Marketo Data Tells Us: What Can Marketers Learn from the Golden Ratio?



Posted: September 17, 2015 | Marketing Metrics

Following my blog earlier this month on win rate and velocity, we’ve finally reached the most important metric of the series… drum roll pleaseThe Golden Ratio! With the Golden Ratio, aligning channels across conversion rate, win rate, and velocity will give you the full picture of channel performance.

What Is the Golden Ratio?

The Golden Ratio is pipeline generated over cost. I believe pipeline/cost is more important than ROI for marketing metrics. While ROI depends on multiple factors, some of which are out of marketing’s hands, such as sales performance and capacity, the Golden Ratio is measured primarily on marketing aptitude—the ability to deliver pipeline across certain channels.

Now, before we dive into the data, let’s set some context around first-touch and multi-touch attribution, since those are the two lenses for viewing the Golden Ratio across channels.

First-Touch vs. Multi-Touch Attribution

When looking at pipeline attribution, it’s crucial to understand the difference between first-touch and multi-touch.

  • First-Touch Attribution: Attributing the pipeline contribution to the first touch point of the opportunity. Example: If a lead came in as a result of attending a webinar, regardless of all subsequent touch points, all credit gets attributed to that webinar.
  • Multi-Touch Attribution: Attributing the pipeline contribution to all touch points of the opportunity. Example: If a lead came in as a result of a webinar, but later responded to an email campaign, attended a tradeshow, and then downloaded a whitepaper, all of those channels would get credit distributed equally across them.

Many companies only look at first-touch attribution, which is good for looking at acquisition snapshots (specific point in time), however it does not give a complete picture of channel performance across time. A lead could have come in through a certain channel, but gained most of the influence in subsequent touches, such as through a nurturing program. In a first-touch model, only the acquisition channel gets the credit. In a multi-touch model, all touches that influence an opportunity get credit.

Pipeline to Cost Ratio (First-Touch)

first-touch pipeline_snip

Here’s first-touch pipeline to cost ratio. This measures pipeline generated over the cost, normalized across marketing channels. All attribution is based on first-touch (lead source).

Pipeline to Cost Ratio (Multi-Touch)

multi-touch pipeline_snip

Here’s multi-touch pipeline to cost ratio. This measures pipeline generated over the cost, normalized across marketing channels. All attribution is credited across all touch points.

What We’ve Learned

I love this data; we’ve got digital marketing down to a science! The Golden Ratio proves two fundamental theories, first of which every marketer probably practices, and the other that’s not so intuitive. Let’s take a look:

  • This Is Why We Nurture: I was waiting patiently for the publishing of this blog for the big reveal. Email nurturing is amazing! OK, you’re not surprised, but at least now you have the data to prove it. Email has THE HIGHEST pipeline to cost ratio of all marketing channels, especially in a multi-touch model where email nurturing has huge influence over opportunities relative to cost. Think of those deals that have two-year sales cycles—why would you not nurture them?
  • First-Touch vs. Multi-Touch: I recently met with a past colleague that was using a competitor marketing automation system that couldn’t do multi-touch attribution. She told me her company had stopped doing webinars due to poor performance. But she was completely unaware how webinars affected opportunities after the first touch. And judging by the data, webinars could have been a great vehicle for nurturing prospects. The moral of the story is that first-touch attribution only gauges acquisition, whereas multi-touch attribution gauges everything else.

Putting It All Together

Imagine if you had a magic crystal ball that told you exactly where your best leads came from. Well now you can build your own magic crystal ball (actually more like a magic telescope). By aligning conversion rate, win rate, velocity, pipeline, and cost across all of your channels—or even better—across all of your programs, you can clearly see what works and what doesn’t. Some of my current and past demand gen. colleagues have perfected this art; some have even been able to work backwards to drive future revenue projections. That’s how marketing gets a seat at the revenue table.

Notice something in the data that stood out to you? Got follow-up questions for me? Leave your comments below.

Johnny Cheng is the Platform Product Marketing Manager at Marketo. Johnny has a passion for tech, marketing and math – which luckily all intersect at Marketo.

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How can you use the golden ratio to your advantage? Marketo #data guru Johnny (@marketerjohnny) will show you!

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