By the end of this chapter, you will be able to:
- Tie your growth marketing metrics to revenue and profitability
If you view marketing as a cost centre or necessary evil, it’s time to turn that on its head.
From now on, you consider marketing a revenue generator. This is the mindset shift required to embrace growth marketing. It’s also the mentality required to bring in more investors.
When it’s time to raise that Series A and beyond, investors will want to know how every activity generated revenue. It’s up to you to take all of your growth marketing activities, whether they’re in lead generation or content marketing, and tie them back to revenue. The positive outcomes of this approach are that:
- Investors know where their money is going, and they are willing to invest further
- From inception, your marketing function develops as a revenue generator, not as a cost centre
- Your marketing activities become more focused and efficient, because there’s a clear purpose and objective to all activities
How do you tie SEO to revenue and profitability?
Search engine optimization (SEO) is a popular growth marketing activity, but it’s rarely tied back to investor metrics. This is because SEO is usually focused on top-of-funnel metrics.
- Branded search demand: Increased branded search demand improves rankings for non-branded queries, places brands in the related searches section, and impacts future search suggestions and auto-completes.
- Domain authority: A higher domain authority, not to be confused with page authority which measures specific pages, makes you more competitive in Google rankings for specific keywords.
- Organic rankings: Unpaid appearance in the Search Engine Results Page (SERP) increases the impact of your inbound marketing efforts since customers turn to you to solve their problems. (e.g. A budgeting app that ranks highly for personal finance content converts millennials looking for money advice.)
- Organic search traffic: This is the number of people who land on your site after a general search engine query, indicating how much your organic SEO efforts are generating site visits and leads.
- Organic search traffic as a percentage of all sources: This is important, because an increase in this metric over time indicates your organic efforts are minimizing the amount of money your company spends on paid ads.
- Brand vs. non-brand keyword rankings: This demonstrates how connected your solution (brand) is to a market problem (non-brand keyword rankings). If you’re growing your non-brand keyword rankings, your SEO efforts are paying off and helping to offset the cost of paid ads.
Marketing teams can demonstrate ROI by tying their SEO activities to their KPI metrics. For example, marketers can tie increases in organic search traffic or domain authority over time to an increase in conversions or a decrease in customer cost per acquisition over time.
Tip: SEO rankings should only be tracked monthly, since it takes time for Google to index and rank sites.
How do you tie lead generation to revenue and profitability?
Your lead generation metrics are important for two reasons. First, they are closely tied to revenue, helping you paint a clear picture about your marketing ROI. Second, they link other top-of-funnel marketing activities, like SEO, to revenue by demonstrating how those activities reduced the need for pricey lead generation.
Not sure which metrics to track? Here’s your cheat sheet.
- Customer Acquisition Cost (CAC): How much you spend to acquire each customer. This is an useful metric. It demonstrates how well you’re allocating funds, whether your business is sustainable, whether you’re pricing your product correctly, and more.
- Cost per lead (CPL): How much you pay for leads generated through performance marketing. In these arrangements, the goal for performance marketing compensation is generating a lead not generating a sale. This metric determines whether that expense is worthwhile.
- Return on Ad Spend (ROAS): How much revenue is generated for every dollar spent on marketing and advertising. This metric is telling and puts your other metrics in context. For example, Company A and Company B may have CACs of $7 and $18 respectively. At first glance, Company A looks like it’s in a better position. But if Company A’s ROAS is $8 and Company B’S ROAS is $30, Company B is more attractive to an investor.
- Lifetime Value (LTV): How much revenue a customer will bring in over their entire time with the company. If a customer is expensive to acquire (high CAC), but generates exceptional lifetime value, the high CAC might be worth it. On the flip side, an expensive CAC with low lifetime value warrants a re-evaluation of your customer acquisition strategy.
How do you tie lead nurturing to revenue and profitability?
Lead nurturing is focused on keeping the leads you generated engaged and informed until they’re ready to convert. But you want to convert them sooner rather than later to avoid spending money on prospects who never purchase.
Important lead nurturing metrics include open rates, click-through rates, click-to-open rates, unsubscribe rates, bounce rates, and discoverability rates. While this sounds like a lot of metrics to track, improving them maximizes your lead generation metrics.
- Increased conversion rate: Optimized messaging, layout, and CTAs lead to more sales
- Increased sales velocity: Leads are ready to buy, because they’ve been educated and nurtured before arriving at the sales team
- Increased annual recurring revenue (ARR): Maintained annual subscriptions and fewer cancellations due to regular engagement and information sharing
- Increased lifetime value (LTV): People do business with the company longer, maximizing the return from acquiring one customer
- Decreased CAC: As more revenue comes from repeat revenue or referral business, money spent on acquiring new customers can be decreased
How do you tie content marketing to revenue and profitability?
Content supports all of its growth marketing peers. So its metrics can be divided based on the purpose content serves, whether its to increase brand awareness through content (SEO-focused, social media, or editorial), convert through lead generating PPC copy, or educate and inform in lead nurturing emails.
- Consumption: Metrics related to consumption such as web traffic from social channels and organic search, video views, newsletter opens, and download can measure brand awareness. This is a top of funnel metric, but it can lead to reduced spend on paid marketing tools as organic brand recognition grows.
- Engagement: Metrics related to email shares, social media engagement, inbound links, and media illustrate the educational value of a brand. This can increase the lifetime value (LTV) and annual recurring revenue (ARR).
- Lead generation metrics: Metrics related to email subscriptions, completed form, qualified leads, free trial conversions, and content upgrades demonstrate how well content turns casual visitors into interested leads. An increase in content-driven lead generation metrics points to reduced CAC and reduced CPL.
Your marketing activities should all tell a story about making money or saving money. Ideally, it will do both.
Marketing should be viewed as a revenue generator, not a cost centre. Marketing teams must prove this by regularly tracking the ROI of their marketing activities. This also helps the marketing function justify their activities to current investors and secure funding from future investors.
If you’re a start-up founder, the world is brimming with opportunity. Each year, consumer expectations rise, fuelling demand for greater, more customer-focused products and services. At the same time, businesses are eager for vendors who improve outdated B2B tools and service delivery. Meanwhile, there’s ample funding for the taking. In the third quarter of 2020, VC-backed companies raised $73.2 billion U.S. worldwide while Canada’s venture capital market hit an all-time high of $4.9 billion U.S. in 2019.
The opportunity is there. Now it’s up to start-up founders to capitalize on it, and the best way to do that is through growth marketing. Growth marketing’s focus on data, customer satisfaction, and experimentation checks all of the boxes required to capitalize on these trends. With growth marketing, you keep up with customer expectations, innovate on B2B service delivery, and prove your business’s feasibility to current and potential investors from Day 1. You do this by understanding how your customers respond to your product using data, experimenting to discover the most impactful marketing messages, and tying all of your marketing activities back to revenue generation.
As our Harvest Guide to Growth Marketing shows, there is a proven way to do this, even if you’re an early-stage company chasing Series A funding. Growth marketing helps you use the resources you have now to produce outstanding business outcomes. It empowers you to merge product development and marketing to build initial product traction, catch the attention of investors, and propel your company to the next level.
To learn more about Harvest's Growth Program, request a consultation here.