Lead Nurturing ROI Metrics
This is the seventh and final in a series of blog posts about Lead Nurturing, the essential marketing process for turning leads into sales-ready prospects.
If you’ve been keeping up with this series, you’ve traveled with us on the journey of setting up a lead nurturing program. We’re just about ready to launch.
But, before we do, we need to establish key effectiveness metrics to gauge the ROI of your program. These metrics will help you track the quality of your leads, from acquisition to won/lost deals, and suggest opportunities to adjust your program for better results.
Key Metrics for Measuring Lead Nurturing Program Effectiveness
These metrics tell us how well we’re segmenting our lists. Do our lists contain people with the demographics we’re looking for? Are we offering content that actually interests them? Are we successful in moving these people through the lead funnel?
Three key indicators of list segmentation effectiveness are:
- Email unsubscribe rates – if a lot of people are unsubscribing from your email lists, this is a clear sign that there is a mismatch between the people in your lists and what you are offering them. A general rule of thumb is that unsubscribe rates should be under 1% across all segments. If the rate is higher than 1%, it’s time to take a closer look. Maybe you need to adjust your buyer personas or the content you’re mapping your offerings to .
- Email click-through rates – how often are email recipients clicking on the links in your emails to view your landing pages? Obviously, we want as high a number here as possible. But what is considered a “good” rate? To try to answer this question, email marketing service provider MailChimp provides statistics on email click-through rates from its own research. According to their most recent statistics (December of 2012), click-through rates by industry varied from 1.3% in the gambling industry to 5.5% in the Photo and Video industry. If your click-through rates are under 1%, you probably need to adjust your email and landing page creative, and/or what you are offering in these emails and landing pages.
- Landing page conversion rates – this measures how many leads complete a form or download something from your landing pages. If your landing page visitors aren’t “converting,” this means they aren’t completing your calls to action, or CTA. This can be a function of your landing page design and copy as well as how compelling your offer is to your target segment. Ion Interactive, a landing page optimization company, quotes an average landing page conversion rate of 2.5%. Other sources quote 2% – 10% for sales-oriented landing pages (where the CTA is for the visitor to buy something) and 20%-30% for opt-in landing pages (e.g. “Sign up for our newsletter.”) What might be considered a reasonable conversion rate can vary significantly between industries and buyer roles. Our best advice is to test different designs and offers, establish your own conversion metric benchmark, and then continually tweak to improve this metric.
We can also add metrics for web traffic success, a key driver of people to your website and into your lead funnel.
- SEO metrics – provided by Google analytics and by the visitor tracking statistics generated by your marketing automation platform. These indicate how well your search engine optimization efforts are enabling people to find your site, what pages people are visiting, and how much time they are spending on your site.
- PPC metrics – short for Pay Per Click, these metrics, generated by the advertising platforms of Google, Bing and Yahoo, tell you how many views and clicks your paid ads are getting on these platforms. By tying individual ads to unique landing pages, you can correlate the ultimate success of these ads with the conversion rates for these landing pages.
How many of your leads are actually potential buyers? How many have become customers? That’s what these metrics help you determine.
- Marketing Qualified Leads (MQLs) – the number of leads qualified by your marketing department as having good potential to buy something. This is determined by a combination of a lead’s activity on your site, how closely his/her demographic profile matches your target customer, and what you learn by actually talking to him/her. MQLs are the leads your marketing team passes on to the sales team.
- Sales Accepted Leads (SALs) — this is the number MQLs your sales team accepts from your marketing team to pursue. If your sales team isn’t accepting all of your MQLs, you’ll want to understand why. What is the gap in perception of these leads between the marketing and sales teams?
- Lead to customer – how many of your leads become customers?
- Time to customer – how long does it take for a new lead to become a customer?
- Cost per customer – what is the marketing cost to acquire a lead and convert that lead to a customer? You determine this by dividing the cost of the lead nurturing program by the total number of leads converted to customers that are attributed to the lead nurturing program.
- Profit per customer – total revenue from customers attributed to your lead nurturing campaign, less COGS (Cost Of Goods Sold); i.e. the cost to create the goods or services that were purchased.
- Return On Marketing Investment (ROMI) – expressed as a percentage, this is the profit per customer divided by the cost per customer.
Trends and Tests
As you accumulate these metrics, you’ll need to study them over time. Are they going up, down, or flatlining? First, establish a baseline based on your initial results, for instance, after running your program for a month. Then, track your results week by week, month by month, quarter by quarter and year by year. If your results flatline or dip from day one, clearly there’s room for improvement.
Moving forward, experiment with different approaches. Test different copy, design and CTAs in your emails and landing pages. You can do that with A/B tests – using two or more entirely different emails or landing pages with the same segment – or multivariate testing, changing only certain elements within an email or landing page to see if subtle changes can make a big difference.
We could write a whole book on trending and testing, and at the very least, a blog post, which, in fact, we will do in the near future.
Lead Nurturing Campaign Costs
To compute your ROMI, you’ll need to tally the costs of producing your campaign. Typical costs include:
- Content creation – conceiving, writing, designing and capturing/editing video to create white papers, ebooks, blogs, videos and more
- Copywriting and design of emails and landing pages
- Program administration – designing drip workflows in your marketing automation tool and tracking results
- Search Engine Optimization (SEO) and Search Engine Marketing (SEM) to bring people to your website
- Social media involvement to bring people to your website
- Marketing automation platform
- Production costs of hard copy items – collateral, white papers, promotional giveaway items, etc.
To get started with measurement, you’ll need to configure your marketing automation platform and CRM to provide the data for the metrics we’ve listed. You can view this data as text or as charts. You can create a dashboard which collects the data from these platforms as well as your PPC platforms and Google Analytics, and displays it in one place for you. Or you can subscribe to one of the online KPI dashboard tools that do this for you, such as Domo or Klipfolio.
However you do it, measurement and refinement are key to the success of your lead nurturing program. By measuring continually, you’ll quickly know how well you’re meeting your goals, whether your ROMI is positive or negative, and how you can refine elements of your program to improve your results.
This concludes our blog series on Lead Nurturing, but not the conversation. Stay tuned for future posts that go more in depth into aspects of what we’ve covered so far. And please, join the conversation! You’re in the trenches every day, trying and testing the very things we’re talking about. Let us know what you’ve learned. We can all benefit from the sharing of ideas.
Here’s to the Marketing Champion in all of us. See you in the next post.
Here’s some additional great reading for going deeper into analytics:
- Marketo’s Definitive Guide to Marketing Metrics and Marketing Analytics »
- How to Unlock the ROI of Your Marketing with Analytics »