Karen Breen Vogel explains how to "follow the money" by attaching dollars and cents to a website visitor moving through your pipeline. Focusing on accountability and the monetary value of conversion are key to delivering a strong ROI to your financial execs. This presentation will help further your understanding of the ROI of your website and media marketing resources by learning how to give a financial orientation to your online marketing and lead generation funnel (Part 4 of 5).
Thank you, Sarah. Yes, the title of today's talk is, "Follow the Money." Probably my favorite discussion and hopefully one that you will also get a lot of value from and be comfortable taking forward from here. The purpose of this conversation is to pick up on the last discussion we were having, which is how important it is when you're building a website and then investing and bringing in visitors to the website, that you understand, "Is it working? And what is your return on investment?"
We talked about the use of key performance indicators, or KPIs, in the last session, which is a way to really minimize the amount of data that you have to look at and really to focus your energies on certain data points or ratios that really tell you how well your website is performing whether it's performing in a goal around increasing revenue or is it performing in a goal around saving you money.
You definitely have to decide. What are the key performance indicators that you're going to measure, that you're going to set baselines for, set goals to improve then constantly improve and watch the benchmarks? Is your environment getting better or worse and are you able to deliver back to the business the return on investment that's been made in both the website itself, and in the resources within your company and perhaps even the media or paid search activity that you're investing in?
Today, what were going to do is pick up from where we left off. I had a slide in last one in the last discussion and talked about, “How do we make this financially oriented? How do we create a numbers view, a financial view, of a visitor coming to the site and doing certain behaviors and, perhaps becoming a known lead in your business and then receiving sales attention and perhaps turning into a customer? How do we understand all of that and put it into dollars and cents?"
My belief is that until marketers put this information into a financial perspective, they aren't going to receive the respect and attention and budgets from the financial executive suite that they deserve. This is really critical. Really critical in any kind of marketing endeavor, but the web actually helps and assists in getting this data lockdown.
So, it's become a medium that has pushed this to the forefront for marketers to really get focused on accountability and not accountability at soft outcome, or what I would call vague outcomes, like conversions and visits and leads actually putting a monetary value on those types of things going on in the pipeline, so that the business can pay more attention to them and understand their values.
This chart is really a generic view of this. It says, starting at the upper left, "we've got an historical site conversion rate." The way we get that is that we need to obtain conversion data. We have to define what is the conversion on our site? What is the pace at which we're converting visitors on our website on a monthly basis, quarterly basis, weekly basis whatever is appropriate to the volume of activity that you have on your website.
In most B2B environments, that tends to be about a monthly picture. If you have a high quantity of traffic, you may want to make that a weekly picture of the conversion data. The first thing is to understand, as people finish their visit on your site, did they convert or not, and at what rate is that occurring?
We talked last time about creating key performance indicators that really look at the ratios of conversions to visits, conversions to engagement and really begin to give you a deeper texture for how effective is your funnel in converting visitors to being known people, being people that you actually can follow up with and contact, either in a nurturing mode, or in a sales mode.
Once we have that data, we need to follow that now past the website and into your sales, inside sales or your sales activity, or maybe your dealer distributor channel. If we know the conversion data, or the number of forms completed, or the number of contacts that we've got, how many of those are really leads?
Now we need a lead volume. We need to know, in the past, what has our business been able to do? From those conversions, how many of them have really been clarified as being a lead? Many of your conversions might be people just asking questions. They could be students asking for information. They could be consultants, they could be competitors. They could be people trying to sell things to you.
You really have to filter out all the noise and say, "Out of this group of conversions, what would we call leads?" That's our lead volume. We need to go get that information. Then as we follow the money, we want to say, "Is there a function within our company usually a marketing team or inside sales team where we actually pick through those leads, apply some qualification criteria and further refine how many of these are actually qualified leads. How many of these are we going to get serious about? Are we going to move to a sales team or potentially to a distributor or dealer?"
Now, we are obtaining qualified lead data. Distinct from leads, these are ones that have been further clarified around some type of qualification criteria. In this particular model, which is very generic. I have just gone to the punch and said, "OK then what's our historical revenue per sale?" We need to understand, if someone does close in our environment, how much revenue do we obtain?
I will tell you that this can be done a number of different ways. You can use revenue on the first sale. You can use profitability on the first sale. You can use lifetime value at a revenue or profitability amount. You have to pick something that everybody in your company agrees is the way they want to look at this information, and what's meaningful to you.
We have had clients choose any one of those things. First year revenue, first year profitability, or lifetime value revenue or profitability. My personal preference, if you can do it, is lifetime profitability. It's the most highly indicative of really what that new customer meant to the business from an upside perspective.
You're looking to get the revenue that was resulting from these qualified leads that came from the website, and you're looking to understand, "How do we want to view that? Do we want to view it as revenue or profit and over what time frame do we want to view that?"
I'm going to break this down in a little bit more detail. The first thing that you would do is to look at the visitors on the site. What are they worth to you? I actually pulled this right out of a work in process with a client right now, to use it as an example.
We're flow charting out the funnel. The blue box is how many visitors did we get to the site? In this case, there are actually two sites that we happen to be using. How many of those visitors did something that we have said is a milestone, is a conversion event?
The number of those visitors and the percentage of the total visitors that did that activity are mentioned in the orange box. Now, we're further breaking down what is happening in our website.
The two green boxes are the two branches one thing happened in a positive way, they were qualified on the site to do something and the second way they weren't. In this particular client, there is actually a qualification activity on the site. Through a certain form, in the form fields, there is actually a qualification step that is occurring.
Lastly, the purple box says, "how many of these people actually completed, that were qualified, and were ferreted out in a qualification step, how many of them actually completed the form, submitted it and received a thank you page?"
So, the "473" sitting in the purple box, is what is going to start the "follow the money" after the website. You may note, by the way, that in this case, the green boxes don't actually total to the orange box, which is a little unusual in that that should total up. You should have fidelity here between the various steps of the funnel, and the numbers should add up.
In this particular case, what we've determined is there is a discrepancy between two things going on at the website and what the numbers should be. So, this will give us a point to go check the tagging that was set up originally in the web analytic system, or perhaps something that's going wrong in the way this was configured, the website or the analytic system.
A really good value, in addition to understanding what the financial value of your visitors and your leads is, is that this actually is an audit tool to check your systems all the way through to say, "Do we collect the right data? Is it credible? Is there any problem with the quality of our data?"
But, assuming we will figure out why those numbers don't add up to 8900 in the previous box, we're going to move forward with the 473. So, we have 473 web leads. Now we have an external person in this company who actually takes all 473 of those, vets them, and decides whether they're qualified or not.
In this particular example, 331 of them were vetted to the not qualified from a phone call activity that an inside salesperson did, 142 of them became qualified based upon the criteria at that stage in the game. So, we're moving 142 forward in our system. Remember, this is post website lead management, so we're looking at the back end lead management activities in this particular business.
What we further found out is, at this point, these 142 leads are given to a true salesperson, who then re establishes connection with the lead, asks more questions, dives deeper, and determines whether or not they're going to move forward. In this case, 111 of the 142, a relatively high number by the way, were actually deemed unqualified, and only 31 did the salespeople say, "These are going to move forward."
They're actually entered, in this case, into a Siebel system with the Internet as their source. Preferably, it actually would have been a little bit more detailed than just Internet. It might have been the keyword or the campaign that they came in, which is another advancement that this particular client can make.
Then, at this point, we've got 31 qualified leads by sales that are moving forward as sales opportunities. A certain number of these will close. In this particular working example, the client is actually right now trying to dig in and find out, "Where do those 31 sit in the Siebel system? How are they coded? How many of them have moved where? And what will be the final revenue or profitability amount that we can use to flush that back through the system?"
I'm kind of moving back now to a generic example, just to show you how to bring this back forward. But, if you go back to the funnel on the right hand side here, this is a different set of numbers. I've just used very round numbers. If we had 10,000 visits, how many of them got to be a conversion? Then, how many of them were qualified? How many deals did we close?
So, I'm at a very high level, making a funnel represent both on the web and off the web activity. On the left hand side, in this particular situation, we have used some dollars that were actually used in this particular situation to cause this to occur, that created the 10,000 visits. So, in this case, there was money spent to get these 10,000 visits to occur.
We can put a cost per action on each one of those things. It cost us $2.50 to get a visit. It cost us $250 to get an inquiry, et cetera, all the way down to, in this case, $20,832 to get a deal closed. These numbers, by the way, I pulled from a client about a year ago. Their product is a multi million dollar product. So, actually, they were quite comfortable with this cost structure because of the size of the deal that got created at the end of pipeline.
What this allows us to do, as you'll see in this grid, is that the actual CPA to each one of those levels is the numbers I just reviewed with you, the $250, the $250, the $417, and the $20,833. But, what we also could do, if we followed the money, is if we know that $50,000, in this case, was the profit, then we can flush this back through, and say, "What would we be willing to spend, or what's the value of each one of those levels of behavior by the particular visitor to this site that we're comfortable with, because we know what kind of money we create at the end of this process?"
The important thing here is that not that these numbers are perfect, and they may not be, because sometimes there's assumptions that have to be made. Not every number is going to be perfect on day one, and you're going to have to get started and get better at this over time. But, the important thing is that you begin to trend this kind of thing and see where your problems are.
So, you're able to give your business, "This is the value of the visitors on the site to me in dollars and cents. It's a future value of these visitors doing these things today in our business is equal to this, because of our conversion rates through the website, as well as in the back end lead management and sales process."
That's a valuable set of information for everybody to start working from, because it gives everybody the playing field that you're in, from a dollars and cents perspective.
The second thing that it allows you to do is when you have those numbers, you can actually create a funnel graphically that depicts the numbers. In this example, what I've shown you is that if your numbers are really high at the top, and really low all the way through the rest of the funnel, then you've got a problem in that you're bringing in way too many people to you that are unqualified, and you're doing a very poor job of everything after that. Probably doing a poor job of targeting, but then you do have problems beyond that that need to be fixed.
In a second example in the upper right, you kind of look like you're bringing in the right people, and you're doing some OK awareness activities in the funnel. You're getting them there, but you're really losing them pretty early in the game. So, you really need to focus on the website, the engagement content, and the engagement activities. This really directs your efforts towards the areas of improvement and things that you can do to make your funnel yield more output for you more efficiently.
Bottom left, you're doing a lot of good things and getting the right people there, making them aware, keeping them for a while, engaging them. But, for some reason, when the rubber meets the road on that conversion, on that form, or that offer, they are not moving forward.
So, this becomes a really great time to do A/B or multivariate testing to really try a couple of different ways to get that final conversion to occur. You've done so many good things and invested such good money, but you're just not getting the payoff at this point.
Then the last one on the bottom right, you can see is a very effective funnel where all things are really go in the system. The right people are there. They're staying. They're engaging, and then they're converting. In your system, those are qualified leads that the salespeople are agreeing are qualified, and they're actually able to bring those to sale in a profitable way.
So, if you want to have a healthy lead generation funnel and have your website working that way, you need to have a detective system that gives you these numbers all the way through the entire process, from on the web to off the web to your salespeople, to closure, or out to your distributors.
This is not easy. It's an iterative process to keep working at it and making it better. But, the value here is you know how your system's working, and you know where to spend your energy to make improvements. You also can say to your business, "The value of these investments is returning this kind of pipeline financial value to our business."
Hopefully that was helpful to you. It's kind of a complex topic, so certainly we're willing to take phone calls or to help people with this in a little bit more detail. We, at ClearGauge, actually use a number of different techniques and tools to work through this with our clients. It is very much an iterative process to keep pushing to the back end to get better and better data.
The other thing I will say, and this is what I'm going to focus in on in the next session, is kind of bringing this all back up to, what are the best practices for measuring performance? What are the things to do to pick the right web analytics tool to be able to do these kinds of things that we've been talking about with KPIs and financial value? Also, how to set up the best practices, skills, and resources in your company to make this successful for your company.
So, that will be the next topic that kind of wraps up the "How to Use a Website Effectively as an Online Lead Generation Tool and How to Measure It."
Thank you very much, and I'm going to turn it back to Sarah.
