Over the past couple of months, we've been exploring ways to better demonstrate marketing ROI (read: demonstrate your value as a marketer and your benefit to the organization), such as the exact cost needed to acquire a new customer or the amount of time needed for your organization to earn back it's marketing costs from said customer.
So without further ado, here are the final metrics to arm your arsenal of the facts that GENUINELY matter to the bottom line:
Marketing Originated Customer %
What It Is: The Marketing Originated Customer % is a ratio that shows what new business is driven by marketing, by determining which portion of your total customer acquisitions directly originated from marketing efforts.
How to Calculate It: To calculate Marketing Originated Customer %, take all of the new customers from a period, and tease out what percentage of them started with a lead generated by your marketing team.
Formula: New customers started as a marketing lead / New customers in a month = Marketing Originated Customer %
Let’s Look at an Example:
Total new customers in a month = 10,000
Total new customers started as a marketing lead = 5,000
Marketing Originated Customer % = 5,000 / 10,000 = 50% Months
What This Means and Why It Matters: This metric illustrates the impact that your marketing team’s lead generation efforts have on acquiring new customers. This percentage is based on your sales and marketing relationship and structure, so your ideal ratio will vary depending on your business model. A company with an outside sales team and inside sales support may be looking at 20-40% Margin Originated Customer %, whereas a company with an inside sales team and lead focused marketing team might be at 40-80%.
Marketing Influenced Customer %
What It Is: The Marketing Influenced Customer % takes into account all of the new customers that marketing interacted with while they were leads, anytime during the sales process.
How to Calculate It: to determine overall influence, take all of the new customers your company accrued in a given period, and find out what % of them had any interaction with marketing while they were a lead.
Formula: Total new customers that interacted with marketing / Total new customers = Marketing Influenced Customer %
Let’s Look at an Example:
Total new customers = 10,000
Total new customers that interacted with marketing = 7,000
Marketing Originated Customer % = 7,000 / 10,000 = 70% Months
What This Means and Why It Matters: This metric takes into account the impact marketing has on a lead during their entire buying lifecycle. It can indicate how effective marketing is at generating new leads, nurturing existing ones, and helping sales close the deal. It gives your CEO or CFO a big-picture look into the overall impact that marketing has on the entire sales process.
Rather than talking about per-post Facebook engagement and other “softer” metrics, use the six metrics we detailed to report on how your marketing program led to new customers, lower customer acquisition costs, or higher customer lifetime values. When you can present marketing metrics that resonate with your decision-makers, you’ll be in a much better position to make the case for budgets and strategies that will benefit your marketing team now and in the future.