This article outlines the 4 essential questions any firm marketer should answer in order to validate the firm’s investment in marketing.
In my not so recent past, I worked at a large digital agency for about the length of time it takes to drink a cup of coffee during the height of the Internet bubble. The agency had a lot of large, notable consumer clients. One of the stories of legend involved Les Wexner, the billionaire and retail magnet, walking into the conference room and asking the account team, “Why do we need a website?” At the time, everyone was aghast. How could he ask such a question? Of course, we need a website! How could one of the most successful retail leaders be so far out of touch?
With the gift of experience and hindsight, I now better understand his intent. He was simply asking a business question. He was asking us to validate his investment. How wanted to know how the web was going to impact his business. Put more bluntly, he wanted to know how it was going to make him money. And, I’m pretty sure it was a question that no one in the agency was really tooled to answer. After all, these were the wild, wild west days of the Internet. SaaS wasn’t even a thing. A CMS was a 6- or 7-figure investment.
Fast forward to today, and I lead a marketing agency that advises professional services firms — architecture firms, engineering firms, consulting firms. The parties are different. But, the questions sound a lot alike. Sometimes, when we talk about marketing with senior partners, they look at me sideways and say something like, “Do we even need marketing? Does it work? How do we know?” Unlike 15 or so years ago the answers can be literally right at your fingertips with the help of marketing automation and CRM.
As the CMO or marketing director of a professional services firm, I think you always need to be prepared to validate your firm’s marketing investment at anytime. You should be striving to prove ROI everyday. As I see it, to do this you need to be prepared to answer four essential questions at any point in time:
- How many leads are we generating?
- How many initial meetings are we generating?
- How many opportunities are we generating?
- What percentage of opportunities do we win?
I describe each essential question below along with a handful of sub-questions related to each.
#1 – How many leads are we generating?
Each week? Each month? Each quarter? Each year? Is that enough? Are they the right quality? Where are they coming from? Which sources are the best?
In addtion to knowing how many leads you’re generating and where they’re coming from, you should build the ability to segment your leads into three tiers:
- Tier 1 leads represent those people who have directly requested assistance from your firm in solving a problem you have the expertise to solve or engaging your firm for a project based on your capabilities and experience.
- Tier 2 leads represent people who are demonstrating some interest in what your firm has to offer as indicated by their behavior (they’re consuming your web content, attending your webinars or your offline seminars).
- Tier 3 leads represent little more than names on a list. These may be people that you’ve identified through a list building service or you’ve identified as high value potentials for your firm. They also could be inbound leads — people who’ve subscribed to your communications but have not yet engaged in your thought leadership in a meaningful way or directly asked to speak to you.
Establishing your lead tiers will help you understand how much you’re impacting the buying process and develop a sense of the overall effectiveness of your marketing efforts. Obviously, the higher percentage of your leads that are Tier 1 or Tier 2, the better.
From there, you can start to peer beneath the hood to figure out which lead sources are most and least effective. You should know which lead sources are delivering the most leads, which ones are delivering the best ones, and which ones are delivering the worst ones.
#2 – How many meetings are we generating?
Each week, each month, each quarter? From which lead sources?
As you know from the lead tiers described above, not every lead represents a direct conversation or project opportunity. As I’ve said many times in the past, a lead is a person not a project. Projects can’t hire you. Only people can. When we generate a lead, that person may have a need right now or they may have a need at some point in the future. The act of generating the lead is the act of turning a faceless person into a known potential client and bringing them into your marketing system. The act of generating the meeting is converting that lead into an actual sales conversation for a principal or senior partner.
One of the core mantras of the Rattleback marketing philosophy is that nothing truly meaningful happens until there’s a conversation, which means that a critical objective of your marketing efforts is not only to generate leads, but also to translate those leads into quality conversations for your firm’s principals. This means we have to become adept at nurturing people that are in our marketing system towards high-value interactions and face-to-face or in person conversations with firm leaders.
#3 – How many opportunities are we generating?
How many opportunities are we generating each month? Each quarter? Each year? From which lead sources? Are they the right opportunities? What is their total value?
Moving further down the funnel, you should not only know how many opportunities you’re generating, but also where those opportunities are coming from. Are they coming from your business development team? From referrals? From a particular speaking event? Are they coming from the web? At any moment in time, you should be prepared to quantify how many opportunities you’re generating, what their value is and where they’re coming from. Diving one layer deeper, you should be able to determine which lead sources are driving your best opportunities. If you’re diligent about tracking lead source as leads emerge in your CRM (some of which can be automated), it becomes pretty easy to answer these questions as opportunities emerge.
#4 – What percentage of opportunities do we win?
When we win, why do we win? When we lose, why do we lose?
Ultimately, this is where the rubber meets the road. Once you’ve successfully mapped leads to meetings and meetings to opportunities, connecting leads to revenue is fairly easy. With data in hand, you can determine the likelihood of an opportunity becoming revenue once that opportunity emerges.
Eventually you want the ability to determine if there’s a higher likelihood of an opportunity becoming a project based on where the opportunity came from and you would like to determine whether or not an opportunity is likely to be of higher or lower probability based on that information. You should start to analyze whether opportunities of certain types, in certain segments or with certain types of clients have a higher or lower likelihood of becoming revenue for your firm. In the end, this will help you understand which aspects of your marketing activities are contributing more or less to your firm’s revenue goals.
Ideally, you will use all this information to loop back into your decision-making model to make better decisions about where you devote marketing resources to drive leads and which opportunities you pursue and which you don’t.
Bringing it All Together
While all of this may sound a little pie in the sky at first, it’s really just blocking and tackling inside of a few critical systems. If you’re diligent about tracking information in your CRM and committed to really using and understanding the features of marketing automation, the data you need is right in front of you. The challenge really just becomes analyzing it, interpreting it, and presenting it to your leadership team through a useful dashboard they can understand:
So, when you’re faced with the difficult question, “Is our marketing working?” You can reply with an emphatic yes. We’re generating leads, we’re turning those leads into meetings and opportunities and we’re driving real, tangible revenue to the practice.