10 Things I Learned from Joanne: Lesson 1

Each Level of the Model Must be Measurable

As many of you know Joanne O’Connell and I recently completed writing and publishing a book called Intentional Marketing: A Systematic Approach to Optimizing Performance.

If you don’t have a copy, you can order one from this website: https://www.anduro.com/intentional-marketing-book

The book took us a few years to write mainly because we were developing new ideas, or at least, reworking old ideas into a new way of looking at marketing and measuring marketing performance.

During a recent discussion with Joanne, I said I had learned quite a few things from her. This didn’t surprise Joanne but she couldn’t help asking, “What did you learn?” Today’s blog post is my answer to that question. I have 10 learnings. There were more but this post is the first of the top 10 that I can remember.

As with nearly, all of the ideas I learned from Joanne, this should be obvious but it isn’t. I have been looking at marketing and sales funnels for years. Some are simple with 3 levels:

• TOFU - top of the funnel

• MOFU - middle of the funnel

• BOFU - bottom of the funnel

https://www.slideteam.net/3-level-content-marketing-funnel.html

Or this one that is a bit more useful:

• Awareness

• Engagement

• Conversion

https://www.commercialintegrator.com/business_resources/sales_marketing/av-integrators-marketing-tips-funnel/

Other funnels have more levels and are more complicated like this one:

https://customerjourneymarketer.com/new-digital-marketing-funnel-stages/

(There are so many things wrong with this funnel that I can’t even begin to critique it.)

All of these funnels are conceptually interesting but flawed because they are concepts and as a result, difficult to measure. To understand what is working and what isn’t working in marketing, a company needs to be able to measure successes and failures. This requires numbers - what we call measures - something that is measurable. Something that changes. Something that marketers can change.

The model that Joanne and I developed has just 5 levels: Impressions, Visits, Prospects, Offers, and Outcomes. Adjustments can be made to the labels of these levels. A company can even change the order - slightly. Sometimes we have Offers before Prospects. Ultimately, however, a company needs to be able to find measures for each level. This is critical and this is what makes the model that Joanne and I developed - unique and valuable.

By Tanya White

Notice that Joanne and I are using the word “model” instead of “funnel”. These 2 paragraphs, from our book, explain why (page 29):

There are a few reasons why we have selected to use the concept of a model instead of a “funnel”. The first reason is that a real funnel isn’t porous—all the liquid goes through the bottom. However, the way a “funnel” is described by people in marketing is that a funnel is “porous”. In other words, people are lost at each level—not everyone reaches the bottom. The second reason we have selected to avoid the concept of a “funnel” is that the concept implies that gravity simply pulls people down the “funnel” to the bottom. As any seasoned marketer will tell you, moving people through each level is hardly easy. This process is often expensive and requires considerable effort.

The concept of a model captures a customer’s movement from the beginning, when your company reached out to the market, to when someone contacted your company, and finally, to when a product is purchased and revenue generated. Your customer acquisition model will show the number of conversions from impressions through to sales.

In addition, the second paragraph explains why we tipped the “funnel” - we wanted to illustrate that moving people from Awareness (Impressions) to Conversion (Outcomes) takes time, money, and effort. It isn’t easy.

The point is that if a company or a marketing department is going to invest money, employ effort, and take time to develop a strategy and implement various marketing activities, then the results should be measurable at every stage of the customer’s journey.

Simply put, creating a model of marketing (a funnel) that isn’t measurable is a waste of time. Why bother?

A second reason that each level must have measures is to facilitate calculations like conversion rates and the costs for each person to move from one level to the next. We call these calculations “metrics”. In our model, there are 7 measures and 10 metrics. The total picture looks like this:

By Tanya White

The measures are the sum of each of the following over a specific period (like a month):

• Investments

• Impressions

• Visits

• Prospects

• Offers

• Outcomes

• Revenues

The metrics are the calculations using these measures. The first set is the conversion rates between each level. There are four:

• Visit Rate - between Impressions and Visits

• Prospect Rate - between Visits and Prospects

• Offer Rate - between Prospects and Offers

• Close Rate - between Offers and Outcomes

Next, there are 7 financial metrics related to the cost of getting a person to each level:

• Cost per Impression

• Cost per Visit

• Cost per Prospect

• Cost per Offer

• Cost per Outcome, or what is commonly referred to as Cost per Sale

The final metric is also financial. It is the Return on Marketing Investment. This is the ratio of Revenues to Investments, not including the cost of the Investments.

By Tanya White

In other words, this is the ROI of the investments in marketing. The formula is simple. The measures should be easy to find. The calculation is easy. The resulting metric tells a very meaningful story. Here is another paragraph from our book that explains the value of knowing ROMI for your company (page 98):

The metric for ROMI indicates the efficiency of the investments in marketing. Most business owners and some marketers will try to tell you that a high number for ROMI is optimal. However, this is not necessarily true. Many of the companies that we have worked with find that the sweet spot for ROMI is between 10 and 20 (this means that the company gets a return of $10 to $20 for every $1 invested in marketing not including the investment).

It is amazing the level of value that develops from one principle. I can still hear Joanne saying, “Each level of the model needs to be measurable. This is important.”