There's more marketing data out there right now to overflow any spreadsheet and overwhelm statisticians who love number crunching even more than Nate Silver. Just the names of popular marketing metrics themselves can be too heady. That’s why in today’s blog, we’re defining key analytics like customer acquisition cost and lead management in order to hone in on how these measurements affect your brand reach.
Big data is at the foundation of all of the megatrends that are happening today, from social to mobile to the cloud to gaming.—Chris Lynch
Starting with Customer Acquisition Cost
Although that's definitely a mouthful, customer acquisition cost by itself will make or break your sales and marketing. Even though this term is by no means as new as the concept of social media engagement, subscribers or social media reach, for those of us struggling to keep up with all of these new terms, customer acquisition cost is pretty straightforward.
To calculate your customer acquisition cost, simply take the amount of money that you spent on sales and marketing over a specific period of time and divide it by the number of new customers that you gained during that period. For example, if your company spent $250 and gained only 25 customers, then your CAC would be $10. Pretty simple right? The beauty of this metric is that it can be applied to all of your inbound marketing efforts in order to determine what is the ROI of a particular channel at a specific point in time.
The goal is to turn data into information, and information into insight.—Carly Fiorina
Aside from its applicability across marketing channels, figuring out your customer acquisition cost (CAC) is also great, because it can form the basis of other marketing metrics and determine channel-centric ROIs. One metric that's particularly useful is the time-to-payback CAC cost, which tells you how many months it takes your business to recoup the money that you spent on customer acquisition.
Let's say, for example, that you sell clothing exclusively online. Naturally you also do most of your advertising online through social media, pay-per-click advertising, and search engine marketing. You incur a cost for all of this marketing, which results in more customers for your business. Meaning, most customers just buy an article of clothing here and there, so it could take many months for your initial sales and marketing effort to recoup your cost of acquisition and start generating real ROI.
For the vast majority of companies, time-to-payback CAC is a user-friendly way of determining the ROI of your marketing efforts. However, you might want to think twice about using this metric if your time-to-payback CAC takes more than a year or two to recoup. And, you also might rethink this metric when your business gets a huge lump sum type payment and you're more narrowly focused on lead nurturing a select group of people.
Inbound Marketing and Lead Scoring
One of the chief benefits of inbound marketing is that it can efficiently and affordably allow you to attract more people to your business. Once you have all of these customers, what you do from there will determine the success of your sales and marketing. The thing is, without lead management and some way to differentiate leads from one another to make your marketing more effective, you could be draining your money if you do not quickly figure out a way to be more targeted in your marketing efforts.
46% of marketers with mature lead management processes have sales teams that follow up on more than 75% of marketing-generated leads.—Forrester Research
Lead Management and Lead Scoring
With that being said, a great way to be more targeted and purposeful in your marketing is with lead management and lead scoring. If lead management is the overarching game, then lead scoring is the starting pitcher. Lead management is the comprehensive process of tracking and managing your sales leads. Therefore, lead management encompasses most factors like lead qualification and lead nurturance.
Yet, you may be wondering how and where does lead scoring factor in. Lead scoring comes into play by essentially giving you a way to hone in on your marketing efforts specifically on the most promising leads. And even though this makes perfect intuitive sense, many companies still struggle with lead scoring. Probably due to the fact that, 79% of B2B marketers have not yet established lead scoring for their business.
Defining an MQL is to dig into the data. Start by creating a list of all the activities a lead can complete before becoming a customer, such as requesting a demo or a trial of your product, visiting certain pages of your website, or downloading certain pieces of content. When analyzing these activities, you want to look for items with the highest close rates.—Alison Savery
With that being said, defining lead scoring is as easy as selling cars. For instance, if you were selling cars and there were five people chatting to each other and staring out the window, on one side of the showroom, and another person asking you very detail-oriented questions about a car on your lot, would you treat all of those customers as if they had the same potential to buy? Most definitely not.
The difference between these leads in the above scenario is that one of them is a sales qualified lead, i.e., the guy asking questions, who rightfully should receive all the attention. Through a similar process, you can determine the people most likely to buy from your company based on an individual's personal characteristics, purchase history with your company and online behavior.
Without big data, you are blind and deaf and in the middle of a freeway.—Geoffrey Moore
Big Data can provide you with a very big advantage when it comes to finding your marketing qualified leads. In particular, data collected from closed-loop marketing can determine the variables most related to converting that lead. Ultimately in order to measure your brand reach, finding the factors most conducive to lead conversion will transform your marketing efforts and, in turn, your overall results in marketing ROI and sales.
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