Which 50% Is Wasted

Which 50% Are You Wasting?

As a Demand Generation or marketing professional you probably find yourself asking: “I know about 50% of my budget is being wasted, but which 50%?” Or, which campaigns are most effective?

Many organizations are clear on how much they are spending per piece on DM or as a total budget line item, but cannot relate it to cost per lead or opportunity. If they do, they often fail to include costs for staff, incentives and offers, list rental fees and the cost of inbound agents or processing.

Email traditionally thought of as the low cost way of reaching lots of people, can be deceptively expensive, especially in the small and medium business markets. In this market bad emails abound and yield rates can be under 0.5%. So, for every dollar you spend on an email, the cost per response is $200! And, notoriously, more than 50 percent of responses are tire kickers or unqualified doubling your cost per lead to $400. Even so called “free media” such as, chat, organic search, Twitter, blogs, webinars, etc… has a cost such as inbound agents, landing pages or production.

You may never be able to eliminate “waste” 100%, but you can cut down on the amount that is wasted by taking a systematic approach.

Before diving into the details, let me touch on campaign effectiveness. All of the steps below can be related to campaigns, too. In optimizing a campaign, seek to optimize both the individual tactics within a campaign, as well as, the various combinations. It can be complicated, but my advice is to be simplistic in your approach and focus on the largest cost and highest impact areas of the campaign first and then branch out. Use a systematic test plan to determine the right mix and sequence of touches.

Determine Actual Costs: Perform a detailed audit of all the elements that touch a campaign or initiative and all items that are ongoing, such as Search, Chat, Organic Web, and others. Develop a chart that categorizes all expenses into one of four categories: List, Campaign, Metrics/Measures, and Customer.

Correlate Costs to Goals: Match each of these categories to the cost per outcome you are using as a goal. For example, if you are using leads at the outcome, look at your list yields and determine how much you are spending per lead for a list. Remember to include scrubbing, duplicates, bad names, cost to load in your system, and other impacts related to inbound and outbound costs.

Business and Strategic Plan: Use these inputs to complete your Business Plan. Then develop your strategy which maps to your goals and objectives, the what you need to do, and determines “how” you will do it. Media mix, product focus, customer segmentation and budget must be part of it. It must be comprehensive, yet provide a flexible framework to drive innovation and change in a systematic way.

Benchmark Against Others: Now you have a “benchmark” for your organization, but how do you know if it is good or bad. Benchmark other companies in your industry. In the past, formal benchmark surveys conducted by research firms were the only way. They are still the most reliable and unbiased, if you can afford them, but consider using Q&A tools on various social media such as Google, LinkedIn, Plaxo, or Tribe to get a general sense. You’d be surprised what people are willing to share anonymously or to promote their intellect.

Set Goals: Determine what your goals should be, e.g. getting to a 1.5% yield on email lists or decreasing number of non-revenue related chats by 25%. This must be linked to your comprehensive DG strategy and budget. It should be simple and have specific goals relating to your desired strategic outcomes.

Create a Systematic Learning Plan: It is important that the learning plan include testing and be clearly linked to your overall strategic goals. The plan should specifically speak to what you want to learn and what testing will be done to determine the best way to get there. You may also want to include non-cost related things around messaging, look-n-feel, etc…. But Demand Gen is a science so make sure your plan has clear goals, a metric system to support it, and conclusions.

Measure, Analyze, and Adjust: If a strategic plan is the blue print to success, accurate metrics and reporting are the foundation. While you are developing your learning plan be certain you can measure results accurately or reliably. While we’d all love to have 100 percent accuracy in our results, this isn’t always possible, but if they are consistently measured with the same bias, you can use them to be directionally correct and leverage significant variances to drive change and innovation.

Communicate, Communicate, Communicate: Results and analysis should be shared with as many key stakeholders as is practical. It will allow them to adjust their inputs or resources to facilitate your strategy and help you gain buy-in. Additionally, the more eyes and brains on a challenge the more likely you are to come up with breakthrough ideas that drive true innovation.

My friends who are Demand Generation Specialists remind me constantly that DG is part science and part art. But by applying these steps to your Demand Generation initiatives/annual plans, you can cut down on waste, improve yields and create an atmosphere of innovation and change that can make you a competitive edge for your business.