Marketing Mondays Q&A is supposed to be me answering marketing questions that I get asked. But today I’m going to answer a question I’m almost never asked: “How do you know what’s working in your marketing?” I want to answer this question because it’s the question people should be asking.
Instead, people tend to ask:
- What do you think about Social Media?
- How do I get better response from my email marketing?
- How can I make money with Twitter?
- Should I use text messaging?
The answer to those questions is I don’t know! How in the world am I supposed to know that if I don’t know what’s already working in your business?
The best marketers in the world are wrong 50% of the time when they come up with a new idea. (Hint: Don’t copy others, even if you know they’re successful. They just might be trying something that’s failing bad.)
Instead, you need a way to know what works. Often that requires testing – but even tests don’t tell you what works unless you’re measuring the right things.
Right now, I’m coaching my 10 year old son’s flag football team. I’ve never coached flag football before. The truth is, I’ve never really played it. I played tackle football growing up and in high school, but never flag football. Going into our first game, my strategy was to keep it simple. I figured these kids are only 9 & 10 years old – they can’t catch well, they can’t throw well, so, let’s run. I devised a couple of simple running plays. Run it up the middle. Run the sweep. Etc. Bottom line: we got creamed. During the first half of the game, I couldn’t quite understand why. Running plays should work. Get three yards per down and you’re set, right?
About half way through the game I realized why the other team was killing us – they were getting fancy. They ran the reverse, then the double-reverse, then a triple-reverse and even a reverse-bomb. I realized then that flag football is all about misdirection. In tackle football, it’s about strength and speed. You can run it up the middle if you have a strong line that blocks well. You can pass if you’ve got receivers that are faster than the defense. In flag football, since you can’t block, it’s all about misdirection. We were playing the wrong game. The next week we crushed our opponent.
In your business, there’s a good chance you’re playing the wrong game. Let me give you a few indicators of playing the wrong game:
You make decisions based on…
- cost per click
- cost per lead
- cost per impression
- email open or click rates
You get the idea. It’s not that these data points aren’t important, but they’re less important than others. What game are you in? Are you in the game of buying clicks, or leads, or getting people to open your emails? No way! You should be in the game of acquiring customers and turning them into raving fans.
I recommend the data points you should use to make decisions are:
- Cost per new customer
- Lifetime value of a customer
If you’re not tracking those two metrics, you’re playing the wrong game. Shoot, you might not even be on the right field. Clate also has a few suggestions on which business metrics are worth your time to monitor.
Because, tracking those two metrics is only the beginning. To know what really works, you need to track both of those metrics by lead source. You should know what your cost per new customer is for your pay-per-click ads, for your social media activities, for your yellow pages ads and everything else. Same goes for the lifetime value of your customers.
Cost per click and cost per lead metrics can be extremely deceiving if you’re looking at them without the context of cost per customer and lifetime value of a customer. For example, pay-per-click is one of our most expensive sources of leads. If I were just looking at cost-per-lead, I’d cancel those activities in a heartbeat. However, those lead sources tend to convert to new customers at a higher rate than some of our other sources. As a result, the cost per new customer ends up being on the lower end. See why it’s important to be looking at the right data? I’d be missing out on profitable customers if I made decisions based on cost per lead only.
When you know cost per customer by lead source, you’re armed with the right playbook to go crush it. It’s not always about having the next amazing idea. It is about knowing what works and doing more of it and less of what doesn’t work.
I believe the lead source tracking function in Infusionsoft is one of the most powerful features we provide to our customers. If you’re an Infusionsoft customer, set up lead source tracking today — stay tuned to the blog for an updated tutorial on this!