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📈 Drive Predictable Performance (from Metrics & Chill)
If you spend any amount of time on LinkedIn, you’ve probably seen an increase in posts about ad costs getting more expensive, budgets getting reduced, and needing to do more with less.
If that’s you, you’re not alone.
Sam Kuehnle (VP Marketing at Loxo, and former VP Demand Gen at Refine Labs) is under the same pressure. And recently, he came on the podcast to talk about how to hit growth goals and increase revenue, despite having less budget. This is a framework he’s actively using now, and generously shared in detail on the episode. Here’s the short version…
First, analyze your historical experience.
The goal here is to see what worked best (and what didn’t), and then to see if it makes sense to invest your limited spend in those channels moving forward. It’s worth noting that for all of this, Sam recommends looking at performance data from the previous 12 months, for a more accurate read that takes things like seasonality or trends into account.
First, look at what you spent on your marketing program by month, quarter, and total. You can count total marketing spend (contractors, freelancers, salaries, etc.) or just ad spend. Then go through and calculate your conversion rates from each program, and your “cost per’s”: the goal is to come away knowing how much you spent to get a signup, demo, opportunity, or paying customer.
If you haven’t been tracking this data closely, this may be more difficult.
(And of course, you can also use an analytics platform like Databox to track these metrics automatically to reduce the manual calculations, and pull data from a dozen different places.)
Once you know what your conversion rates were, and how much each channel cost to acquire a signup, demo, lead, or paying customer, you’ll start to know what you can cut, and what you should continue investing in. There may be a channel you thought was performing fairly well, that you find is converting at a much lower (or more expensive) rate than the others. If your budget is shrinking, this should go. On the other hand, you might find one or two channels that are performing really well, and decide to invest what little budget you have there, to double down on what’s already working.
This data also paints a picture of what you can expect if you continue the status quo, without adding or removing any budget or priorities. If your leaders are asking you to double Sales Qualified Leads (SQLs) or Signups, for example, you’ll start to get an idea of how realistic it is and what it would take to do that.
Next, determine your growth levers.
Start by visualizing all your marketing stages. These might include:
Sam recommends analyzing the performance of each stage on a quarterly basis. From here, you want to go through each stage, studying the conversion % from one stage to another to look for any areas you know can improve. If you want, use benchmark data to give you an idea of what “good” looks like. Sam uses this to see what growth levers he can pull ( = stages he can improve) with little to no investment to help him hit his goals.
Since we’re talking about a budget that’s been lowered (or cut in half entirely) these are middle to bottom-of-funnel stages, because there isn’t spend available to bring more prospects to the website or product.
Sam cited Demo to Opportunity Rate, or Win Rates as stages that often are performing worse than they should be at companies. Improving these usually doesn’t require a ton of spend. Instead, it requires working collaboratively with Sales or CS leaders to make it easier to book with an AE (in the case of Demo to Opp Rate) or doing a win/loss analysis to find why you’re losing deals, and fixing those issues (in the case of Win Rates).
Because you’re tracking the conversion rates from one stage to the next, and looking at what an average quarter’s performance looks like, you can forecast what the impact would be if you improved conversion from one stage to the next. Sam thinks of this as playing with growth levers. You want to find underperforming areas you can improve without a lot of spend, and see how close that gets you to your targets.
So in the first stage, you’ve listed all your marketing channels or programs. You’ve calculated what it costs to acquire a signup, lead, demo, or customer from each. You were able to cut any programs that were too expensive, drove no results, or where Customer Acquisition Cost (CAC) Payback took too long to justify the investment.
Then in this stage, you analyzed your entire customer lifecycle or marketing funnel to find where conversion from one stage to the next was below average. You projected what the impact to Signups or Revenue would be if you improved one or more of those stages.
In the final stage, you need to report all of this to your leaders.
Finally, educate stakeholders.
For all the talk about executives who “don’t get marketing”, Sam finds most are reasonable. They understand the marketing leader can’t work miracles, but they need the data and context explained in a way they understand.
In this final stage, Sam reviews the data with stakeholders showing the impact each channel will have on revenue. He shows what it costs for each marketing program to acquire a new customer, what he’s going to cut and why, and what he anticipates the results will be if he can improve stages further down the funnel.
Of course, this is just a summary of everything we talked about. If you want to hear Sam break this all down in detail with more examples, check out the full interview with him on your favorite podcast app.
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