With the vast amounts of data available to digital marketers it is all-too-easy to spend valuable time burying deep into the numbers without using them as actionable insights. Setting meaningful targets with a structured review process means that even the busiest in-house marketers can be on top of their numbers and importantly use them to identify and drive improvements.
How to calculate meaningful targets
When setting targets, my preferred starting point is the actual value that Marketing is tasked with delivering to the business. Typically this will be a value attached to new sales e.g. “Generate £x of new business sales from marketing activity”. This figure should be an agreed target between the head of marketing, the managing director, and most likely the finance director too.
With your ultimate target agreed, you need to break this down into more meaningful targets. To do this you need some background information and data:
- Average sales order value
- Opportunity to win conversion rate
- Lead to opportunity conversion rate
In an ideal world this information will be readily available in company accounting and CRM systems however don’t worry if this data is not easily accessible. This is a good opportunity to introduce your target setting project to your colleagues in Sales to get their input.
Key stakeholders from the Sales team should have a close handle on typical order sizes and conversion rates, but may also be able to give insight into variations or trends. Depending on your business and the information gathered, it may make sense at this stage to split your total sales target into several smaller targets e.g. geographical split or by product category.
Once you have gathered your background data there is a maths exercise to do to calculate your top level targets. Using the formulas below you can calculate the following targets:
- # of sales wins
- # of sales opportunities
- £ of sales opportunities
- # of raw leads
This data can now be used to set your annual and monthly top level targets. These should be recorded in your Level One Tracker (sometimes referred to as a scorecard or bowler). Here you can also make adjustments to any seasonality trends should you wish.
You will now need to consider how the sales target should be assigned across the various marketing activities. Ideally use previous years’ data on sales by lead source to guide you. However if this is not available then other useful data can include Conversion Goals by Traffic Source in Analytics or even just website traffic sources as a starting point to make an educated guess e.g. 30% Email, 25% PPC, 25% Trade Shows, 20% Organic.
Using the same calculations as above you can now calculate the raw leads and sales opportunity targets for each element of your marketing mix. You can choose to adjust the values for different activities e.g. average order value from PPC is £4,000 rather than £5,000, this will increase or decrease the target number of leads and opportunities as appropriate. Just remember to update your top level metrics with the changes.
You now have starting point for your level two trackers, which you can complete for each activity. Using existing data as your base you can enter target metrics for key performance indicators which will help you to monitor performance and identify opportunities for improvement. KPIs can include:
- volume of organic traffic (SEO)
- organic search bounce rate (SEO)
- conversion rate from traffic to lead (SEO) (PPC) (Email)
- impression share (PPC)
- cost per conversion [lead] (PPC)
- click through rate (PPC) (Email)
- average cost per click (PPC)
The purpose of setting targets against these KPIs is to help manage campaigns and drive performance improvements. With so many metrics available and without having the targets in place it can be overwhelming for a busy marketer in a small team to identify where best to allocate time and resource to be impactful.
Don’t drown in data
Now you know your targets and what you need to track, it’s at this stage that many in-house marketers can feel overwhelmed by the amount of data that regularly needs to be gathered for reporting purposes.
Avoid reporting being a drain on your time by spending some time upfront planning your reporting requirements; set up automated reports by emails and use dashboards where available. Make use of any resources available to help you with this, be it IT support or online application support options. I recommend spending a couple of days at the start of the year to map out and schedule reports, even part way through the year this is still worthwhile doing. This preparation means you can then focus your valuable time on using the data to make informed decisions rather than just gathering it!
Use targets and visual management to drive performance improvements
Having targets in place is essential to help a marketing team identify and focus on the areas for improvement. However, having the targets in place is not enough, there needs to be ownership and visibility of the goals. Depending on the size of your team and the split of responsibilities it is recommended to assign ownership to the marketing team where appropriate for level two trackers, this will be a significant factor in getting buy-in from the marketing team. For the second factor, visibility of the targets, the best method that I have found is to use visual management.
Create a marketing board, located close by the marketing team, where you can put up copies of your trackers. To make the trackers visually compelling and easy to understand, use a traffic light system. Results can be colour coded as:
- Green – On target
- Orange – Near miss
- Red – Missed target
The benefit of using a colour coded system is the ease and speed at which the detailed information can be gleaned. Colour coding means you can see at-a-glance how each element of the marketing mix is performing against targets and easily identify areas that require attention. The simplicity of a colour coded tracker is key to helping everyone understand it and being engaged. You may initially find some resistance to using visual management due to its public nature so it’s important to introduce and communicate the purpose of the board. It is not designed to be a tool for blame but to quickly and easily highlight opportunities for optimisation and improvement.
Once you have an attractive looking visual management board in place, how can you use this to drive optimisation? A regular visual management board review meeting should take place with all stakeholders. Depending on your business, you may choose to make this a monthly, weekly or even daily meeting. In addition to the Marketing team, it is a good idea to invite colleagues from other departments, particularly Sales. The review should start at the top level metrics i.e. are sales on target (green or red) and work down to lower level KPIs, focusing the discussion on the hot spots i.e. the red.
For some red spots, there may be a quickly identified action that should be carried out, others may require more in-depth analysis. E.g. If the organic traffic bounce rate is red, further research is required to identify which organic traffic landing pages have a high bounce rate, to then review the calls to action on these pages. Each action, whether it be optimisation or further analysis, should be recorded on the board with an owner and follow up date, to be revisited at the next meeting.
How does setting targets help to prove the value of marketing?
First and foremost the setting of targets improves your ability to track the performance, both during and at the end of your campaigns, making you more efficient at identifying opportunities and allocating resources to have the most impact. This will improve campaign performance and ROI.
Target trackers will provide you with clear, easy-to-articulate data to use in discussions about Marketing’s activity and contribution to the business. If you miss a target – and this happens to the best of us at times – then your knowledge and familiarity with the “red” areas of the trackers, together with your recorded actions, provides you with a data-driven explanation of the steps being taken for improvement.
Finally, trackers can also be used very effectively in budget discussions. Should the dreaded subject of a budget cut arise, your trackers enable you to calculate the potential impact that a cut will have on sales revenue. This can make a business think twice about making the budget cut. On a more cheery note, when it comes to pitching for new or additional budget, the trackers provide tangible and powerful evidence to support predictions of ROI and help you win that additional budget.