The marketing funnel provides businesses with a solid model for creating a marketing strategy, but it is worth questioning whether it is helping you to identify the KPIs that best define successful performance for your business.
Here’s a new way of looking at the marketing funnel – one that can help you focus on all stages of the funnel, as well as highlighting some useful KPIs that can provide real insight into the way you measure success.
Doing something that’s changing the world and would you like to have a chat with me about it? Click here and fill out the form!
Don’t like videos? Here’s the text version:
In today’s video, I’m going to talk about the KPIs that you might be setting to measure success – and questioning whether there are some that you haven’t thought of that you might want to add.
If you haven’t subscribed to my YouTube channel already, please do – it will help me loads, and if you click the bell you’ll be notified when I release new videos.
Redefining Performance
During a course I recently attended, I had a thought-provoking conversation with another attendee about high-performance businesses. He was talking about how the idea of being happy in the workplace is all well and good, but once a high-performing business comes under pressure, it’s all about money over people – money, profit and numbers. I countered this assertion, because to my mind, purely looking at profit metrics isn’t necessarily a good indication of what ‘performance’ means to high-performing businesses – I would like to think that a business becomes a high-performing business because it prioritises other metrics alongside profit (which is of course important).
I think it’s critical for a business that wants to operate ethically to consider what ‘performance’ means for them – and to keep this in mind when they’re comparing their performance against a business that’s operating in a less ethical, or even an unethical way. If you’re comparing your performance against a business that’s unethical, then I think you can take some comfort in the idea that their performance success may be happening at the expense of something that you wouldn’t tolerate.
Performance is about more than profit – yes, it provides the fuel to keep your business going (which is important!), but is does not give your business purpose.
Measuring Performance: Success Metrics
Setting key performance indicators (KPIs) to measure performance is crucial for making sure that your business can run successfully. It’s like checking your blood pressure to make sure that you’re healthy and well.
What are the success metrics that you look at in your business, and which ones are the most important to you? I think profit is only one metric, and it’s arguable whether it’s the most important. I think there are other metrics that are equally as important as profit, so here I’m going to talk through where to find these metrics in your business and how to rank them in your head.
The Marketing Funnel: Awareness
The marketing funnel can be thought of as the way that people travel through your business – and yes, it is modelled on a funnel, with a wide top and a narrow bottom.
You’ve got awareness at the top. Awareness is the first contact that people have with you. At this stage, they’re learning about your business – they’re finding out about what you do.
Awareness metrics include:
- Clicks
- Likes
- Signups to your email
- How many people are following you.
These are pretty important metrics in that they’re feeding into everything you do. You need the numbers involved at this stage to be the largest numbers in your metrics, and this is why this model is described as a funnel – those clicks, like, follows and signups funnel down into the next stage, which is consideration.
The Marketing Funnel: Consideration
When it comes to consideration – the next stage of the marketing funnel – you are looking at interactions with your business. People are now considering whether your product is the one that they’re going to buy. They’re comparing you against your competitors; they’re thinking about whether they actually need your product or service.
Consideration metrics include:
- The opening of emails by people on your email list
- People reading blog posts that explain more about your product
- Potential customers booking a sales conversation to further discuss their needs
- Potential customers completing a quiz or a calculator on your website to find out more about how your service or product relates to them.
Consideration metrics are where you see the numbers drop. Yes, you’ll lose lots of people, but these numbers are a lot fuzzier because consideration often happens in the head. This is true of awareness metrics as well – there’s a lot of loss that you won’t be able to measure, and you may not even be able to see that it’s happening, so a lot of what you’re measuring in these top two stages can be unclear. As a result, you can’t come to solid conclusions because there’s always another explanation that may account for changes in these metrics.
The Marketing Funnel: Conversion
The third stage of the marketing funnel is where people usually start with their KPIs. This is conversion; in other words, this is where you sell your products or services. The numbers involved in measuring conversion are fairly obvious – they relate to how many people have actually bought the product or service that you’re selling. That’s the bottom line with conversion metrics – how many sales do you make?
Profit is also a part of this stage. For example, you might want to compare actual sales against the costs of those sales and how much profit you’re making from them. As your business grows and becomes more complex, you can expand these metrics as required to evaluate conversion and profit in different ways.
The Forgotten Part of the Marketing Funnel
After the conversion stage come the stages of the marketing funnel that people often forget to use in their success metrics: loyalty and advocacy. They might vaguely measure aspects of these last two stages of the marketing funnel; they might even have some vague strategies in place. But it’s rare for businesses to use loyalty and advocacy to determine performance – in other words, to determine success – and this is a critical, strategic error.
It’s understandable why people think this way – after all, the marketing funnel is shaped like a funnel, so it’s almost guiding your brain to think these last two stages are the least important parts of this structure. But it’s a mistake to think that this part of the marketing funnel represents the smallest part of your marketing.
Duct Tape Marketing visualise the marketing funnel as a marketing hourglass, which helps to highlight the importance of these last two stages. Duct Tape Marketing’s John Jantsch talks about how the bulk of your marketing comes in the awareness stage, but he highlights how the advocacy and loyalty stages involve nurturing your existing customers to buy from you. The loyalty stage is all about nurturing them to repurchase, while the advocacy stage involves getting people to talk to other people about buying from you. This turns your customers into your best salespeople. If you can get the loyalty and advocacy stages working in your business, sales will pick up like a snowball because that’s where people’s trust lies – in the people close to them telling them that your product or service is worth buying.
Loyalty and advocacy metrics include:
- Customer satisfaction
- Reputation
- Employee satisfaction.
As a side note, employee satisfaction arguably improves the entire length of the funnel, so maybe it should be a more important metric when it comes to determining performance. Employee satisfaction can be directly related to your profits – what if the unhappiness of your employees is impacting your profit? It’s certainly worth considering.
The metrics that count at the loyalty and advocacy stages are more ‘concepts’ than they are actual metrics because the metrics that you need to measure when it comes to satisfaction and reputation are going to be more specific to your business. Maybe they’ll relate to customer surveys or the numbers of reviews you have, or maybe they’ll relate to rankings that you have on an industry website that people trust – such as checking a tradesperson on a website like Checkatrade.
Remember the Bottom Half of the Hourglass
I think that remembering to factor in loyalty and advocacy is one of the most important indicators of performance success. While conversion (and therefore profit) is seen as such an important focus – and it is true that your business needs to make that fuel – maybe you need to be looking for your success metrics at the bottom of the marketing funnel, at the bottom of the marketing hourglass.
Your success metrics are going to have a profound effect on what you decide to do with your strategy, so check what you’re measuring, check what you’re really paying attention to, and see if focusing that attention on certain metrics changes your strategy – and maybe transforms your business.
Are you wondering about whether your current KPIs translate to truly useful metrics for success? Please do get in touch if you want to explore how you can redefine how you evaluate performance in your business.