About the Author: Bruce McDuffee's been on the ground in manufacturing marketing and sales for three decades. As global marketing director of an electronics manufacturing company, he tested and proved his strategies and tactics in the real world of global manufacturing. When Bruce speaks about marketing, manufacturers listen. His team is made up of manufacturers with more than 50 years of combined manufacturing sales and marketing experience. He knows what you're up against. We've asked Bruce to share his tested and proven marketing strategies, tactics, and technology with other manufacturing companies.
Key Performance Indicators (KPIs)
A company can employ any and all marketing techniques and still not find value in them. This comes from a lack of assessing which parts are working — and which ones are not. Many companies use vanity metrics or metrics where the only purpose is to help you and your marketing team feel better about yourselves.
An example of a vanity metric could be Facebook 'Likes'. When you use these KPIs, you'll amaze your co-workers and your stakeholders by knowing which marketing tactics are working and which ones are not working. It's not as hard as it used to be with modern tools like marketing automation integrated to CRM, the ubiquitous spreadsheet with pivot tables, etc.
These are my top marketing KPIs that are perfect for manufacturing companies. Use these KPIs to evaluate the performance of marketing strategy and tactics.
There are two sets of metrics. The first set is meant to be used internally with the marketing team in evaluating activities, promotions, events, campaigns, etc. The second set is the most important set. These five (5) are meant to be the metrics you use when presenting results to the external (i.e., external to the marketing team) stakeholders or your leadership team. The C-suite metrics can make or break your marketing career!
KPIs for Marketing Team
- Cost per Click (CPC). This is the best measure to compare any of the myriad marketing digital activities to each other. After a while, you'll be able to reject activities that don't meet your benchmark and do more of those that exceed your benchmark.
- Cost per Thousand Exposures (CPM). This is a good measure to determine reach. Cost per click and cost per thousand exposures should be considered together when evaluating the results of activities.
KPIs for C-Suite Stakeholders
- Net Contribution. This is the best measure of effectiveness. Do not mistake net contribution for an absolute ROMI. It is a perfect measure of efficiency and the trend tells the CMO how the overall strategy and tactics are driving revenue. Net Contribution (%) = [(sales revenue - COGS) - (cost of sales+marketing)] / [sales revenue]
- Marketing Contribution to New Opportunities. Again, not an absolute measure, but useful as a month-to-month benchmark. Also good for talking points with the Executive Team.
- Marketing Contribution to Closed-Won Opportunities. A great benchmark. Look for trends. Could also be correlated with other specific marketing metrics like impressions, emails sent, etc., to indicate general effectiveness of the marketing activities.
- Revenue per Marketing Qualified Lead (MQL). Always couch your stakeholder facing metrics as revenue as compared to cost. Think about how your CEO or CFO perceives the Marketing function based on reporting revenue per lead (RPL) or cost per lead (CPL).
- Number of MQLs. The net number of leads passed to Sales is, of course, an important measure of success for the marketing strategy and tactics.
Eventually, as you become more sophisticated with tracking marketing KPIs, you will use technology to support your discussions. Set a goal for yourself and your team that the next time you get an audience with the CEO, you will be ready to share at least one statistic about how marketing contributed to revenue.
- Click through Rate (CTR). Another good benchmark for comparing the effectiveness of materials and venues. The CPC, CPM and CRT together help the marketer make decisions about effectiveness.
- Funnel conversion metrics. MQL to SAL (sales accepted lead) to SQO (sales qualified opportunity) to Closed/Won and other relevant conversions.
- Revenue/Cost per attendee. These are good specifics for evaluating the effectiveness of events like trade shows, conferences or seminars. Be cautious of making binding decisions based only on these metrics. There are likely to be intangibles that should be considered such as the sales person's opportunity to see multiple customers and prospects in a short span of time.
These 10 KPIs help when it comes to deciding how to attribute a closed opportunity. If the last touch before a closed opportunity was a trade show, does that mean the revenue should be associated with the trade show?
In this modern age of buying behavior, we can never really know, nor should we try, to attribute revenue to one particular source. Instead, if we use these KPIs, we can clarify which parts of our marketing strategy are working — and drop the parts that are not — to improve our return on marketing investment (ROMI).
As John Wanamaker, the merchant and marketing pioneer (who opened his first store in Philadelphia, Pa., in 1861 before the American Civil War broke out) said more than 90 years ago, "Half the money I spend on advertising is wasted; the trouble is I don't know which half."
Naturally, your particular manufacturing (or distribution) business or organization may require different metrics depending on what you are selling. For example, those firms that are selling subscription, rental or repair / replacement part services may track also annual contract value and churn rate.
Not sure how to get started with KPIs? Sign up for Bruce's free Marketing Plan Evaluation for a KPI review.