Marketing is a necessity for every entrepreneur and independent professional, and the sooner you understand it the better. But consultants often ask me: How do I measure the effectiveness of my marketing initiatives?
To answer this, it's helpful to understand the following:
- The difference and link between marketing strategy and implementation.
- The unintended consequences of setting an indicator of success.
- My recommended metric, and why I advocate for it.
Marketing Strategy And Implementation
To build and maintain a healthy pipeline you need a clear plan of action coupled with a flawless execution of that plan. That's why, in the CCS growth framework, we divide demand generation into two components:
- Marketing Strategy: It's the plan of action that includes an analysis of your circumstances and the recommended initiatives to earn attention and trust from your target market.
- Marketing Implementation: It's the process of putting the recommended initiatives from your plan into action. The execution of that plan.
This distinction is more useful than it seems. Some consultants invest time and resources in "marketing" without a clear plan of action. Others have a reasonable idea of what needs to be done, but can't commit to consistently implementing their plan.
Now, your marketing effectiveness is the degree to which your initiatives are successful in producing the desired outcome. You can produce an outcome without a plan. But it's impossible to produce an outcome without execution.
- You can only measure the marketing effectiveness of a plan once you implement it.
- The better your marketing implementation, the more you can trust that your success metrics are reflecting the real effectiveness of your strategy. Poor or inconsistent execution of the initiatives won't allow you to conclude how effective your plan of action really is.
I've recently written about unintended consequences, which are the outcomes of an action that were not foreseen. Although setting goals tend to lead to better performance, you need to be aware that success metrics can create unexpected side effects.
Most of the commonly suggested marketing indicators out there are prone to the "cobra effect", which end up making your problems worse.
If your success is measured by the number of leads, you may end up wasting all of your budget collecting information of contacts who are a poor fit for your services. If it's the number of calls, you will quickly fill your agenda with people who are looking for free advice without any intention of building a relationship.
There's no perfect indicator. But understanding the root of the problem and experimenting with different metrics with other independent consultants, I'm confident in the one I use with clients.
My Suggestion For Consultants
The final goal of your marketing initiatives is to earn attention and trust from your target audience.
That's a nice definition, but unfortunately not very practical. The problem is, it is virtually impossible to measure trust. It's personal, fluid, and both rational and emotional. Yes, you can use proxies - but let's not get into this rabbit hole here.
Since you can't improve what you don't measure, I usually adopt a more specific goal for your demand generation (marketing strategy + implementation):
The goal is to profitably generate qualified opportunities.
Two important things here.
First, "qualified opportunities" is the indicator I recommend you to use to measure the effectiveness of your marketing initiatives. Several criteria must be met for an opportunity to be considered “qualified”, but they help us increase focus and avoid unintended consequences. You can read its definition here.
Second, our initiatives should be profitable. Some of those qualified opportunities will turn into clients, so the total cost of acquiring a new client should include both your marketing and sales expenses.
If you are losing money to win your average client, your effectiveness or number of qualified opportunities becomes irrelevant. Your plan of action is simply not sustainable. Trading short-term revenue for long-term profit might be the rule for many VC-backed startups, but it rarely ends up well for consulting businesses.