Moneyball for Marketers
If you’ve seen them movie Moneyball, you already know the basics: the “Moneyball” way of winning relies on analytics, statistics, and numbers, rather than opinions, intuitions, or appearances. This player performance methodology was famously used by the small-time Oakland A’s to compete with financial heavyweights like the New York Yankees. The A’s General Manager, Billy Beane (played by Brad Pitt in the film), measured players using new, data-centric metrics that flew in the face of conventional wisdom.
Before Moneyball, baseball scouts relied on popular but flawed Key Performance Indicators (KPIs) like RBIs (Runs Batted In) and a player’s appearance (aka “the gut”). But technological advances and a better understanding of statistical correlations made these old scouting reports obsolete, uncovering hidden gems amongst the player rosters.
We’ve talked about Moneyball and marketing automation on the blog before, and the analogy still rings true. Here’s a laundry list of lessons that marketers can learn from the Moneyball method.
Don’t Buy Players, Buy Wins
The Oakland A’s learned that they weren’t buying players – they were buying wins. As a marketer, focus on the KPIs that truly reflect profits earned.
Historically, sales people and marketers have tracked three KPIs:
- Number of leads generated
- Lead conversion percentages
- Revenue per sales person
These KPIs are not necessarily “wrong”, but they paint a wide brush over what’s actually going on with your sales and marketing funnel. This can sometimes lead to a misallocation of resources and the wrong strategy. If you’re using marketing automation tools, you can drill down much deeper – you can track the costs associated with each channel and campaign, and allocate a direct cost to acquire each lead. And by working with your CRM tool, sales, and customer success team, you can then attribute the lifetime value of the customer back to the lead.
Here are some new KPIs you should consider if you want to be a Moneyball Marketer:
- ROI per Lead: The return on investment of each lead takes into account the cost associated with each lead, the lifetime value of the customer, the number of leads generated by the campaign/channel and conversion rate. Each individual metric can be misleading, which is why you need to track them all. For example, a channel that generates a lot of poor-quality leads may compare unfavorably in total campaign value to a smaller channel with whale-sized leads. Frank Passantino suggested this KPI in a recent Marketo blog.
- Prospect to Pipeline: What’s the typical prospect-to-pipeline conversion rate of each of your company’s product-market fits, channels, and campaigns? When AG Salesworks and The Bridge Group conducted a study of 1,000 prospects, they converted 32 of them into the pipeline. That’s a 3.2% prospect-to-pipeline rate – is 3.2% right for your organization? William Tyree, CMO of RingDNA, suggests that marketers examine historical data and start benchmarking future channels, campaigns, and sales people to your P2P index.
- ROI per Referral: This is a catch-all KPI to measure the effectiveness of each of your online channels (inbound or social), landing pages, or affiliate sites. Don’t just measure the traffic and conversion rate per referral. Some referrals provide great lead-gen but poor closing rates. Others may only benefit SEO. Dave Snyder of Search Engine Watch recommends grouping your referrals into cohorts based on benefit, and measuring them within their cohorts for an “apples to apples” analysis.
Ultimately, the measuring stick every company uses is profit. Don’t be blinded by the old KPIs. Measure your top-line and bottom-line with Moneyball Marketing.
You Can’t Beat the Yankees by Playing Like the Yankees
Just like the Oakland A’s couldn’t use the Yankees method to assemble their lineup, the Moneyball playbook is different from a traditional playbook. A Moneyball Marketer has to open up her repertoire to new marketing methods, including data analytics, customer engagement, and product development. Here are some tricks of the trade you should consider:
A/B Test Everything, Including the Product
One of the unique characteristics of Moneyball Marketing is the iterative relationship between marketing and product. For online marketers, this is admittedly old hat. But for marketers in more traditional businesses, having an endless positive feedback loop between marketing and product is still relatively new.
A/B testing is a simplification of this relationship. Marketers can work with the product team to test different versions of the product offering, ideally in parallel. Based on the responsiveness of your leads and customers, refine the product based on customer feedback, measured product engagement, and net promoter scores.
Content Marketing as a Media Product
Content Marketing is not new, but people are still innovating with content. One way to get creative with your content is to NOT talk about yourself. In a previous blog, I talked about the rise of Media Oriented Content Marketing—content marketing that exists as a standalone media product without explicit commercial interests. These content pieces are so good, people will share them or discover them on their own.
Some recent examples include Chipotle’s beautiful ad about their organic ingredients, KISSmetrics’ helpful blog post about Google Authorship and ShareBloc’s very own contest to find The Top 50 Content Marketing Posts of 2013.
Do Something New
Unfortunately, as Mark Suster says in his blog, growth hacking is all about finding the new wave. If someone has widely blogged about a new way to market a product, the effectiveness of that technique has already hit diminishing returns. Experiment and play around with your channels, product, and allies to see what may work.
Marketing with a Moneyball mentality isn’t just about generating leads and passing them onto sales. Take advantage of your new marketing channels and new KPIs and impact product and sales directly.
Moneyball Marketing isn’t a new concept; it’s an old one just branded differently. Some call it growth hacking. Others may call it the Physics of Marketing. If there’s one take-away here, it should be to use your marketing automation and CRM tools to get the data you need, and then help your marketing and sales team leverage that data into more sales, larger profits and happier customers.