For marketers, our job can be a thankless one. When budgets get tight, it seems we're always the first department to be vetted. Because of this, marketers are on a constant quest to prove ROI. So, to serve as a reminder of the value of marketing, here's what you can say the next time someone asks (or implies) the question "What does marketing do?"
The most unquantifiable (but still hugely important) responsibility of the marketing team is to manage the organization's brand. When we think of brands such as Coca-Cola, Apple, or Nike, we have a distinct image in our heads of what that brand "is." That's worth a lot! If brand management weren't important, there wouldn't be multi-million-dollar trademark infringement lawsuits happening between today's household brand names:
It's likely you don't work for a brand the size of those mentioned above, but the fact that these organizations fight so viciously over the words they use and the designs they create shows how important brand management really is.
Forecasting New Opportunities
In today's quickly-evolving digital marketing landscape, it's the job of the marketing team to constantly be on the lookout for new marketing platforms and new opportunities. Take for example the missed opportunity by Chipotle's marketing team to capitalize on a new social media platform called Twitter, which launched on March 21, 2006.
On March 11, 2007, a man named Chip Clark created the Twitter handle @Chipotle. That means the brand had 355 days to join Twitter – but failed to do so in time – eventually having to settle on the handle @ChipotleTweets. Since then, they have missed out on the tens-of-thousands of engagements with fans who've tweeted at @Chipotle over the years.
Again, it's likely the brand you work for is not nearly as vulnerable to cybersquatters as Chipotle is, but it does illustrate how vital it is for marketing teams to be looking ahead at all times.
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As much as anything, lead generation is what marketers can point to as the metric most closely tied to the success of an organization. Ask any salesperson and they'll tell you, there's nothing more valuable than a lead that they didn't have to work for! That's because leads are the first step in generating more revenue.
Today's marketers are finding success measuring leads using marketing automation software such as HubSpot, which allows them to identify whether those that filled out forms on their website (leads) did so via organic search, referral links, social media, email marketing, paid search, or direct traffic. Remember, the only way to take credit for a lead is to know exactly where it came from!
Once you're able to measure your leads, you can juxtapose them with the rate at which those leads turn into sales and the average lifetime of a customer, giving you hard-and-fast evidence of your marketing team's value over time.
To measure things like cost per lead (CPL), conversion rate and customer lifetime value (CLV), follow these simple formulas.
Cost Per Lead
Marketing budget / leads generated
Customers acquired / leads generated
Customer Lifetime Value
Amount of revenue generated by one customer throughout their lifetime as a customer.
*Note Re: Customer Lifetime Value - Too often, marketers focus on the revenue generated by one sale. Consider that the average single order at Starbucks is $6, but the average customer liftime value (CLV) is over $14,000. CLV is a truer representation than average single purchase when figuring out how to offset customer acquisition costs, because many sales are made by repeat customers.
Making Sense Of It All
If your cost per lead is $50, and you convert leads into customers at a 20% clip, it costs you $250 to acquire a customer.
Now compare that with your customer lifetime value. (Hint: it better be well over $250!)
Not only do these three calculations give the organization's higher-ups an idea of where the holes in the sales process are located, but they're a mathematical way to show how valuable (or not valuable) your marketing team is in an undeniable way.
Next time someone questions the value of your marketing team, you'll know exactly how to correct them!