Don’t Be Misled by Vanity Metrics: It’s Always About the Sale

By:
05/01/2018
Tech Perspectives

Measuring the effectiveness of marketing campaigns has gotten significantly more complicated as the number of measurement tools and platforms multiply. The difficulty to quantify is compounded in B2B with indirect sales, long sales cycle times and committee-based buying. In response to these challenges, many marketers default to using so-called “vanity metrics” to gauge campaigns focusing on consumption and engagement (e.g. page views, visits, time on page, shares, likes, retweets etc.). Likely this delivers misleading information, and does not show true return on marketing investments.

“Vanity metrics” look good on a dashboard but don’t tell the whole story of your campaign – in other words, they are skin deep. While these metrics play an important role in your overall marketing plan, they rarely tell you how a campaign performed for its most important function – driving sales.

The goal of every B2B marketing campaign is to ultimately sell a product or service. While the strategy behind a tactic may be to increase awareness, or fill the top of the funnel, the end game is always a new or a retained/upsold customer. If not, what’s the point? To generate likes or page views? Of course not, tech companies use content, ads, events and other marketing tactics as a mean towards an end – increasing sales and their customer base.

Understanding Customer Lifetime Value

To accurately measure how well marketing contributes to sales marketers need to build effective attribution models and understand the customer lifetime value (CLV) of prospects converting to customers. This critical measure tells you the true value of a customer including consideration, total spend, profitability and churn vs. the cost to acquire the customer via marketing tactics. (To read more about CLV go here)

Focusing on CLV can illustrate how vanity metrics can be misleading. Campaign A may cost $180 per converted customer with an average lifetime value of around $800 due to a high propensity for churn because they are hard customers to retain. Perhaps a special one-time discount was used to close the sale. Conversely, posting compelling sponsored content on LinkedIn may have a $500 average acquisition cost per customer but generates an average of $10,000 in lifetime value over a multi-year period. In the short-term campaign, A looks like a better deal for the company ($180 vs. $500). However, when CLV is part of the evaluation the $500 lead doesn’t look too expensive; in fact, it looks like a great deal. To do this analysis well it requires the discipline to take the long view and avoid the temptation for short-term emphasis on quarter to quarter results.

Focusing on CLV provides insight into which factors contribute to profitability. The analysis could suggest a price increase or a better renewal plan. It could also point to the need for more efficient marketing strategies that lower acquisition costs. That idea leads us back to consumption/vanity metrics. Now we can see how they are a key piece to the overall puzzle.

Analysis and Optimization

By closely monitoring consumption and engagement metrics you can continuously optimize your outbound/inbound campaigns that generate top of funnel leads. If you focus on more cost-effective marketing, the cost to acquire a lead and a customer will decrease over time. One of the most important things to optimize is what drives people to your web site and landing pages; and their engagement with content and other conversion triggers. Just like with CLV, there are levers to pull to maximize your performance such as data targeting, content topics, headlines, creative, and media placement.

While vanity metrics don’t tell the whole story of marketing success, they are the key to optimizing top of funnel activity and optimizing your customer acquisition cost which in turn increases customer life time value.

To read more on how technology and innovation can improve lifetime value by making customers better customers click here.

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