Business

3 Metrics Every B2B Marketer Should Know

Razzled-but-not-dazzled“When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind: it may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science.”
– Sr. William Thomas, Lord Kelvin

The number one thing that has set me apart from other marketers throughout my career is my ability, and willingness, to do math.  It is not enough to make things look pretty or budget for events.  You must be able to express very clear and useful metrics that drive a business forward.  Here are 3 that I believe every marketer should know off the top of their head if ever asked.

ROI: Return on Investment

ROI

This is the basic of the basic.  You should be able to rattle off exactly what your ROI is for major initiatives and for your year overall.  Although we all know this is very basic, most marketers don’t actually bother to calculate it or share it.

If you have a negative ROI it could lead to negative consequences.  However, if you can get ahead of the question, report your negative ROI, and outline causes for this you will, most likely, be viewed as a professional in the eyes of your management.  Entry level marketers hide bad metrics.  Professionals address them head on.

Equity Value Creation

This equation literally tells the business how much more valuable you’ve made it.  Not how much money you’ve made it, but how much you’ve increased the company’s value.

This is a tough concept for many marketers.  We focus on the bottom line and how much deals are worth.  But how much is the company worth?  If you CEO decided to put the company on the market, how much more valuable have you made it?

This is a critical metric for marketers for two reasons:

  1. You’re communicating how your influenced deals affect the attractiveness of the company directly
  2. You’re communicating how your more fluffy work, like brand awareness and sales enablement, are contributing to the overall value of the company – if not the quarterly sales directly.

Equity Value Creation Formula

Let’s break this down:

  • Monthly Revenue – look at how much your influenced deals bill on a monthly basis.  If you’re measuring something like “brand awareness” look at your monthly revenue a year ago and compare it to now.  Calculate the difference.
  • Expense Ratio – What percentage of your revenue goes to cover expenses?  If you don’t know, a good estimate is 50-60%.  Expenses cover keeping the lights on, employees’ salaries, paying contractors, etc.
  • Multiplier – A multiplier tells a potential buyer of your company how much more than your annual profits they need to purchase you.  This one is tricky.  If your company is not publicaly traded, you likely don’t know what your multiplier is.

    Here are a few good rules of thumb I got from BusinessTown:

    • An extremely well-established and steady business with a rock-solid market position, whose continued earnings will not be dependent upon a strong management team:
      a multiple of 8 to 10.
    • An established business with a good market position, with some competitive pressures and some swings in earnings, requiring continual management attention:
      a multiple of 5 to 7.
    • An established business with no significant competitive advantages, stiff competition, few hard assets, and heavy dependency upon management’s skills for success:
      a multiple of 2 to 4.
    • A small, personal service business where the new owner will be the only, or one of the only, professional service providers:
a multiple of 1.

Essentially this equation takes your Annual Profits x your company’s multiplier and generates the value of the company if someone wanted to buy it.  You can use this to communicate how much more valuable your company is now that marketing is doing x, y or z.

NPV: Net Present Value

“A bird in hand is worth two in the bush.”

A dollar today is worth more than a dollar you make a year from now.  Marketers often report metrics based on the total value of a deal, which makes sense.  But to take your marketing game to the next level, start reporting on NPV instead.  Net Present Value is how much the deal is worth today.  For B2B marketers we often deal with more expensive, longer term solutions.   It could be years before our company realizes the actual full revenue from a sale.  By calculating your ROIs with NPV instead of total deal you’re indicating to your leadership that you understand the deal loses value the longer it lasts.  It shows you’re a professional.

Here is the actual equation:

Image result for npv formula

But only college students do it that way.  If your CRM doesn’t already calculate NPV for you, here’s a website that will do it for you.  There is an equation to calculate your discount rate, but here’s a cheat I found online for all our sanity:

  • 10% for public companies
  • 15% for private companies that are scaling predictably (say above $10m in ARR, and growing greater than 40% year on year)
  • 20% for private companies that have not yet reached scale and predictable growth

That being said, most CRMs can do it for you.  Just customize your opportunity page to include the field.

3 Ways to Dominate a Department of 1

Image result for stranded on an islandMarketers often find themselves on an island.  No, I don’t mean wonderful President’s Club trips (we’re never invited to those).  I mean working alone.  This is one of those skillsets we just have to master.  But we’re not alone.  A ton of B2B roles find themselves alone, especially in smaller companies.  Field sales, HR, accounting, legal – they can all be stranded on an island, expected to do the work of 12 people with the accuracy of IBM’s Watson.

But the big question is how do you do that?

This post is not about how to get your boss to hire more people or how to lower expectations.  It’s about truly dominating your field – all by yourself.

Image result for marketing plan funny1: Make a Plan

If you’re going to be stranded on an island, you should probably start making a list of what you need to do.

  1. Build a shelter
  2. Find food
  3. Figure out how to make fire…

You get the point.

In work it’s no different.  For marketing, that plan is fairly straight forward.  Their called “marketing plans” and you spent 4 years in college doing nothing but preparing for them.  In large organizations marketing plans are usually a luxury.  They are time consuming, cumbersome, and the only people who care about them are the people on your team.  Many small or medium B2B companies will tell you they are a waste of time too, but don’t listen.  When you are doing everything on your own, your marketing plan is your saving grace.

A well crafted marketing plan can do many things.

  • Create buy-in from executives on time spent, budget, priorities, etc
  • Define where you want to focus your efforts
  • Show exactly how big an undertaking many campaigns can be
  • Document your value to the company

It doesn’t have to be the massive business document you designed in school.  When you’re a department of one, you can skip a lot of the pageantry and get straight to the point.  Here is the outline I use:

  • What I accomplished last quarter/year.
  • My goals for next quarter/year.
  • Marketing Mix
  • Budget
  • Calendar

I don’t need to go through SWOT or Competitive Analysis.  I can just speak to those when asked.  The only people who ever read those are marketing anyway.  I dare you to find a small business executive who wants to read marketing’s SWOT analysis.  Go on, I’ll wait.

The other thing I highly recommend is writing them on a quarterly basis.  Business moves too fast for an annual marketing plan.  It normally takes about 3 months to throw them out anyway.  Do them in 3-6 month increments and they’ll be much more useful.

2: You are the expert – Act like it.

Image result for expert funnyIf you are running a department by yourself, it is your job to execute.  No one wants to babysit you and no one has the skill set to help.  You are the expert – act like it.

This is one of the reasons I love my quarterly plans so much.  I can take the time to think through what I want to do and why, rather than being put on the spot every 30 seconds when someone has a question.  Planning breeds confidence, which breeds trust.

Pro-Tip: Ultimately the trust of those around you enables you to dominate a department of one.  If they don’t trust you, you cannot lead.

Keep one thing in mind.  Experts don’t know everything.  They just know more than everyone else in the room.  I am not the world’s foremost expert on marketing.  But I am the expert on my team.  And if I don’t know an answer, my expertise tells me how to find it.  And 99% of the time, that’s good enough.

3: Know Your Limits

I had a VP once who called me “Wonder Woman”.  The nickname was so prevalent that for secret Santa one year he actually gave me a pair of Wonder Woman pajamas (they are insanely comfortable).  He gave me this nickname mostly because of the sheer volume of work I could churn out in a small amount of time.  This ended up being my downfall.  I got overconfident and determined to do anything and everything to succeed.  I over committed.  I made mistakes.  And because I moved so fast, it took a while before anyone (including me) realized.

Image result for exhaustionIt was embarrassing, but the entire experience taught me a very clear and simple lesson – know your limits.  Had I simply pushed back and told him I was going to start dropping balls if I took on any more work, he would have probably backed off or taken something off my plate.  Just because I’m the resident “expert” does not make me a superhero.  I can make mistakes and I can forget things, just like everyone else.  Part of being an expert is knowing how far you can go before you have nothing left to give.  It’s a hard lesson, but a critically important one.  Especially when you’re all alone.

Working alone does not have to be a death sentence.  You have all the creative and prioritization freedom in the world.  The question is whether you will rise to the occasion.

All marketers do is spend money… and other stupid crap people say.

Image result for eye roll memeI have no idea why marketing gets such a bad rap.  I’m sick and tired of it personally.  I can only guess that people are jealous because marketers have an awesome job where we get to throw parties and design cool stuff and don’t have to talk to customers every day.  I would probably hate me too.

But here’s the thing: No one’s job is a walk in the park.  Here are a few of my favorite stupid things I hear from non-marketers about marketing.

All Marketers Do Is Spend Money

I’ll admit, marketing can be expensive.  Especially at organizations that struggle to pay their employees regularly.  But here’s the thing.  Good marketers pays for themselves.  Marketers actually hate spending money, because we know we have to prove an ROI for every dollar we cost the company.  I have never met a B2B marketer who’s like “I have this massive budget.  I can’t wait to burn it on display ads and liquor!”  It just doesn’t happen.

Image result for marketing dilbert

If you have a marketer on your team that you feel “only spends money”, most likely they have fallen victim to a few shortfalls:

  • They didn’t state the projected return before spending the money.  Doing this results in two outcomes – (1) Stated goals keep them honest and (2) Helps them get everyone on board with the expense beforehand – which avoids uncomfortable discussions later.
  • You are making them buy crap for no reason.  (Yes, this is a real thing)  Don’t get mad at marketing for low ROI when you insist on buying thousands of pens to put at your $60,000 tradeshow booth that costs $20,000 just to ship.  No wonder your event marketing isn’t working.  You are setting it up for failure.
  • They’re not tracking or reporting their return in KPIs that mean anything to you.  Marketers speak marketing.  “KPI” stands for “Key Performance Indicators” and if you didn’t know that chances are you don’t speak marketing.  If marketing insists their campaigns are working and you’re not seeing evidence of that, most likely you have a failure to communicate.  Explain to marketing exactly how you define success and ask them to explain to you how they define success.  Without an agreed upon set of KPIs, you’re likely going to have a tough time understanding their value.

Those who can’t do, teach.  Those who can’t sell, market.

Image result for marketing liquor and guessing

I understand how this misconception would come to be.  I tried direct sales.  I did not enjoy it one bit.  I’m not talking about the cooshy stuff most B2B account reps do.  I mean I literally walked around Home Depot for 10 hours a day, 6 days a week trying to get people to sign up for in-home kitchen cabinet refacing consultations.  I was paid $25 a lead.  They called it “direct marketing” – I called it bullsh*t.

But that doesn’t mean I can’t sell.  I have been told by many sales directors over the years that I have the personality and ear for it (whatever that means).

However, I don’t like being called 400 times a day to see if I’ve moved the pipeline $2 further than yesterday.  I also don’t like to be in constant competition with the people on my same team. The stress of doing sales day in and day out is miserable.  But somehow the puzzle of click-through-rates is exhilarating.  It’s not that I can’t do your job – I just don’t want to.

Marketers are the drunk frat boys of the business world

Image result for marketing dilbert

Screw you.  We all know that’s sales.

Marketing isn’t a real business discipline

 - Dilbert by Scott Adams

Marketers have a bad rap for being stupid.  People claim we don’t know anything about how business is done and, I’ll admit, I’ve perpetuated that stereotype from time to time to get out of boring meetings.

But the fact is that statement doesn’t make any sense.

I graduated from one of the most prestigious marketing programs in the world, Penn State.  (WE ARE!)  At the time our marketing program was ranked 16th in the world – THE WORLD!  But they wouldn’t let me graduate with a business degree without also studying managerial accounting, finance, statistics, calculus and a host of other classes every business student studies.  I just took a few more marketing classes than you and a few less [insert discipline] classes.  That doesn’t mean I don’t understand business and you sound like a moron by saying that.

In conclusion, haters gonna hate.  Marketers are going to continue to be professionally awesome.  Also, I love Dilbert and you should buy all of their products.  (No they did not pay me to say that.)

 - Dilbert by Scott Adams