Is the Marketing Funnel Porous?

Marketers and sales professionals often talk about understanding and using a “marketing funnel”. This phrase is so ingrained into our day-to-day language that we assume that our language reflects reality. But maybe this isn’t the case. Maybe it isn’t a funnel - maybe it is more like a sieve.

This became abundantly clear when I was talking about our software, Revenue Catalyst, with my cousin. I was describing the layout of a typical marketing funnel. I explained that there were levels that a customer had do go through depending on of the activities that were related to marketing activities or sales. At the top marketing tactics generated Impressions from ads and various advertising campaigns. I continued by describing that a portion of these converted into Visits, typically to a website page. I went on to say that some of these Visitors converted into Prospects of which a portion were presented with and Offer. Finally, a percentage of those who received the Offer were sold something and became Customers. It all seemed straightforward to me and could be visually illustrated to look something like this:

My cousin, Hjalmer Nelson, looked at me and said, “Oh, you mean an accelerated particle separator”.

I said, “What?” and he repeated, “An accelerated particle separator.” My mind doesn’t process new information very quickly, but I could hear something in his words that made sense. Even after he had repeated the phrase twice, I had to ask him to explain. He proceeded to tell me a story about the Gulf War, sand everywhere, tanks, air filters not working, engines stopping, and the invention of accelerated particle separators to separate sand from air before the air got sucked into the engines. The result was that army tanks could travel for miles across the sandy desert as easily as going down a paved road with no dust or sand.

I was fascinated. From a marketing point of view, what he was saying was that what we flippantly call a marketing funnel is in fact an “accelerated customer separator”, although I’ll admit that the “accelerated” part of that phrase is often not very fast and prospects become customers much slower than desired.

I did some research on Google and I found very little written or diagrammed on this topic. As a result, I made my own diagram.

Imagine a funnel with a bunch of holes in the side. It should look something like a colander, but more V shaped and with a big hole in the bottom. Imaging various marketing and advertising tactics illustrated at the top such as TV, radio, Facebook, SEO, AdWords, even Snapchat. These ads influence prospects in the target market and they start to fall out the sides of the porous funnel. Some get to the bottom and become customers, but others are lost at the top and middle of the funnel via the holes. A diagram of this “porous marketing funnel” would look something like this:


2019-07-22 - Porous Markting Funnel.png

If you can imagine the funnel spinning, then some of the prospects would exit the system very quickly at the top. Others would cling on longer and get lost further down the funnel. Ideally, an adequate percentage of prospects would flow all the way through, with some coming out the bottom as customers.

Here’s another perspective. A while back I read Jordan Belfort’s book Way of the Wolf. A movie with Leonardo DiCaprio was later made called, The Wolf of Wall Street. In the book, Belfort describes 4 types of prospect archetypes as follows:

Buyers in Heat

  • These are motivated buyers that want your product and can afford it

  • They want to buy now

  • Buyers in Power

  • These are buyers but they are not ready to buy because their pain is not acute

  • They are going to delay the decision and need more coaxing

Lookie Loos

  • These are “tire kickers” who are just trying to get more information

  • They are unlikely to buy, ever

  • They are time wasters who need to be weeded out quickly

Mistakes

  • These people never belonged in the funnel but somehow got attracted or dragged in for the wrong reasons

  • There is no chance of turning these people into customers

If we apply our concept of an ”accelerated particle separator” then the funnel would look something like this:

2019-07-22 - Porous Markting Funnel - In Heat.png

Do you agree with this concept? Is there any validity? Let me know what you think.

Jeff

Are Impressions Reliable as a KPI?

This is an interesting question. I’m sure that most marketers would say that there are more important Key Performance Indicators (KPIs) than tracking and measuring impressions. But let’s think about this for a minute because I think that there are some characteristics about impressions that are important. Important enough for us to consider impressions as a KPI.

But before we get to these points, let’s look at where impressions fit in the scheme of things, specifically marketing.

What is an Impression?

By way of definition, impressions are the number of times an advertisement or other image that represents a company is shown to a viewer.

For online (digital and social) marketing, an “impression” usually means the number of times the ad was loaded and shown (at least potentially) to someone looking at a webpage (or a video).

For traditional advertising, an “impression” usually means the number of times the ad was shown to members of the target group.

Note: “impressions” means the audience was exposed to the ad; it does not imply that members of the target group actually saw or remembered the ad. Seeing and remembering an advertisement (i.e. recall) is a totally different issue and not the focus of this article. 

When we work with clients, we divide the types of impressions into three very broad categories: digital, social and traditional.

Impressions from digital channels include: 

  • Organic Search

  • Paid Search

  • Display and Banners Ads

  • Remarketing

  • Direct Visits to a website (assuming they are not from a traditional channel)

  • And Email

Impressions from social channels includes:

  • Facebook

  • Instagram

  • LinkedIn

  • Twitter

  • Pinterest

  • Yelp

  • TripAdvisor

  • And others

Impressions from traditional channels on the other hand include channels such as:

  • Radio

  • TV

  • Out-of-home (billboards)

  • Trade show

  • Print (newspapers and magazines)

  • Direct mail including catalogues 

  • And a few others

The Importance of Impressions

So why are impressions important? First, as you can see from the diagram below, impressions are at the top of the Customer Acquisition Funnel. This is important because without impressions, marketing and sales are not going to happen. Period. People - prospective buyers - need to be aware of your company and the products you offer. If there are no impressions, then there is not going to be any sales and without sales there will be no revenue. 

Funnel.png

You can read more about our specific version of the Customer Acquisition Funnel in this post 17 Essential Marketing Metrics for Customer Acquisition. For this article, the outcome will be sales. 

Second, when a company makes an investment in marketing it is essentially buying impressions. That may sound overly simple but that is reality. No Impressions = No Visits = No Prospects = No Quotes = No Sales. Impressions are the start point of the buying process and the very first level of the Customer Acquisition Funnel. 

Third, impressions are important because they show managers and owners where marketing and advertising are happening. A manager can look at a marketing statement or report that identifies the volume of impressions by marketing channel and see that some channels have impressions, and some don’t. If this is intended - great. However, if there was a strategic plan for the company to be present on a specific channel and there are no impressions showing up on for that channel, then the manager can ask, “What is going on?”.

Finally, the number of impressions gives a rough idea of the effectiveness of a campaign. If the number of impressions is low - in the thousands - then a manager can assume that the level of awareness was low. Similarly, if the number of impressions is in the millions then a manager can assume that the level of awareness is much higher. This isn’t saying that the campaign was effective or not. As many marketers have discovered, it is very possible to have a large number of impressions and yet have zero visits and zero sales. And believe me this is frustrating - very frustrating. 

Finding Impressions

Finding out the number of impressions is always not easy. Each marketing platform and marketing channel is different. Some channels are easy but others are not easy at all. Let’s look at a few examples.

Organic Search

This should be easy, but it isn’t. If you look at your Google Analytics account they are nowhere to be found unless you link your Google Search Console account to your Google Analytics account, then miraculously they show up. You can get this number in Search Console, but it is much easier once you have the two accounts linked up

Acquisition \ Search Console \ Landing Pages \ Acquisition \ Impressions

2019-07-09 - Search Console Impressions.png

Paid Search and Display

If you are using Google Ads, then this is easy. Just log into your account and there they are. Done.

2019-07-09 - Paid Ads Impressions.png

If you have linked your Google Ads account to your Google Analytics account, then it is even easier. Here’s help.

Acquisition \ Google Ads \ Campaigns - select Impressions and click on Month

2019-07-09 - Paid Ads Impressions - in Google Analytics.png

Twitter

Finding impressions in Twitter is relatively easy. Log into your account and click on your profile picture (top right). Select Analytics.

2019-07-09 - Twitter Analytics.png

Next scroll down to the month that you want to review and there they are - Impressions. Easy.

2019-07-09+-+Twitter+Impressions.jpg

Facebook

Finding impressions for your company page on Facebook is painful but it is possible.

First go to Insights and download a spreadsheet with the date range that you want.

2019-07-09 - Facebook Impressions.png

Open the spreadsheet and scroll way over to column W for Daily Organic Impression, column Z for Daily Paid Impressions, and column AC for Daily Viral Impressions. Sum each of these columns for the respective totals.  Like I said - painful.

LinkedIn - Personal Profile

There aren’t really “impressions” in your personal profile. But it is worth looking at how many profile viewers that have you had. Here’s the path:

Click on Home and you will see the number of people who viewed your profile over on the left side. 

2019-07-09 - LinkedIn Profile Viewed.png

Note, however, that this is for 90 days. To get the number of profile viewers for a month, you will need to divide by 3.

2019-07-09 - LinkedIn Profile by 90.png

LinkedIn - Company Page

The first step is to navigate to your company page.

2019-07-09 - LinkedIn Company Find.png

Click on Analytics \ Visitors \ Select the dates that you want \ All Pages \ Page Views

If you select Unique Visitors instead of Page Views, you will have a rough number of people who viewed your company page over a specific period of time.

2019-07-09 - LinkedIn Company Unique.png

Email

Calculating the number of impressions for your email campaigns is pretty easy. Find out the number of subscribers and multiply that by the number of campaigns that you did in the month. For example, if you have 5,000 subscribers (not including bounces) and you sent out 4 emails in a month, then the total number of impressions is 20,000 for the month.

Traditional Channels

To get the number of impressions for all your traditional channels you will need to ask the vendor that ran the advertisement for your company. They should be able to give you a rough estimate. If they can’t then that company is probably not worth the investment. 

My Conclusion

As you can surmise, in my opinion, tracking and reviewing impressions generated by marketing campaigns is important. Important enough that you may want to use impressions as a KPI. It may not be your most valuable KPI but there is value in knowing what is happening when it comes to the top of your Customer Acquistion Funnel.

Which Trade Show Performs Better - January or March?

Overview

We are on our third post exploring how the marketing campaigns by one of our clients is performing. During the first post, Marketing and Advertising Works, Right? we looked at whether or not marketing and advertising actually works. Everyone knows marketing works but we wanted to look at actual numbers to prove this.

Of course, the answer is “YES”. In the post, we showed that between 2017 and 2018 Booked Sales increased from 193 to 261; Booked Revenues increased from $1.8 million to $1.9 millions; and ROMI increased from $8 to $17. Fantastic results.

In the next post, Driving Up Revenues Between 2017 and 2018, we looked at how specific performance measures and metrics improved, year over year. We compared Investment, Booked Revenues, and Return On Marketing Investment (ROMI). We recommended that the company increase their investment in marketing by 15%. This was risky but it paid off because Booked Revenues increased by 117% and ROMI improved by 99%. Excellent results.

Customer Acquisition Funnel

In this post, we will compare the performance of 2 different trade shows - one in January and the second in March. The Customer Acquisition Funnel for this client has 6 levels:

  • Impressions

  • Sessions (not included because specific landing pages maybe next time)

  • Leads

  • Quotes

  • Booked Sales (the number of projects sold in a month)

  • Booked Revenue (the total value of the booked sale in dollars)

Key Performance Indicators

In addition, we tracked KPIs by collecting measures for each level of the funnel and calculating metrics (a ratio of 2 measures) for the following:

  • Average Cost per Impression

  • Average Cost per Lead

  • Average Cost per Quote

  • Average Cost per Booked Sale

  • Conversion Rate from Impression to Lead

  • Conversion Rate from Lead to Quote

  • Conversion Rate from Quote to Booked Sale

  • Average Booked Revenues per Booked Sale

  • Return on Marketing Investment (ROMI)

The table below shows the results from the top (Investments) to the bottom (Booked Revenues) for the first 4 months of 2019, for 2 different trade shows that occurred in the beginning of 2019.

Note: The data is not complete - there are still sales closing in more recent months (May, June and July) as a result of the investments made in both trade shows. But we have enough data to make a comparison and make solid recommendations to improve results.

2019-06-23 - SISLtd - Tradeshow Comparisons - Jan to Apr 2019.png

Investments

Investment in the March trade show was double that of the trade show in January.

Impressions

The trade show in March generated more than double the volume of Impressions. The average cost per Impression is very nearly the same but slightly less in March. The conversion rate from an Impression to a Lead was significantly better for the trade show in January.

Leads

The trade show in March has generated more Leads even though tracking for the show in January has been longer (4 months vs 2 months). The average cost per Lead is almost double that of the show in January ($82 vs $158). The conversion rate from Leads to Quotes is nearly the same.

Quotes

The number of quotes is nearly the same (52 vs 55) even though the show in March has data for only 2 months compared to 4 months for the show in January. The average cost per Quote is nearly double for trade show in March. The conversion rate from Lead to Quote is better for the show in January compared to the show in March (19% vs 11%).

Booked Sales

So far for the year, the show in January has generated more Booked Sales (10) compared to the show in March (6) but this could change over the next few months as more Booked Sales are closed. To date, the average cost per Booked Sale is much cheaper for the show in January ($909) compared to the show in March ($3,118).

At this point, it looks like the show in January is out performing the March show. The Investment for the show in March was considerable and yet all measures and metrics are performing worse than for the show in January. As a result, the show in January is the horse to bet on. However...

Booked Revenue

Now let’s look at Booked Revenues. The show in January (tracking 4 months) has generated $176,687 in Booked Revenue. In contrast, the show in March (tracking for only 2 months) has generated $215,535 in Booked Revenue. Wow.

The reason is that the Sales Booked from the show in March are over double in amount from the sales booked from the show in January. Wonderful.

If we want to know why the average Booked Revenue per Booked Sale is higher for the trade show in March, we would need to do a quick survey comparing clients from each trade show. We could look at the characteristics of people in the target markets for each show. We could compare geographical, income, and family sized differences for each target market. Or maybe we could look at the creative and messaging that was used at the booths for each trade show.

Conclusion

There are lots of questions that can be asked but the bottom line is that the trade show in March looks to be performing very well and the results are excellent.

Recommendations

Based on these KPIs, what would you recommend for this client?

Here is what we are recommending:

  1. Continue with both trade shows since the Revenues generated and ROMI are both strong.

  2. Continue to follow-up thoroughly with all prospects (phone, email, post card, meetings)

  3. Ask clients who booked sales from both show for referrals

  4. Be sure Remarketing ads (Google) are working well

  5. Develop an automated email campaign for each trade show to nurture prospects into quotes

  6. Consider offering a discount or incentive to anyone with an outstanding quote

Driving Up Revenues Between 2017 and 2018

Background

In the last post, Marketing and Advertising Works, Right?, we looked at the value of investing in marketing. Our conclusion was that if done wisely increasing the amount in marketing will most likely lead to an increase in revenue.

In this post, we will look at the same company but examine the specific changes that were made to improve the effectiveness of their investments in marketing.

As mentioned in the last blog post we are using data from one of our clients. I’m not able to divulge the name of the company but I can tell you that the numbers are real. The company is located in Calgary, Alberta. They have been in the renovations industry for nearly 30 years. Our company, Anduro Marketing, has done a variety of marketing activities for them including Digital Marketing, Traditional Marketing (via a media buyer partner), Website Design Consultation, and in recent years Marketing Strategy Consulting.

Below is the same table that we introduced at the end of the last post.

2019-06-09 - SISLtd.ca - Comparisons 2017 and 2018.png

The data are for the full years of 2017 and 2018. Here is an explanation of each row and column:

  • Marketing Investments are the amount invested in marketing for the entire year

  • Booked Revenues are the total value of revenue for the projects committed to by customers

  • Investments / Revenues % is the percentage of revenues invested in marketing

  • The acronym for Return on Marketing Investment is ROMI

  • We format this number as a dollar. If the answer is $10 we would say, “For every $1 invested in marketing we generated $10 in revenue, not including the investment in marketing”. By the way, $10 is a good baseline number.

  • The formula for ROMI is [(Revenue - Investment) / Investment]

  • Change is the difference between 2018 and 2017

  • % Change is the percentage of the change between these 2 years

Marketing Investments

As we can see from the table, investments made in marketing increased by 15% from almost $195,000 to nearly $225,000. This is a significant increase.

Before we look at the results of this increase in investment in marketing I have to add that this decision - to increase the budget by nearly $2,500 per month - takes guts, faith, planning, commitment, and a talented team to execute the plan.

Booked Revenues

Revenues that were committed to by customers (booked) increased from nearly $1,835,000 in 2017 to almost $4,000,000 in 2018. This is a significant increase of 117% (an increase of over $2 million). Wow.

Investments / Revenues %

If we look at the percentage of investments compared the revenues booked we can see that this amount actually decreased from a bit more than 10% to just over 5%. This is excellent.

This means that we are investing a lower percentage of revenues in marketing and actually generating more revenue. In other words are investments in marketing are more efficient and more effective - exactly what we want.

ROMI

ROMI increased by 99% from just over $8 in 2017 to nearly $17 in 2018. In other words, for every $1 spent on marketing in 2018 we generated $17 in booked revenue (not including the amount invested in marketing).

This is fantastic for 2 reasons: a) the trend is going in the right direction (improving) and b) the return of $17 for every $1 invested in marketing.

Recommendations at the End of 2017

Here is a list of recommendations that we made and which were adopted by the company we are working with:

  1. Implement a customer relationship management system (CRM)

  2. Hire a female salesperson (most of the buyers are women)

  3. Target traditional advertising (radio and billboards) to specific areas of the city where those in the target market live

  4. Increase ad spend for traditional marketing campaigns (radio and billboards)

  5. Focus on getting referrals and repeat business using incentives

  6. Increase the number and scope of customer participation events

Recommendations at the End of 2018

Here is a list of the recommendations that we made at the end of 2018 for the upcoming year of 2019:

  1. Improve SEO

  2. Increase scope for Google Ads

  3. Add Google Display Ads and Remarketing

  4. Have a stronger presence on social platforms

  5. Increase the number of reviews

  6. Increase the number of followers on specific platforms (Facebook, Instagram, Pinterest, email)

Next Post

In our next post we will look at comparing the performance of two differences.

Marketing and Advertising Works, Right?

Case Study Background

Of course, marketing and advertising works. I also know that I'm biased but let’s not stop there. Let’s see if numbers — real data — actually PROVE that marketing is effective.

In this blog post, we are going to review a case example using data from one of our clients. I’m not able to divulge the name of the company but I can tell you that the numbers are real.

The company is located in Calgary, Alberta. They have been in the renovations industry for nearly 30 years. Our company, Anduro Marketing, has done a variety of marketing activities for them including Digital Marketing, Traditional Marketing (via a media buyer partner), Website Design Consultation, and in recent years Marketing Strategy Consulting.

Our recommendations for changes in strategy and tactics are a result of using data collected with our Revenue Catalyst software product. Revenue Catalyst is like an X-ray machine for marketing - it illuminates everything in marketing that is going right and everything that is going wrong.

In this post, we will specifically review data related to Marketing Investments, Sessions to the Website, Booked Sales generated and resulting Booked Revenues booked. The measures in each of these areas, for the year of 2018, are as follows:

2019-05-28 - Table of Numbers 2018.png

Investments ($) include any expense related to marketing. These break down into four main areas:

  • Digital: SEO, Backlinking, Reviews, Paid Search, Display, Remarketing, Email

  • Social: Facebook, Instagram, Pinterest

  • Traditional: Radio, Out of Home Billboards, Signage on Trucks, Trade Shows

  • Internal: Customer Referrals, Repeat Business

Sessions (#) include all visits (including repeat visits) to the website as recorded by Google Analytics.

Booked Sales (#) is the number of projects sold in a month. One project is one sale. We did not include upsales or changes in scope during the project.

Booked Revenues ($) includes the total value of the sale in dollars as agreed upon at the time the agreement is made with the customer.

The basic premise of marketing is that there should be some desired outcome as a result of funds invested in marketing. If the investments are done wisely and effectively then there should be a positive correlation between the amount invested and the desired outcome (most often Sales and Revenue).

In this case study, we will review 3 desired outcomes:

  1. Sessions (visitors) to the website

  2. Booked Sales (#)

  3. Booked Revenue ($)

As mentioned, our hypothesis is that investments in marketing should correlate positively with these three outcomes. With this in mind, let’s look at three graphs (and a fourth later on).

Investments vs Sessions

In this first graph, we will plot the amount invested each month in marketing (Investments) and compare that to the number of visitors to the website (Sessions). Ideally, when the company invests funds into marketing and advertising, we would expect that the number of visitors to the website would increase, either immediately or shortly after the investment.

New Investments vs Sessions.png

This is in fact what we observe when we compare these two measures. Investments in marketing (red line) was high in the last month of the first quarter and all during the second quarter. Sessions (blue columns) correlates very well with the investments made each month. As investments increase so do Sessions. As investments drop off later in the year, so do visit to the website (Sessions).

Investments vs Booked Sales

Wouldn’t it be nice if there was an increase in sales when we spent money on marketing and advertising? Using our case example, let’s have a look. Just to be clear, what we want to see is more sales generated at some point in the future as a result of investing funds in marketing.

New Investments vs Booked Sales.png

Notice in this chart that Investments (red line) are exactly the same as in the previous graph — high in the first two quarters and significantly less in the last two quarters of the year.

A quick look at Booked Sales (blue columns) shows us that there is a strong relationship between Investments and Booked Sales but that there is a lag in some months. In April there was a significant investment of $37,249 made in marketing but the jump in Booked Sales doesn’t occur until the following month, May. This is not uncommon.

A lag like this depends on a variety of factors like time for customers to make a decision, the volume of orders that a company can process in a month, and the time of year. The lag between marketing investments and a closed sale will also vary between products, companies, industries and geographical areas.

In this case, the company in our case study made significant investments in traditional advertising including trade shows, billboards, and radio. Obviously, their investments paid off.

Investments vs Booked Revenue

It is possible to invest funds in marketing and have an increase in Sessions and an increase in Booked Sales but it doesn’t really matter if there is not an increase in Revenue. In our third chart, we will determine if there is a correlation between the funds invested in marketing and the resulting Booked Revenues generated.

New Investments and Booked Revenue.png

In fact, this is what we see. As Investments increase so do Booked Revenues and as investments decrease so does Booked Revenues. Similar to the chart for Booked Sales, we can also see the lag between the Investments in April and the Booked Revenues generated a month later in May. We can also see a significant lag between the Investments in June and the resulting Booked Revenues in July and August. Better late than never!

Return on Marketing Investment

While we are looking at numbers and performance we might as well review the Return on Marketing Investment (ROMI). The formula for the calculation is [(Revenue — Investment) / Investment]. Although the $ signs cancel out, we format the resulting product with a dollar sign. An example would be $10. Essentially, the number means that for every $1 that we spend on marketing (subtracting the cost of the investment), we gained $10 back in Revenue. A table of the data is as follows:

Let’s look at the chart.

Investments vs ROMI.png

This chart is quite different from the preceding charts. In the previous charts we saw a positive correlation between the Investments made and the desired outcomes. In this case, we see the opposite — when Investments are high, the ROMI is low and when Investments are low, ROMI is high. Why is this?

The answer is in the lag time that we discussed earlier. In this case study — with this company — high investments in marketing do result in an increase in Booked Revenues but there is a significant lag. The result is that in months like July and August when Investments are low but Booked Revenues are high, ROMI is high. Makes sense!

An Interesting Conclusion

Here is an interesting Year over Year comparison. Same company. Same measures but different years.

2019-05-28 - Table 2017 vs 2018.png
  • Between the two years, there was a significant increase in Investments (15%).

  • Sessions increased by a similar amount (16%).

  • Booked Sales went up by a third (35%). Excellent!

  • Booked Revenues more than doubled (117%). Wow!

  • And ROMI doubled (99%). Impressive!

Overall this is FANTASTIC.

In the next post we will look at the changes that our client made in order to get such a significant improvement in Revenue and ROMI.

Jeff Nelson
@JeffxNelson