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What metrics marketers should pay attention to while measuring an online marketing campaign

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What you should take into consideration before calculating CAC and LTV

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How to structure a campaign performance report so that it's easy to follow and take action

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    Transcript

    Anna Shutko:

    Hello, JJ, and welcome to the show.

    JJ Reynolds:

    Thank you so much for having me.

    Anna Shutko:

    I am super, super excited to have you today, and I know you are a power user of Supermetrics. You are a fantastic marketer analyst and you basically change many hats at once, and we’re going to talk about marketers designing campaigns for B2B SaaS, and more specifically, the measurement for these campaigns. So, my first question to you is what should marketers start when they are designing a campaign for B2B SaaS? Are there any specific things they should take into consideration when designing a campaign for this specific type of product?

    JJ Reynolds:

    Yeah. I’d say first take a step back and say, what is the expectation of what you are trying to accomplish? That’s the first strategy aspect. For any data pipeline measurement, any type of thing is the first piece is the strategy of what is it that you’re trying to accomplish? So, for example, in a smaller B2B, if you’re first just in a startup phase, or maybe you’re just looking for a few leads here and there, you might have a goal of let’s just say 10 leads or 10 new customers a month, whereas a larger your company might be like, we’re going to need hundreds, thousands, whatever it might be. So, I’d say first thing is, what’s the expectation of your campaign? And then work backward off of that. The biggest fault I see a lot of people do, especially when it comes to measuring what they’re trying to accomplish, is they’ll start with the action and then say what happened.

    JJ Reynolds:

    They’ll have something along the lines of saying, we’re going to do cold email outreach, or we’re going to start an SEO campaign for this specific target, but they’re not really defining what their outcome is desired, what they’re trying to achieve. When you’re designing a campaign, so if you’re at ground zero, you’re sitting in front of a whiteboard, what I’d suggest just to start things out at a high level is say, what is our desired outcome, and then what do we expect the percentages to be? Just work off percentages, because oftentimes it can get really daunting to be like, we need a hundred leads. Okay, let’s work backward off of that. Let’s say, okay, that means that we need a thousand people on our landing page.

    That means that we need to send 100,000 emails if we have a 1% click through rate. That’s the numbers. So, I think working backward off of that is much, much easier to get a realistic expectation as opposed to setting a number of saying we’re going to grow 10% month over month, and then when you don’t do that, you’re like, well, didn’t work. Now what? So, I’d say that’s probably the biggest, the biggest piece is, what’s the expectation? What are the steps that you’re trying to achieve and how can we nail those down?

    Anna Shutko:

    All right. Fantastic. I really, really like how you started with the strategy. I think this is very important and this is very key for every single marketer out there to keep in mind, and I just wanted to double click on the expectations part. You mentioned that, for example, imagine everybody’s standing in front of the whiteboard and we’re trying to figure out these percentages. What if your leadership team has one percentage, as you might say? We want to grow our ROI by say 5% and then the reality is totally different. So, you’ve seen that your campaigns can only bring a 2% ROI increase. How do you manage the expectations of all these different stakeholders to maybe arrive at something that is maybe a bit more ambitious, but still achievable?

    JJ Reynolds:

    Yeah, I think that conflict between ambition and reality is where the measurement and analyst live. That is where we’re trying to say, here’s what actually happened, here was the expectation, and we’re way off from it, or maybe we achieved it. I’d say the goal and this is one of the relational aspects that no one really speaks about when it comes to measurement analytics data is the conversation. So, you didn’t have to have a conversation with your leadership team about saying, let’s just say, for example, you have a landing page for your enterprise solution. This landing page is converting at 0.05%. If the person hits the page, 0.05% of people are actually completing a form.

    So, you have a couple of courses of action. You, as a measurement person, you just say, leadership team, we either need to spend some time in design and messaging on this page, or we need to spend a lot more money on advertising or outreach or whatever we’re trying to do because this page only converts that 0.05%, but most people don’t even know what their enterprise-level solution pages convert at. That’s what I’d recommend is that conversation is key, and if you can come to the table with saying, here’s what it actually is, and maybe here are a few solutions, maybe we need to increase design, increase traffic levels increase the messaging, and by increase, I’m saying increase as in improving that aspect of your marketing strategy.

    Anna Shutko:

    Right. Perfect. This is very interesting. Also, as I said, I really, really love that you mentioned the combination of data analytics and having a sound conversation with the leadership team there, and this is actually a perfect segue into my next question, which is, so imagine you’ve had a conversation and then you’ve aligned on the metrics and the increments. So, the next step would be to measure them. What metrics should the team monitor on an ongoing basis when it comes to tracking campaign performance for B2B SaaS campaigns?

    JJ Reynolds:

    All right. I love to split this up into three categories. You can use them for the sake of marketing terminology, I’ll just use top of funnel, middle of funnel, and bottom of funnel metrics. The top of funnel, I’m going to say, let’s look at the actions that your team is doing. This could be emails sent if you’re doing cold email outreach, it could be ad impressions if you’re running ads on a platform that serves impressions, this could be the number of podcasts you got on if you’re trying to do a podcast circuit, maybe if you want to try to estimate the number of downloads each podcast gets, you can do that. That are the top-level actions that I’d suggest that you start with so you have some idea of next month if we stop getting leads, it’s because our CEO didn’t go on any podcasts.

    You’re like, no kidding. It doesn’t really matter the rest of the funnel, because nobody’s entering our ecosystem. After that, I’d say the middle of funnel and this is where I’d introduce your website. I hope you have a website if you’re listening to this and you are in the B2B aspect, but what is the intended action on that website? So. Say, for example, you have a more consumer-level product, and then you have the B2B maybe core product. You have where maybe five more seats or whatever that account looks like for your system. Well, how many people saw that you even offered this solution? That’s a page view metric that most people will collect by default with a tool like Google Analytics or any of the bazillion others that are out there.

    But then you want to go to the next level, I’d say on your website is, what are people investigating into that? So this could be, if you a pricing page, how many people view, I don’t know, where it says more details? Every SaaS company has there. You have your four maybe main solutions that each product offers, but then there’s a more details page where you can have the ability to see every single thing you offer. Measure that and then measure the next steps. So, maybe it’s the signup button clicks or people going to your signup page or whatever that might be, and then ultimately the bottom of funnel is how many leads you generated, and then beyond that is how many sales those generated from those leads. So, you can see if you’re following along with a pen and paper, you could see that we start with this giant number of how many impressions you served, how many people viewed this page of whatever the solution is that you’re offering, how many people investigated, which is not a default metric by any means.

    This is not something that just is out of the box, normally collected. We love to use CSS IDs to say, did someone see this block of text for more than five seconds? That’s how you can measure that investigated stage, then you can measure people who clicked to your signup, or maybe if there’s a signup form in line, you could measure that, and then ultimately leads generated depending on your type of system. If it’s self-serve, you could just generate leads and then transactions from those leads, or if you have to hop on a phone call type of situation, you could have your sales team say, how many phone calls are we booking, and then how many sales are the outcomes of that?

    That way you have a fall-off percentage at every single step. So if something breaks, because, at the end of the day, percentages are only percentages. You want to have an action to take, and so if you know people are viewing our pricing page, but not investigating it, well, you’re like, okay, we’ve got to figure out this sales page, whereas if your sales team can’t close, you’re like, maybe we need to have some sales training. That’s what I’d say is the initial KPIs that are beyond the basics of revenue.

    Anna Shutko:

    All right, fantastic. I really love how you’ve broken down everything into three major categories. So, leading actions, then website-based actions, and then lead sales, phone calls, bottom the funnel metrics. Now, let’s talk about different kinds of metrics more specifically. You mentioned there are quite many of them belonging to each and every funnel stage, but I would like to ask you about two very specific metrics, many marketers, and frankly, not just marketers, many CEOs and other folks in the data team are interested in, which are CAC and LTV. I know people will get into many, many fights in terms of how they should calculate these metrics. My question to you is, what’s your take on this? Imagine we’re running this B2B SaaS product campaign, we should calculate CAC and LTV. First of all, when is the best time to start calculating these metrics? What kind of data should you have in order to be sure that you are calculating these metrics correctly? And then my second question here would be, how would you calculate these metrics so that they can help you uncover relevant insights?

    JJ Reynolds:

    Yes. Let’s start some fights. Everyone put your boxing gloves on right now because customer acquisition costs, LTV are some of the most, I guess, the most disputed metrics basically in all of business history. I’m going to give you my take. Some people in this listening might not like that, other people I’m going to hopefully give insights as to far as maybe how to think about it and ultimately how to bridge the conversation because, at the end of the day, it’s the relationship that matters with whoever the person is asking. If you’re going to fight for one fight and someone else is going to fight for another version of it, doesn’t really help. So, you need to come to an agreement at the end of the day. That’s my preface before getting into this. Customer acquisition cost, CAC for everyone who doesn’t… CAC. The first thing you have to define is, what are we going to determine as cost?

    That’s a hard part in itself because cost, your advertising team is going to say cost is ad spend. Your finance team is going to say cost is the market department. The CEO is going to say, the cost is the hosting, the entire dev team. That’s the cost. At a first I’d say, to start off, we need to define what cost is. It doesn’t matter what you define it as honestly. You could say it is ad spend for the advertising team. You could say that it is the marketing department for the financial team. It doesn’t really matter how you define that, it just matters that you stay consistent with defining that. That’s my first caveat that people are already probably getting steam coming out of their ears by is that cost level, because when we’re saying customer acquisition costs, we need to say, if we ran these ads, we divide customers by ads spent, and now we have a customer acquisition cost.

    But what about the person who’s running the ads? If you’re using an agency, a third-party agency that’s outside of your company, that’s an extra cost. My off-the-cuff answer the moment people ask me this is I’d say the advertising if you’re running ads is that’s what your cost is. If you have a third-party agency, I’d say they’re retainer, they’re whatever you’re paying them in combination with the ad spend is what your cost is. It makes it easy. It makes everybody on the same page. It’s very simple to define. Then we have the first C, which is the customer, and how you define a customer is going to also play into this. So, some people like to define customers as let’s just say a mid-tier plan. So, for example, of five seats or more, however you want to define it, a qualified, an MQL qualified lead or qualified customer.

    And so you need to get clear on who a customer is first, because if you’re dividing customers by cost and you’re not including some customers, well, again, consistency is going to be better than trying to nail down exactly how everyone views this. Those are my caveats that I would really suggest that you dive into with your team before even deciding about numbers, how much do we spend? How much of this? What are we defining these costs and these customers by? How I would say is just a blanket statement is costs is ad spend plus the people running the ads and creative, et cetera.

    If you have costs like that, then it’s just an easier way to view that. If you don’t run ads, for example, so you do podcasting or so you do YouTube as your strategy, just try to group all that together as far as you have a number that everyone can agree upon. And then customers, I would just say all customers, because if someone gives you their money, that’s where you’re going to find customer, even if it’s a dollar a month or whatever, $12 a year, that’s a customer. I’ll fight any CFO or CEO if they want to talk about it, that’s not a customer to them, because eventually, they’ll grow. That’s my customer acquisition cost.

    Anna Shutko:

    Yeah. It sounds very reasonable. I really like how you’ve broken it down by who is doing the advertisement versus how much we actually spend, and then I definitely do agree with all the customers. I know we also might get some punches from the audience there, but definitely, there are users, there are paying users, but it’s definitely worth taking the whole audience into consideration. So, how would you then add these findings and use them when you are calculating the LTV?

    JJ Reynolds:

    Yeah. So with LTV, I really would like to play into the fact of saying it’s a hard metric to calculate and I’ll give you one of the most difficult examples just to let people’s minds melt. We’ve got a client who is in education. They basically offer anyone with a .edu email address a free account. Free account, getting bonkers of customers, but when they graduate from university because they no longer have a .eu at their university email address, they sign up with a new email address. So if you go to, say, for example, someone went to a big university and then they got hired at Supermetrics and then we were going to try and sell them something, now they’re going to sign up with their Supermetrics email address and you’re going to lose that LTV. Your whole lead generation campaign of getting students into your funnels so that they get used to your product, which is you’re not going to be able to have LTV because they’re now going to sign up with a new email address.

    That is one of the most complicated situations, but with what I would say is for LTV, pick a date range, a time range that is reasonable for the length of your company if you’re just starting out and you’re trying to pre predict LTV into the future. It’s a great metric to have for saying our product costs 50 bucks a month, and we estimate that our average customer is going to stick for 18 months. It’s a great metric to start with, but then measure that against what actually happens because sometimes you have products that are super, super sticky.

    We’re never going to unsubscribe from this product because it’s the best. Whereas you might end up on the other side of that, where people don’t really know what your product is, because you’re a startup and they start an account, they pay you for six months and they’re like, it’s not fully baked. I might come back in the future. So, I’d just say, again, expectation. How much do we think we’re going to… We expect it to be 18 months, but we don’t have data on that versus what the actual outcome is. Super, super helpful in adjusting your marketing, at least projections overall.

    Anna Shutko:

    All right, fantastic. I really love how you’ve taken really complicated scenarios into consideration and helped us outline which components we should pay attention to while calculating the LTV. Now, my next question would be, so we’ve discussed many, many, many metrics, the website metrics, down the funnel metrics, CAC, LTV, and many others. Now, it’s time to combine all of the use metrics from different channels and hopefully, marketers are not using only one channel. There is a variety of channels in one single report. So, my question here is how can a performance marketing team structure a report which is clear to read, maybe you can elaborate a bit on the report structure and how to create this report in a way that it could serve different audiences?

    JJ Reynolds:

    I am a huge design data dashboard person. I love it so much. My strategy is this is, your report should have one answer, the primary answer, and you should load this report and I should scream out to you what the answer to that question is, and it should basically tell you what to do. So, whatever that question is, it should jump off the page, then you should have something that’s a secondary question. So, for example, let’s just use Supermetrics as an example. You guys will have different types of blog content. Let’s just talk about it, there might be some blog content on data visualization, you might have some content on database management, and you might have some content on team management, more CRM, more big, bigger strategy questions. As a content marketer, you’ll come to those breakdowns and say, which type of content is the best for lead generation?

    Well, I use the word best there and I already hesitated it in it because what’s the definition of best? But in doing that, what you’re going to need to do is you’ll have to say this category of data pipelines or database management is the best at generating leads. The next question I’m going to ask you is which blog post is going to be the best of those? If those are your questions, if you’re talking to the content team and they’re asking, we don’t have a known concept of what our best lead generation content is by category, well, that’s your report. Maybe a nice table with some bar charts talking about how each individual category performs, and then your next question is how each individual page performs, so you can drill down into that, and then you might want to say, what’s the next question is that you have the URL of, let’s just say 10 ways to manage your BigQuery database more efficiently.

    That’s the blog post. Give them a hyperlink so that you can click on the little button next to that link, and so that your content team can then view the page that URL is referencing because not everyone remembers who wrote that article, and what it was. So just to recap, the primary question, that’s what you need to answer first. It should scream out. I’m talking color-coded, red is bad, green is good, however, if you want to define it, maybe you trendline with that metric over time. Secondary question, then broken down into what’s the next question someone’s going to ask once they view that first primary question, and then what action are they going to take and make it super, super easy for them to go take that action? So, for the example, I just gave give them a hyperlink to view that piece of content on the website so that everybody on the whole team knows our top-performing blog post is 10 ways to manage a BigQuery pipeline.

    And then you can view that and see, and they can go read it instantly and say, this is actually bombdigity.com because it’s really great and it was written by our head of database engineering and they really know what they’re talking about. So, as far as structuring that, that’s what I’d recommend, primary answer, jump off the page, the secondary question for people who want to dig in, and then a third action that they can take, so viewing a page, going into an ad account, whatever that might be. It’s just super helpful, especially when you’re working with larger teams to have everybody on the same page.

    Anna Shutko:

    Fantastic. I really, really love this framework and I especially love how you finished by saying that you should add something that encourages somebody to take an action. I think this is super important because normally the report is just here’s the data, here are our conclusions, that’s it. You should go and figure out what you should do next. So, it’s perfect. Now, let’s talk about the mistakes part, which is one of my favorite questions. We’ve talked about the metrics calculation, how to design a report and what marketers should pay attention to when they are structuring their funnel and adding campaigns there. There are many actions involved in each and every one of these points. So, what are the typical mistakes marketers make when they’re measuring the results of a B2B SaaS product campaign?

    JJ Reynolds:

    Mistakes. The biggest, biggest mistake is tracking a metric without an action, hands down, period, that is it. If you’re tracking something and you’re like, I don’t know what to do with this. If it’s bad and what is bad? What is good? Defining that beforehand, probably that’s the biggest mistake I see. For example, measuring hovers. So, for example, you could say, I want to know how many people hover on our primary call to action button on the Supermetrics website. What are you going to do if there are 0.05% hovers? Make the button bigger? What are you going to do with that information? There’s no usefulness that you could do with hovers of a button. If someone knows that, email me, shoot me an email. Let me know because I would happy to retain that statement, but I’ve never found a useful action from a hover. That’s a very simple, stupid example, but whatever you’re doing, whether it’s email marketing, whether it’s CRM analysis, whether it’s ad analysis, if there’s no useful action from that metric starting out with, I’d say that’s probably the biggest mistake I see.

    Anna Shutko:

    All right, fantastic. Now, we would love to learn more about you. If the audience who’d love to reach out to you and I’m pretty sure they will, maybe some people will fight you. Maybe some people will ask you for more useful advice on measurement, where can they find you?

    JJ Reynolds:

    Yeah. You can find our agency is Mediauthentic. M-E-D-I-A-U-T-H-E-N-T-I-C. So, the world media and the word authentic just smashed together, and you can find all about what we do there. You’ll find my face in talking head videos all over the site. If you’re interested in learning about some data visualization, we’re starting up a new education blog type of thing on datastudio.vip. that’s datastudio.vip, and that’s coming soon. if you go there right now, probably will see something that is just a tongue in cheek, but any of those few platforms is feel free. You can fill out a form and say, I want to talk with you. You can shoot me an email, LinkedIn as well, all over, JJ Reynolds. That’s who I am and happy to have a conversation and put on the boxing gloves about LTV and CAC.

    Anna Shutko:

    Fantastic. JJ, thank you so much for coming to the show.

    JJ Reynolds:

    Thank you for having me. It’s been a pleasure.

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