Every entrepreneur knows that good demand generation marketing is the key to growth these days, but very few have the discipline or know-how to measure return in a world of a thousand tools and techniques. Even those things that worked yesterday may not work tomorrow, as the market matures, the culture changes, and competitors appear with new solutions.
Business success is all about meeting the needs of the modern buyer, who is more informed, has access to more choices, and is ever smarter about making purchasing decisions. In fact, we now live in a buyer-led digital age, where the traditional media push-marketing efforts just don’t work. Peter Drucker’s old comment that “culture eats strategy for breakfast” is truer now than ever.
In the classic book, “Driving Demand: Transforming B2B Marketing to Meet the Needs of the Modern Buyer,” top marketing consultant Carlos Hidalgo updates the old guidelines on how to set up demand generation processes, keep them current, and measure results. While his insights have come from large organizations, I give many of the same recommendations to every startup:
- Channel engagement performance. Selecting the right sales channels is one of the first strategic decisions that every startup faces. Understanding culture is paramount, but measuring results is even better. Hidalgo recommends a focus on engagement stage indicators including customers by channel, conversion ratio, and cost per revenue.
- Lead-stage content performance. The fuel for any good demand generation program is relevant, buyer-centric content. You need to track what content is resonating with your prospective customers, through metrics including submit rate by content offer, elasticity, velocity, cost, and ultimately revenue by content program.
- Nurturing stage email performance. The nurturing stage is the link between the engagement and conversion stages and is most often the automated area of demand generation. That makes it easier to collect results indicators, including the number of emails sent, open rate, click rate, and email bounce rates. Don’t just use these in isolation.
- Lead management performance. This area of demand analysis is also called the “sales funnel” or “sales pipeline,” used for tracking the overall process from initial prospect engagement to close. Metrics which must be tracked include the number of leads, conversion rates by lead stage, velocity, growth rate, and total lead database size.
- Demand generation revenue performance. Revenue performance needs to be applied to each individual program, and also rolled up to show the overall performance per dollar invested. Individual measurements should include pipeline value by lead stage, closed revenue by program, pipeline growth, and overall win rate.
- Return on investment for demand generation. Obviously, you are looking for demand generation programs that have a positive return on investment (ROI). In addition, the best companies compare the negative and positive cash flows over a period of time to determine the net present value (NPV) of planned future marketing spending.
Instead of looking at demand generation as a pure cost center, smart entrepreneurs ask their marketing team to measure themselves as a line of business and to report on their profit and loss just like other business groups in the organization. This approach has the additional advantage of potentially saving their budget from arbitrary cost cuts during downturns.
Overall, demand generation and other marketing efforts must move from being a “necessary overhead item” managed by a guru with a crystal ball to a vital business function, managed quantitatively, like the products you sell and included in your continuous innovation mantra. Are you evaluating your marketing returns today with the same discipline as your product returns?