SEOs and executives speak different languages. It's a simple fact, but it's one that often acts as a blocker for getting your ideas and investments approved. A simple change in how you communicate your marketing goals, triumphs, and challenges could be what's standing between you and getting the C-suite buy-in that's integral to your success. In today's Whiteboard Friday, Rand helps you translate your marketing jargon into financial metrics and data that the folks in charge will actually care about.
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Video Transcription
Howdy, Moz fans, and welcome to another edition of Whiteboard Friday. This week we're going to chat about tying marketing metrics that marketers use to the things that CEOs, CXOs, whatever the C-level titles that you've got are, investors, board members, to the metrics and data that they care about.
This is a problem that I've talked about with many marketers over the last few weeks, especially at some conferences and events where folks say, "Hey, we've got our metrics dialed in. We know what we're doing. But when we present it to the Board, or when we present it to our CMO, or our CEO, when we show it to our investors, not only do they not get it, it's like we're not speaking the same language, and therefore we're not able to have a conversation productively about where investment should and shouldn't be made, and they're not able to give input into whether they think our idea is a good one, or whether they think there's a good return on investment there." This can be tough.
Start with the metrics that marketers care about
So what happens is you're a marketer, you're presenting here to your Board of Directors or to your executive team, and you say, "Hey look, we've got traffic growing in every category. SEO is up. Social is up. We've grown our link profile, which is going to help us with search, all these great things." Fantastic, but the Board is sort of sitting there like, "Well, I don't really know how to contribute, and how does that tie in to higher lifetime value of customers, because that's the thing that I know and the thing that I care about, and I'm not sure this marketer person is really investing in the right kind of ways for the organization."
That sucks. As a marketer, that totally sucks, because it means that you are not communicating your message, and that means you're not going to get, you're unlikely to get buy-in from all these people that you really care about and need their permission and their acceptance in order to make the investments you need.
The thing is, marketers are very focused on the funnel.
We care about metrics that show top-of-funnel growth. We care about which channels send that top-of-funnel traffic. We care about how people are moving through the funnel. We want to see conversions and conversion rate, which is why we work so much on conversion rate optimization, and we care about marketing metrics that predict better retention or greater recidivism, meaning people are buying again or coming back and becoming customers again.
This is our world and we live in it. It does translate okay, decently to the Board level.
Translate marketing metrics to the financial ones that investors care about
But if you think about what folks care about at the highest levels of a company's strategic imperatives — that could be a Board of Directors, could be investors, could be C-level folks — they're really focused on things like market size, meaning: How big is our addressable market? Who could we potentially reach? What if we run out of those people — can we keep growing? Are more of them coming into the fold, or are people exiting this market and going somewhere else?
They care about cost of customer acquisition. How much does it cost us to get one new customer?
They care about customer revenue, the revenue that we actually get from those customers that we're bringing in, whether that's going up, and overall growth rate. Are we getting more customers over time? Is that rate of growth expanding, meaning acceleration?
They care about customer lifetime value. Customer lifetime value is something that pretty much every metric we calculate as marketers should tie back to that, especially when we're having conversations with these kinds of people. Essentially it is when a new customer comes in and they make any kind of purchase from us, they spend any type of dollars with us — a product, a service, a subscription, whatever it is — how much do we get over their customer lifetime? Meaning if it's an e-commerce play, it could be the case that they come and they buy five things from us over the course of two years on average, and that dollar total is $360, and 40% of that is gross margin for us. Essentially, the rest is cost of goods. Okay, that's customer lifetime value.
Or if you have a subscription business, like Moz is a subscription business, if you subscribe to our tools, we'll charge you $99 a month or $149 a month. I think on average our customer lifetime value is essentially $120 times the average customer lifetime span, which is somewhere around 11 months all in. So it's that number multiplied out. So $1200 or $1300, somewhere around there, that's customer lifetime value.
That doesn't actually count recidivism, people who quit and then come back again. We're trying to get to that metric, and we need it, because you want to be able to speak to true customer lifetime value. This is sort of the underpinning of all the rest of this.
But other things these folks are going to care about, comparison of cohorts. So it's not the case that all customers are exactly the same. You know this as a marketer, because you know that it costs you a different amount of money to acquire folks through one channel, and they perform differently than folks who are acquired through a different channel. You know that different cohorts of personas, for example, people let's say who work in an agency versus who work in-house, maybe those are two different kinds of people that you serve in a B2B model. Or you know that folks who are higher income versus lower income spend different amounts at your e-commerce shop, that type of stuff. That comparison is very interesting to these folks as well.
Another comparison that matters is a competitive comparison. How big are we, how big are they? How fast are they growing, how fast are we growing? What's their customer lifetime value, what's ours? What's their retention and recidivism rate, what's ours? Those things, massively interesting to this group as well.
Then there's a bunch of other stuff that they care about, like cost of goods and teams and market dynamics, etc. Marketers generally don't touch that stuff and don't usually need to worry about it.
But the solution to our problem here is to speak this language.
So let's go back to our initial story.
Instead of saying, "Here's traffic growth from all these different channels, and here's how we're investing in search, versus social, versus paid ads, versus trade shows," all this kind of stuff, what we want to say is something like, "Hey, here's the traffic from SEO, and here's the traffic from social, and as those have been growing, our cost to acquire a new customer has been falling, because those channels are organic, and that means we don't pay each time we get a new customer from them. We only pay for the upfront investment in sweat equity, creativity, engineering needs, web engineering needs, and whatever we're doing. But then it keeps paying dividends, and because of that you can see this CAC falling as our search traffic has risen."
Now you have the attention of these folks. Now you've engaged them in a way that they care about, because they say, "Aha, more organic search, lower cost to acquire a customer," — which is great because CLTV to CAC ratio, the ratio of lifetime value to acquisition cost, this ratio right here, is something that every investor, every Board of Directors member, every CXO cares deeply about. It's the underpinnings of the company. That's what makes a profitable company work and what gives it the ability to grow. When you speak their language, you get this type of response.
So what I'm going to urge you to do as a marketer is to take any metric, any data point, any story you're trying to tell around return on investment, around a project you have, and turn it into something that makes sense to the group of people that you're talking to, especially if that's strategic-level. You want to tie those to tangible improvements or to issues. It could be problems. It may not be just positive things. It could be negative things too, in the areas your CXO or Board or investor cares about.
So let's imagine — and this is a conversation that many, many folks have — they say to me, "Rand, we want to hire an SEO consultant, or we want to bring an SEO in-house full-time, but we've been having trouble getting buy-off from our CEO or our CMO or our Board."
Well, let's change the conversation. Instead of, "We need to hire an SEO consultant because SEO is really important, search engines send a lot of traffic, and search traffic is something we're not competing in well right now," to, "CAC is high. CAC is too high. Our cost to acquire a new customer right now is too high, and our CLTV is too low for customers that we buy via paid search. So we're spending a lot of money on paid ads right now, and the customers we get via that have this high customer acquisition cost, because we have to spend money to get them, and the CLTV isn't as high because customers who come through paid, on average, usually tend to underperform compared to those who come through organic. It's just a fact of who clicks on ads versus who clicks on organic results. But, if we ranked organically for more of these keywords, and we could get more SEO traffic compared to our PPC traffic, we could stop (a) losing those searches to our competitors, who are outranking us now, and (b) we would bump up the CLTV and we'd be lowering cost of customer acquisition."
Boom. You have changed the conversation to something that this group of folks really gets, and you've made it much more likely that they are going to say yes to your proposal.
Same thing here. Let's say you say, "Hey, we're going to do something crazy. We want to actually spend more on trade shows, on events, on speaking, on going places physically in-person. It's expensive. We don't reach as many people as we do over web channels or over traditional ad channels, but we've been getting good customers via events."
That's a real tough sell unless you do this. "Dear Board, here's a comparison of customers acquired via our five major marketing channels. Here's SEO, here's PPC, here's our Facebook ads, here's organic social, and this is events. You can see cost to acquire, you can see lifetime value, you can see the ratio, and you can see the numbers of folks that we've gotten via each of those channels and the revenue they bring in."
Awesome. Now, repeat buyers and referrals are so much stronger from events, from this group over here, that even though it costs much more, the math works out that it is the best investment we can make over the next couple of quarters. We want to bring this up by two or threefold, and if we keep seeing continued investment or continued metrics in the same way we have the last few months, we're going to have the highest positive ROI from that investment versus any of these other channels.
Awesome. Change the conversation, made it something these folks understand. Speak their language, and you get the buy-in you want.
All right, everyone, look forward to your comments and thoughts, and we'll see you again next week for another edition of Whiteboard Friday. Take care.
Great post Rand,
For content marketers whose strategies transcend across all channels, the problem I see comes a step before this video - namely, working out the CAC (customer acquisition cost) for content campaigns.
The CAC only really works if you can clearly attribute a channel/campaign to sales / leads. Content is often an early touch and rarely last click marketing method in terms of attribution. This makes most content marketing efforts difficult and sometimes, impossible, to track with a conversion metric.
Likewise, consumer behaviour also plays a role in acquisition. As I'm sure you know, it is not regular consumer behaviour for someone to read a piece of content (let's say a blog post) and then purchase a product on the same visit (100% attribution). Often it takes multiple pieces of consistent, high quality content over many months to deliver results. Just like SEO, content marketing is a slow burn. This is problematic because in my experience, most Execs only look at the short term gains (say over the past 90 days) in which to calculate success. This is often why Paid and Display look better in that time frame than Content.
What are your thoughts on how content marketers can build better reporting that is still relateable to CAC and LTV?
Paradoxically, and somewhat infuriatingly for attribution-focused marketers, it's been my experience that folks who have to tie content directly to acquisitions, especially short-term, are fighting a losing, nearly-impossible battle. Whiteboard Friday itself, to get a little meta, was a multi-year content investment that took time from multiple team members, creativity, investments in hardware, a dedicated room at our offices, lighting setups, editing time, and much more. It didn't prove its worth in terms of ROI for literally years, but today, I'd say that in the 8 years of WB Friday, we've turned it into one of the highest ROI marketing activities at Moz period.
That willingness to fail, to learn, to iterate, and to keep investing when the ROI is negative for long periods with the belief that eventually, you'll create massive value is one that few executives or attribution models can even grasp at. My suggestion is to invest in content with a long-term mentality, not a short-term, attribution-demanded system.
If you're really being forced, though, multi-touch attribution, and assignment of value to each piece of content a customer/subscriber reaches before converting (or retaining) is the way to go. It's not easy to set up (Moz uses Omniture and has an internal data warehouse and BI team to help with some of that modeling), but it is possible to capture at least a fraction of the value content creates. Just know that you can't capture the added SEO benefits of content, or the longterm goodwill, or the value of all the links to the content, or the brand visibility of the social shares, or the most intangible but potentially highest long-term value -- the learning your content marketers are getting from seeing what works vs. doesn't.
Awesome response. The problem is indeed to convince Execs to think beyond the campaign and to invest long term. They need to see that it takes time to build a community and that content will offer more benefits to your business than just the quick buck. Proving this however, can often end up in a convoluted report where you try to address content marketing growth across reach and traffic and engagement and a community as well as micro and macro conversions.
Would you think the MOZ One Metric score could be used to simplify such complex reports for content, the same way it does for social media? I've often thought a single metric for content could be an easy way to sell the 'community' and grow benefits to Execs.
It'd still be a tough sell, but yeah, I'd love to see something like One Metric take off. Some combination of measuring social reach + SEO value + links + traffic + contribution to the conversion funnel could be quite useful, though I suspect it would still need to translate back to the bottom line long term (possibly through a strong correlation with things like conversions, CLTV, CAC, etc).
It would also require a fair bit of customization, I feel. Most content campaigns have wildly different goals and metrics, you'd need to be able to deliver a consistent score despite budgets, assets and strategy changing over time.
Daniel - one tactic to consider that might be helpful here is to run a first-touch attribution report that is looking at leads sourced from content marketing. For example, you could attribute revenue to blogging by reporting on all leads where the first page they saw contained "/blog/" in the URL. With this segmentation, you can then track where they are in the funnel, what the channel was that drove that visit, etc.
I realize that a first-touch attribution is limited and doesn't tell the whole story, but I've found this is a helpful way to illustrate the success of content marketing. It's relatively easy to implement with Salesforce and Google analytics or a marketing automation platform and allows you to show month over month performance at the top of the funnel in raw leads, as well as metrics further down the funnel such as MQLs, opps and bookings.
If you wanted to really dive into it, you could also look at customers acquired from this segment on a cohort basis to track LTV and then apply a calculated marketing CAC of your budget dedicated to content marketing and a blended sales CAC to track your LTV/CAC ratio.
A couple blog posts related to this you might find interesting:
https://www.slideshare.net/MikeVolpe/content-cohort...
https://www.bizible.com/blog/how-we-track-revenue-f...
Hi Matt, I love this idea. We have played around with first-click attribution before, but it fell by the wayside because Execs did not care about first-click, as well as it's limitations regarding tracking over time (e.g. personas clearing their cookies corrupts the data). The data wasn't very reliable.
I really like the slideshare you've provided. Especially interesting is the idea of reporting on a piece of content on the first month and then on the fourth month. This measures the initial traffic hit a piece of content gets when it is first published and amplified; and then the 'slow burn' of SEO. I will definitely start measuring both the 1st and 4th month content performance from now on. Thanks for the tip.
Whiteboard friday has set up a new trend and a big thing that everyone knows. I am sure it would done a lot of positive branding for moz.
Good question Daniel!
For social media campaigns we mainly just make use of Googles URL builder. It makes it very easy to see where the customers are coming from and what they do from then on. But.. that is only the ones who come through our channels and who arrive at that specific piece of content. I would also be interested in hearing what other people are doing..
Best,
You are right, Mark, UTM mark-up does make tracking campaigns clearer (as well as useful in A/B testing headlines). We do that too. But, it is what comes after the click that should be measured. For example, how do we measure how that piece of content influenced a purchasing decision from that same visitor 15 months later?
Most marketers don't measure this, even though this is where a HUGE chunk of content's value lies. Content is not a last click channel. Content builds trust and community that contributes in 'influencing' purchasing decisions. Rarely does it result in a direct sale. But Execs who don't understand the role of content just look measure all their marketing the same way, namely - "What's the ROI?"
Such a 'churn and burn' marketing mentality works for programmatic campaigns, but not for content marketing. I feel we as SEO's and Marketers, need to do a better job at educating the slow burn of both content and SEO to our clients. Sure, there can be immediate results and that is usually how we measure success, but I'd love to see the industry really push back on 30, 60 and 90 day reporting to give such campaigns time to show their true value.
As Rand implies, if WBF was kept to a 30 day reporting schedule, its value in terms of ROI would be difficult to prove. No Exec with just 30 day reports to influence their decision would have kept WBF running and that Exec would have made the wrong call for the business.
I would be interested to know just how many awesome content ideas were killed because they were not given the time / resources by short-sighted Execs to bare fruit.
I think some of this is party around digital adoption/transformation - ie other parts of businesses are adopting to the digital world, and as such given time to "work it out". Marketing, although in some ways ahead of the curve at using digital, is not always given the same framework to operate within. As such - some of what Rand and Daniel talk about is also educating the board/c-suite on digital, this can be achieved naturally by them learning more, or by appointing Head of Digital/CDO/Marketing technologist roles.
Hi Rand!!!
Well imagine in Spain that hardly anyone knows what it means SEO ...
But try to empathize a bit with these executives ...
As you say, these executives are concerned to know the cost of doing a customer, so that if the cost is derived from one thing they do not know how is the online marketing (SEO, Adwords, Social Media ...) will surely be more reluctant to bet on investing that money.
While these executives must understand that the results of online marketing are never so immediate, and that the fruits begin to sprout months later
Good weekend
If you have to combine your online sales efford with a brand strategy, it is almost impossible to connect with executives and make them see the benefits. It is difficult to explain some inbound marketing aspect that have no short-term benefits
Ivan share and endorse what you say. In Spain is still very difficult conctar with entrepreneurs in the digital world. They want short-term benefits, but are not interested in anything for what you do. When you charge a job and begin to ask questions , take it with annoyance.
Analyzing more good customers rather than average and speaking in their language, what they actually want and than creating a database that generate something pleasing to the them. I love this “Aha, more organic search, lower cost to acquire a customer," this is what they want and we failed to understand.
Hey Rand this time the WBF’s topic is very different and unique.
A simple question they usually ask (when the ranking is going to be up) and they don’t want to understand the reasons. What to do in the situation means we convince them but still they only want the results in a short term.
Changing our communication style to exactly the metrics you described is how we doubled our business in 2015 and on track to exceed that in 2016!
No matter what you do (SEO, PPC, Social)...business owners (or execs, CEOs) only care about 1 thing...how do your actions contribute to the bottom line.
Not clicks...but calls. Not sessions...but sales.
One thing we do with every client is confirm KPIs, and make sure everything we do can be attributed to an action...whether a lead acquisition or sale.
If it can't, then we have a serious conversation about our ability to provide a service that has proven ROI.
This is also why we shifted from being an SEO company to a Marketing company. It is very rare that we are not working with paid traffic methods (PPC, FB Ads, etc) that have easy attribution methods for our marketing actions in combination with us providing SEO services.
This also allows us more freedom in the realm of SEO.
Paid Traffic = Customers NOW
SEO = Customers LATER
When the client's phones and/or cash registers are ringing...you have more leeway for marketing channels like SEO and Content Marketing when it isn't always 100% a possibility to have direct conversion attribution.
Love this topic...something we all need to be reminded of!
Great way to think about it Jason - customer now vs. customers later - super smart. Thanks for the story and the feedback!
This is such an important topic to address, and you make some really great points. I'm lucky to be working somewhere the C-levels have good buy-in on marketing tactics, but it's been a challenge in the past to communicate in a way that speaks to their knowledge base. Manage expectations. I like to do a recap of the previous month, and identify upcoming tactics and the return expected. Always test proof of concept before scaling. When it comes to reports, I like to break out customer acquisition and customer retention ROI as separate metrics, rather than just show return by marketing channel costs such as SEM, social ads, email, etc. When determining where to spend the marketing budget, it's always a good idea to diversify. Also, it really helps in determining Customer Lifetime Value if you have a CRM system.
Excellent & very actionable advice. This reminds me very much of point #2 in my SEO Enabler post: 'understanding and contributing to business objectives beyond SEO.' ;) Being able to relate and speak the language of any team (C-suite, devs, designers, etc.) is all part of being an SEO that gets stuff done.
I really enjoyed the conversation this generated in the comments if not more than the post itsself!
In my opinion this video focuses on B2C websites, where users buy a product or a service directly by subscription models or ecommerce or any other type of transaction a website can offer. This allows the analysis of all different channels, attribution modelling, traffic sources etc...However, this video cannot be helpful for B2B websites, which still have products to sell but it's offline. There are sales team picking up the phone and selling something. In particular publishers monetize from advertising by selling ads spaces to influence the websites audience. There isn't any CAC, CLTV involved in the analysis, there are different metrics the Execs care about, which are related to the offline clients buying directly from sales team rather than the website. So the conversoin rate happens offline, not online.
B2B websites are not producing any revenue directly, but they are still contributing to the company's overall growth (revenue) by building a valuable audience. How would you convince an Exec to invest in SEO/ PPC/ Social if you cannot see a direct correlation between digital and revenue?
Hi Luca - no matter how your product/service is delivered nor where your website fits into the sales+marketing stack, every business has some costs associated to acquire a new customer, and some concept of the value an average new customer brings based on what they pay for, how much, for how long, how many times, etc. CAC and CLTV should be universal to businesses of every kind. Even if the sales happen offline or are delivered offline, CAC and CLTV exist and are critical to the business success (or lack thereof). In the days before the web, companies certainly still measured and ran marketing/sales decisions based on these metrics -- they're fundamental to the operations.
Hi Rand, thanks for your response. I have a lot to think about now, your response put my mind into work :) if sales are delivered offline, to be able to incorporate digital into the overall company's strategy, we need sales team to sell what the online world can produce. I am looking at audience, this is the only valuable product a website can generate, when there isn't any other product, good quality audience is what clients want.
By selling audience, we create a link between online and offline and the more the audience grows and is of great quality, the more offline sales can be successful.
Great topic Rand as usual. Most of the C level management needs an SEO to provide them 12 months period strategy and how you will work on each of the channel in case of digital marketing Like, (SEO, Social Media and SEM) and you are also being asked how much people you needed to work under your supervision and how much salaries we should be given them as well? So, CAC (Customer Acquisition Cost ) and CLTV (Customer life-time Value) are most advanced terminologies.
As in country like Pakistan not a single C-level executive can understand these terms in general. What they just need is how much money we are investing in creating a department and You (The SEO Head) is solely responsible not to properly run the department but to get good ROI and quality customers out of there. What you do and how you do the things is none of their business at sometimes but they just need the double revenue as what they have incurred on expenses.
Moreover, they sometimes give you the time by themselves with no prior knowledge of SEO that let suppose in 3 months you have to bring not only rankings on all potential keywords but also get solid customers to buy their products and consult with their services whatever. If you are unable to prove yourself not only You but the whole team is kicked off and the department is closed due to losses as per CEO statements.
This was a fantastic WBF which is always the case, but your point on changing the conversation pieces to speak to the C Level people is something that I have been racking my brain on for a long time. There have been many meetings with blank faces and although great results are being presented it is not sticking with them.
When you can put CAC in their face and show the benefits of the organic marketing work it is a no brainer and something that I have attempted in the past but with the wrong verbiage. I think that as a marketer we always need to know our audience we are marketing too for success, but this is also the case when presenting the information that we have on our efforts. The higher ups only care about one thing and that is Money not where they are at in search or the link value that has been created, and the coolest part is as an SEO showing them how by ranking well and what it took to get there you Saved Money, and have created a longer life of a client being a customer.
This is being shared not only with my team but the entire department. Thanks for this and all that you do at Moz, but also the entire SEO community.
Great topic Rand,
The first thing I’d suggest doing is teaching your C-level how to use Segments in Analytics.
C-Level folks usually know how to look at the general traffic trends in Analytics, sometimes even how to get the GEO data, but usually not more than that. I’m always amazed how often C-Level folks don’t have crucial data in front of them, and sometimes simply by segmenting traffic sources (as only one example), they can understand the importance and potential of SEO (or Social) for the entire business.
Most boards and C-Level folks will very often also be aware of the CLV for user acquisition purposes (both web and app). But this piece of information now also means they are able to translate Organic traffic into revenues.
The thing is that every organization has its own struggles, and in my case it has been the opposite – convincing the C-Level to invest in paid search and offline advertising to improve branding, that will (also) lead to better SEO.
But OK let’s go back. The reason I think it's such a great topic is because most executives don't understand search marketing at all, and sometimes not even marketing in general. This means that all of our requests to management, whether it's investing more in content or product, getting new software subscriptions, sending employees to conferences abroad, and of course hiring new people--must be backed up by data with clear focus on ROI, because that’s their language!
Besides helping them see the Organic traffic as a significant channel for the company's goals, we should also remember that executives care about their market share (our size comparing to the entire market), growth rate and beating the competition. I've been able to get approvals for projects based on the idea of us building something better than a specific competitor. And we should remember that C-Level folks are usually very competitive people.
The problem we are facing is that customers only care about for the things they have up their minds. Even when we tend to analyse and explain all these metrics most are something like 'get on with it'. This obviously is driving us crazy, but nonetheless the way around it for us atleast, is to work on the things our client cares about and wants to hear about and then accordingly discuss the rest ( when they start looking around is time to say bye!)
Wow Rand, that's a very cool post!
I think this can be trully useful on many occasions when you don't know exacly how to express what you've been doing all this time. And honestly, it's sad that sooooo many companies still waist to much money on regular marketing when they should be focusing on online networks cuase, maybe they don't see the results in the moment but they will sooner or later.
Have a nice weekend!
Hi Rand
True. The main problem is usually a shareholder or a director does not know anything about online marketing, like a SEO do not know about other things ... Gradually go closer positions
Thanks for your job. A greeting.
Awesome WBF Rand. I must say, being a marketeer is all about being in customers shoes. Being a marketer one needs to ascertain the clients needs and make plans accordingly. CLTV measurement is something which gives a clear view in this regard. Content strategy is something which might not pay off soon and needs continuous investment. Measuring the performance of omni channel marketing through CAC is what every process lacks. Thanks for bringing this up.
Translating concepts and numbers from what your department uses everyday, to what your audience wants to see is key! Thanks for sharing some solid ideas.
Stellar video Rand! I felt like the dots have just been connected in my brain. This will definitely be a WBF that I bookmark and refer to in the future.
Thanks and have an amazing July 4th weekend!
Hoping that someone can help any my question since I found this great article and video while preparing for a meeting with a potential VC Investor next week.
In determining the customer acquisition cost in our 1st year projections, we plan to have 2 teams of 8 people, one team in each state, that will introduce our monthly subscription service to a target of 500 customers in each state. This equals to a monthly quota of approximately of 5.2 closed deals per team member each month in each state ((500÷12) ÷ 8). Each following year we plan to double our sales goal and have teams in other states. Once the team member closes a deal and meets their monthly quota, they are to move on to other opportunities.
So here is my question… Should the annual cost for each team member be included in the cost of acquisition for each customer although they deal with the customer just once? I know this may seem like a simple question but I’m concerned that with paying an average of $70k annually per team member and adding $1120 to the CAC versus how the CLTV of $14k (based on 2 year subscription) will look to a potential investor. Unfortunately, the targeted customer requires a more personal approach in order to demonstrate the value of the services offered, hence the need for a team member to provide a walkthrough since the targeted industry is known to be slightly behind when it comes to the use of newer technologies.
I apologize for providing so much detail but it’s imperative to determine if we are on the right track before we present to the VC. Any feedback will be greatly appreciated. Thank you in advance…
Very interesting topic this week Rand and definitely a challenge for any modern strategic marketer. I think any C level board member will already expect you to know what tactics should generate the desired results, pretty much a given. However I totally agree how you match your strategic marketing strategy to your business strategy is paramount.
Developing, for example, a Brand Value Dashboard is a good visual example, where you can marry marketing and management metrics together so that both senior managers and marketers can understand and communicate with each other. Your dashboard should include some financial metrics such as: Market Share, Market Growth (CAGR), Market Demand, Marketing Cost per Unit (new and existing business customers). And marketing ones e.g. Goal Conversion by channel, leads/opps per channel and the penultimate metric, the mother of all metrics - BRAND VALUE.
Arguably here the board MUST have confidence in the marketing team that they can increase and enhance brand equity/premium to the benefit an organisation's stakeholders.
If you can communicate evidence through tools such as a brand value dashboard showing how your strategic marketing strategy supports the businesses objectives. If for example you have a adopted a marketing penetration strategy (see Ansoff Matrix) to grow business sales in your existing market. Then the metrics employed need to reflect this approach but still be communicated in business speak e.g. Current market share, Market size and penetration growth % pa.
Then you can really present the value of marketing, enhance it (marketing) and your reputation, deliver value to the business and enhance stakeholder trust and confidence.
As you rightly state Rand it is essential that marketers talk business speak to order to gain support for their marketing efforts.
David
Gracias por su esfuerzo. Un saludo.
SEOs and executives speak different languages but you sharing very good article post.Many people taken help this article and very nice video.
Hey guys, we're creating a product that helps automatically calculate LTV and CAC for each channel and cohort using Stripe data. If you're interested, please, let me know.
Hmmm.. nice one from moz, i enjoyed it
After a long time because of so busyness, here at Moz. So happy again to watch this WBF.
A great topic. it is very dificult to translate our online marketing effort in beneficts. If you have a more Tcenic profile it could be a complete Nightmare
Thanks for the tips Rand
hi rand it is a great use full stuff for us to present our ideas and business plans related to SEO in front of our company board
Brilliant! Nice post! Many of us have been identified in some time with your words! ;)
Really Thanks for this Rand! Good Video!