings.
  • Selection. Ideal prospects accept your proposal and move to next steps.

Now you’ll notice that I kept using the term “ideal prospects” in describing the sales funnel. I’d like to explain what I mean by ideal clients and ideal prospects.

We only serve professional services clients at my company. Our clients sell complex services either to businesses or to affluent families and foundations. When we first engage with clients, we help them develop a clear picture of who they are ideally suited to serve. It’s critical to understand who your ideal client is, why they are ideal and how you are best suited to serve them.

The ideal client profiles we build contain both demographic and psychographic factors. The demographics have to do with who the decision-makers are by title, age, education and other criterion. The psychographic factors have to do with reasons the clients were looking for a service provider and the outcomes they wanted to realize from an engagement with that service provider.

Those are ideal clients. Ideal prospects, on the other hand, are people you haven’t done business with yet who fit your ideal client profile and who are taking their inbound journey in your direction.

Organic prospects are of a somewhat different nature. They might be ideal or they might not be ideal. Here are the key characteristics that make them organic:

  • They’ve never done business with you.
  • They were not in your database, were not a referral from an existing client or partner and you were not in contact with them before they started their inbound journey. 
  • Before they started that journey, you did not know about them and they probably knew very little about you.
  • Before they started their inbound journey, they had no predisposition to say yes to you or to prefer your company.

I believe the big goal for digital marketing is to pull an ever-increasing number of organic ideal prospects through the sales funnel so they become clients and generate meaningful new revenue and profits. 

 

The Five KPIs

For this goal to happen, you’ll need to experiment, likely more than makes you comfortable, to figure out what works at your organization. I believe the big winners, from this period of digital marketing disruption, will be organizations who commit to learning what works.

This does not mean you should just try a bunch of random strategies and tactics, like the old saying: let’s throw a bunch of stuff against the wall to see what sticks. Instead, you need to be strategic and methodical, picking strategies and tactics that you believe should work and then measuring their impact on these five critical KPIs.

  1. Total organic prospects pulled from the digital ecosystem
  2. Total number of organic prospects who fit the ideal client profile in the sales funnel
  3. Total active deals arising from organic ideal prospects
  4. Total closed deals from organic ideal prospects
  5. Total revenue from organic ideal prospects

This is how you become scientific in your marketing, figuring out what levers to pull time and time again to achieve meaningful outcomes. Let’s briefly cover each of these KPIs.

Total organic prospects pulled from the digital ecosystem means the number of people who are in your database now who were not there at some definable point in the past, say a quarter ago or a year ago. When your marketing is pulling organic prospects from the digital ecosystem, you know it is successfully pulling people along the inbound journey.

But that’s not enough. Our database, and every single one of our clients’ databases, contain contact records of people who are not a great fit for them. That’s part of what happens with digital these days. This is why it’s so important for all new contacts entering your database to be graded against your ideal client profile. I recommend that you engage a marketing analyst for this important role.

This is often a time-consuming and manual task, but it’s worth it. If you want to know whether or not your digital marketing is improving, you should be able to quickly run a report in your marketing automation system that shows you organic prospects who fit your ideal client profile. If you have more organic ideal prospects this year or this quarter than you had last year or last quarter, you’re moving in the right direction. If not, it’s probably time for a course correction.

It’s also very important to measure the number of active deals that are in your sales pipeline today that came from organic ideal prospects. This will require a bit of support from your sales team. Every sales team should be using the opportunity function in the CRM to document deal-flow. Marketers can run a report on these and then look for the genesis of the relationship, how the prospect entered the database.

If you have more active deals from organic ideal prospects this year or this quarter than you had last year or last quarter, you’re moving in the right direction. If not, it’s probably time for a course correction.

Along with active deals from organic ideal prospects, you also want to measure closed deals and revenue and profits from those deals. This gives you a real ROI analysis of your investment in digital marketing. 

 

Where To Go From Here

These five KPIs help you create uncontestable proof that your digital marketing initiatives are delivering a real ROI for your company. But I have to be honest about something here. They are not all that easy to setup. They require thought, effort and a plan. I have a resource to help you with that.

I’ve developed an E-Book called Ten Things Service Websites Must Do To Drive Revenue. It goes into much greater detail on many of the concepts I’ve outlined in this blog-post. I know this E-Book will be a huge help to you.