Attribution has traditionally been the bane of all marketers, but we’re no longer doomed to continue the old ways of thinking about it. Why is this good news? Because the metrics that we marketers have customarily used to measure and showcase our success are running out of steam.
The Engagement Economy is catapulting the shift in our thinking and techniques from old school marketing into adaptive engagement. As we evolve in our marketing, we must also evolve in our measurement.
We can, and must, do better. And that means measuring and amplifying only the metrics that matter the most in the Engagement Economy.
Escape the engine room
For decades, marketing has measured its worth using vanity metrics. Marketers roll out imposing figures on impressions, clicks, conversions and marketing qualified leads, and while such metrics can be useful and look quite impressive, they really only matter to us. If we keep focusing on these metrics, we’ll only keep talking to ourselves.
These metrics do not help marketing align with other areas of the company, such as the revenue and customer experience teams, nor do they promote a strategic look at the business. Instead, they are “engine room” metrics that show what is working within marketing. And maybe what happens in the engine room should stay only in the engine room.
The Maslow’s Hierarchy of engagement metrics in the Engagement Economy has three layers: “engine room” metrics at the base, alignment metrics in the middle, and strategic metrics at the top. When we step out of the marketing engine room — which CMOs are doing more and more — we need to talk true alignment metrics, such as pipeline and revenue, along with big strategic metrics like Lifetime Value (LTV) and number of brand advocates. Here’s why.
Marketing alignment with sales and other revenue teams seems like a no-brainer, but it is in fact a struggle when the two sides cannot speak the same language. Sales wants to know that marketing has its back, which means that marketers need to quantify the value of their work through metrics that mean something to sales leaders, such as contribution to pipeline and revenue. Prove to them how your marketing actions lead not just to awareness and leads, but also to pipeline and booked and banked revenue. Do this, and you’ll earn their respect. And trust me, if you are unable to do this, there is always someone else along the revenue chain who will cheerfully take all the credit.
Savvy marketers know this, and we have seen a notable surge in the number of marketing organizations moving in this direction. And the savviest of them also recognize that they need to go farther still up the hierarchy of metrics to win in the Engagement Economy.
Amplify via advocacy
At the top of the new hierarchy of metrics are two intimately intertwined strategic metrics: customer advocacy and LTV. Advocates are those who shout their love for your brand from the rooftops — or on Facebook or Yelp for consumers and TrustRadius or G2 Crowd for business-to-business, which is even better. They may not be the biggest purchasers of a company’s products or services, or its longest-term customers, but they are the readiest with their endorsements and the most fulsome in their praise. In short, they are the brand champions and are not shy about saying so. Consequently, creating, nurturing and giving advocates a platform to socialize their love for the brand is an essential and measurable strategy for success in the Engagement Economy.
I believe that for most brands today, 90 percent of customers are lurkers (they purchase opportunistically and engage with the brand at a low level), nine percent of customers are likers (relative to lurkers, they’re pretty steady in their purchases), and one percent of customers are lovers and thus inclined to advocate with abandon. When you are delivering the every-step-of-the-journey engagement required for maximizing lifetime customer value, you greatly increase the likelihood of converting brand likers into brand lovers.
Be the king of the hill, the top of the heap
As for me, I love Disney as a brand, and the stories and characters they create are incredibly memorable. That’s why I call LTV the “Mufasa” Metric — the King of all Metrics — in the Engagement Economy. And there is a good reason for it.
It used to be that marketing was all about funnels. In the acquisition-based marketing world, for example, we were consumed with concern about clicks and impressions. But in the Engagement Economy, marketing alignment must be across the entire customer life cycle, not just around acquisition, which means a different set of metrics matter.
LTV is measured by how long a customer is with you and how much they are spending across their customer lifetime. Companies focused on LTV, as we all should be today, are not just concerned with customer acquisition. They are concerned with the entire customer cycle of land and expand, make them successful, continue to sell them more, and give a great experience driven by meaningful engagement at every step so they stay with you longer and spend more.
Where do you stand? How do you get to the apex?
Companies and their marketers need to take a critical look at where they currently stand vis-à-vis the Hierarchy of Marketing Metrics. Many marketing organizations have pushed open the engine room doors and are successfully aligning their energies and metrics with sales and other revenue generation teams. They can demonstrate which of their programs are translating into pipeline and booked revenue, and to what degree. And many more organizations are now making their first steps.
But the big prize will go to those who embrace the Mufasa of all metrics and reach the strategic heights of advocacy and LTV. Companies need incentives on the marketing team to pursue alignment on pipeline and revenue creation, and all the way up the hierarchy to its strategic pinnacle.
I believe that marketing is primed to be the catalyst for a business to embrace LTV as strategic objective. And in the immortal worlds of Ramses II in “The 10 Commandments,” “So let it be written. So let it be done.”
This post originally appeared on MarTech Today on April 21, 2017.