How Should SaaS Companies Measure Lead Source ROI?

I was talking to an investor last week about the importance of data – having data, reviewing data, understanding data, acting (and investing) on data. We are a data-driven business. Every quarter we assess our set of metrics – add a few, subtract the ones we don’t find relevant to the stage we are at now, develop a cadence for periodic review of results, and go on our way. Our typical cycle is to review a few key metrics weekly, our core set across the business monthly, and a more macro view quarterly and yearly. The discussion last week was around our monthly and quarterly metrics in review and how they apply to our annual metrics for the planned year ahead.

During the meeting, the investor said, “In the other businesses I am invested in, the C-suite gets their metrics from the CRM and the marketing leader gets their metrics from the marketing automation tool.” This comment stuck with me. After the meeting I followed up with the investor and asked him what kind of data the chief executive (CEO) got about marketing from the CRM. Turns out the data set was pretty limited. The CEOs in his other companies can see the lead source of a closed opportunity, but that is about it. They can’t see the movement of a set of leads through the funnel or the return on investment (ROI) of the original campaign that brought that lead into the funnel, only the results of the campaign as leads move to a closed state.

Understanding the originating source of an opportunity is important, but only a small part of the overall funnel picture. To get a true picture of marketing efficiency (and better understand where to invest), the marketer (and CEO) must have clear visibility to three things:

  1. The originating lead source
  2. Every activity and asset that touched a lead on its journey
  3. The duration of the lead at various stages of the funnel

In our business we track ROI in a couple of ways. The first is by originating lead source. At any given point in time, we can run a report that shows us where every lead from a given lead source currently sits in the funnel. This tells us not only which leads (and at what monetary value) made it to a closed stage, but where the leads that are not yet at a closed stage are currently sitting in the funnel. We look at the total opportunity value of the lead source, not just the closed value. We also look at the impact each lead source and asset has on the funnel as a whole. For example, we can look to see that a set of leads (let’s say 1,000) has entered the funnel through a landing page associated with a specific asset. We can also see that asset touched another 500 leads that entered our funnel through a different avenue – helping to progress the lead through the funnel. So, we can see the opportunity value of the leads that asset drove into the funnel and of the leads that asset influenced that were already in the funnel. This holistic view of our assets allows us to get a true ROI of that asset. It also allows us to see which assets are performing best as attractors and which are performing best later in the buying cycle and adjust our nurture campaigns accordingly.

The third aspect of ROI that we track in marketing is the time it takes a lead to move through our funnel. We have four funnel stages: A Record is the first stage and is simply defined as anyone that we have a viable name and email address; Marketing Qualified Lead (MQL) is a lead that has engaged with us (not as just a name, but someone who has shown genuine interest); Sales Qualified Lead (SQL) is a lead that has reached an engagement score that we believe indicates the lead is ready to engage with a live salesperson; Sales Qualified Opportunity (SQO) is an SQL that sales qualifies and accepts as a hot lead; and Opportunity is a lead that passes discovery and is given to a salesperson to work and close. The CRM can tell me the duration of the journey between SQO and closed opportunity, but it can’t tell me how long it took a lead to get from interested (MQL) to a sales person (SQO) and knowing that duration is critically important for a SaaS business. Certain lead sources produce faster velocities than others. Knowing the velocity of each lead source allows us to better forecast and optimize our efficiency with our sales team.

At Salesfusion, we look at a set of funnel metrics that comes from the marketing automation platform, not the CRM. A truly integrated MAP pulls opportunity data into its reporting engine to allow a marketer (and CEO) to see, analyze, and report on what is really happening with a set of leads and the real ROI of a lead source or asset. Reporting on closed opportunities alone gives less than half the picture. Investing in marketing requires knowing the value each investment is having as an attractor and an influencer. Without the full picture, you are investing blindly.

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