Many companies are working in the wrong direction when it comes to marketing campaigns. That’s because they’re building campaigns without setting goals first. Their campaigns seem to be meeting expectations, but without an accurate way to measure success, how can anyone be sure?
In order for a CEO to gauge how a marketing campaign is truly performing, concrete goals need to be defined before the marketing team creates their campaigns.
“Knowing how to measure where you are against goals and expectations is vital. You can't improve something that you can't measure and track. Therefore, defining KPIs is critical to creating a plan with the ambition of exceeding the commitments.”
- Pablo Junco, CTO at Microsoft
Vague goals vs SMART goals
Many marketers are operating without an understanding of the companies goals. They know the general direction they need to be steering towards — in general, this might be “more revenue”, but most goals are too vague to actually gauge how well things are working.
For example, if you have a goal to ‘get more leads’, what key factors are missing?
- What is your definition of a lead?
- How many leads?
- At what rate do these leads need to convert to revenue?
- How much should you spend per lead?
Another common one goal that is too vague is ‘higher quality leads’. What does higher quality mean to your organization? Is your business reaching the wrong audience or catching prospects at the wrong stage of the funnel? These factors need to be well defined to accurately measure success. That’s where SMART goals come into play.
SMART goal setting is an effective methodology for making your goals concrete and measurable. SMART goals have five characteristics that ensure your marketing team has a clear expectation of what they are supposed to achieve:
If an organization’s goal is to get more leads, they could change that to a SMART goal by defining each of the five characteristics. Then, they’ll end up with a clear, actionable goal like ‘get 25% more leads into the quote/proposal stage of our funnel by the end of Q3 by leveraging our existing email list and CRM data with new email campaigns’.
In this example, the company sees that they have a large list of untouched prospects with pipeline potential. So, they’ve decided to leverage email campaigns to increase leads in an ultra specific way. With the SMART goal in mind, the marketing team can create campaigns that set out to achieve a precise outcome.
Because SMART goals are highly specific, organizations can have multiple SMART goals to achieve better marketing ROI company-wide. When executives work with marketing and sales departments to come up with specific goals, it empowers those teams to become successful in a clearly defined way.
SMART goals help companies create cross-functional alignment around business objectives, motivate teams with a clearly defined purpose, and guide marketing strategies towards concrete, measurable success.
KPIs help CEOs trust that the process works
Once SMART goals are set, marketing teams know what they are supposed to achieve, but how do CEOs know if teams are meeting their goals? By tracking key performance indicators (KPIs).
KPIs provide the ability for CEOs and leadership teams to watch the system work from a high level in real time with real data. This opens up lines of communication and visibility into marketing efforts and ROIs.
Reverse engineering from revenue to marketing
So how can CEOs use revenue KPIs to drive a marketing strategy? With reverse engineering. Instead of looking at marketing goals first, they start with revenue goals and build marketing goals from there.
This is also known as ‘Revenue Marketing’. According to HubSpot, Revenue Marketing is “the process of using different channels and methods to build marketing campaigns that boost customer acquisition and sales. Revenue marketing links plans to revenue goals.”
An effective revenue marketing strategy reverse engineers like this:
Step 1 - Start with a revenue goal and use the average contract value (ACV) KPI to figure out how many deals to win to reach that goal.
Step 2 - Use the sale conversion rate (CVR) KPI to determine how many sales qualified leads (SQLs) are needed to hit the revenue goal.
Step 3 - With revenue KPIs defined, it’s time for marketing KPIs. Determine the marketing qualified leads (MQLs) to SQLs conversion rate. With this, the marketing team knows that they need X number of MQLs to convert to X number of SQLs for X number of closed deals at ACV to hit the revenue goal.
Step 4 - Develop a marketing strategy to achieve the clear revenue goal. Define what content and channels will create X number of leads at each stage of the funnel. Use past cost per lead (CPL) and cost per acquisition (CAC) to make sure the budget aligns with the goals.
Companies that don’t know their numbers can still track KPIs
Without previous SMART revenue goals and revenue marketing strategies in place, many companies won’t have the numbers to determine KPIs like their MQL to SQL conversion rate on hand, and that’s ok.
There’s no better time than now to start tracking these metrics, and fancy marketing automation software is not necessary (though it is a worthy investment as goals increase).
Organizations can likely get the data they need from customer relationship management (CRM) systems. From there, they can populate simple spreadsheets to calculate revenue marketing KPIs. Measurements can be monthly, quarterly, or bi-annually based on sales-cycle lengths.
From CRM search queries organizations can populate a spreadsheet with:
- Total deals won.
- The average contract value (ACV) of those deals.
- Total deals/opportunities in the pipeline (can be measured as SQLs, SALs, deals, opportunities, or something else based on the CRM).
- How many of those deals/opportunities converted from marketing (track if they were previously MQLs).
- Total number of marketing-generated leads.
- The conversion rates from each funnel stage to the next.
It may take some digging, but the numbers can be unearthed. Once these numbers are established, they can generate a dashboard with graphs and charts that show all revenue marketing KPIs at a glance and track progress against SMART goals.
Organizations don’t need to do this alone
CEOs and marketing departments are busy, so it can be a challenge to invest the time into developing clear goals and strategies that pay off. Having been in your shoes we know how difficult this can be, especially if you're operating with limited resources. We've helped many companies create SMART goals and execute revenue-based marketing strategies to achieve them and we'd love the opportunity to help you reach your goals.
If your organization can use some guidance through this process, we’re here to help. Contact us to get the conversation started.