Author: Johnny Cheng
I’m baaaack! It’s me, Johnny, with your next blog from the Marketo Institute! This time around, we’re going to take a look at conversion rate.
Conversion rate is one of the most important marketing metrics. It’s a metric that lead generation marketers—from practitioners all the way up to CMOs—are measured on. And that’s because today marketing owns just as much of the pipeline as sales does, and conversion rate is a great indicator of pipeline health—starting from the marketing end of the funnel.
Let’s start at the top of the funnel and look at conversion rate by acquisition channel. This will help answer the age-old question of channel performance.
For every dollar, what percentage would you allocate to which acquisition channel? Easy! The one with the highest conversion rate, win rate, and velocity.
The conversion rate, in terms of demand generation, is the percent of “contacts” that successfully go from one stage of the funnel to the next. Conversion rate could identify with any activity such as clicking a call-to-action and going from a “name” to a “lead”, or reaching a certain lead score and going from a “marketing qualified lead” to a “sales qualified lead”.
But the ultimate conversion rate every demand gen marketer is measured on is lead to opportunity. Converting an interested customer into a buyer is what marketing is all about.
Now, let’s dive into the data!
The chart below represents average conversion rate (from lead to opportunity) by acquisition channel across all Marketo customers. The darker shade of green indicates where leads converted at a higher rate. The first column shows the acquisition channel where leads are sourced. The second column shows the average conversion rate percentage of each channel. The third column shows normalized conversion rate to highlight relative standings (e.g. Paid Marketing converts 2x Events).
So what does this data tell us as marketers? Looking at the results, here’s what stood out to me:
Let’s use this analysis as a comparative exercise. Take a look at your conversion rate, broken down by acquisition channel (or first touch attribution, if you prefer.) How does it stack up against the Marketo average? Are there channels that are much higher or lower by comparison? Here’s what you could possibly see:
“All my conversion rates are way higher than average”. Congratulations! You’re doing a great job! Take the day off. Well, unless it’s high because you have no lead scoring in place, in which case—get back to work.
“My conversion rates are all over the place”. This could be due to several factors, first and foremost is the industry. When I sliced and diced the data by industry I saw some interesting things. I saw that the real estate industry’s highest conversion channel is events, which makes sense if you think about open houses being the main source of leads. Or that the non-profit industry’s highest channel is prospecting, which also makes sense if you think of all of the donation calling.
Another reason your conversion rates could vary is resources and timeframe (urgency.) Certain channels are just more resource intensive (dollars or people) and can greatly differ in time-to-value. An example would be if you have a sizeable budget but need to meet an immediate spike in leads this quarter, you’re probably not going to rely on inbound content marketing. Another example would be if you have an incredibly strong partner ecosystem or reseller program, you’re going to focus more resources on those channels.
“All my conversion rates are much lower than average”. Conversion rate alone isn’t a good indicator of marketing success. This is where you’ll need to look at other data sets. Align your conversion rate with win rate and velocity by channel. Hopefully you’ll start seeing some positive patterns in the data. If, for example, your conversion rate is low, but your win rate is phenomenal, it could just mean you have a very conservative marketing handoff or stringent lead scoring system, which is OK. Another scenario could be that your leads have extremely low velocity so they are sluggishly moving through the funnel, taking years to convert and realize value.
But if all of the data indicates poor performance then you should take a look at your funnel. Be extra careful of this common pitfall: casting too wide of a net top-of-funnel, hoping to play a numbers game, but lacking focused programs, activities and content to drive the leads through the funnel. This is doubly dangerous because you end up wasting extra resources pulling in bad leads (ones that would never convert), while leaking out potentially good leads due to the lack of attention and touch points.
Notice something in the data that stood out to you? Let me know in the comments below.
Marketo Data Tells Us: What Is the Top Conversion Rate by Channel? was posted at Marketo Marketing Blog - Best Practices and Thought Leadership. | http://blog.marketo.com
Powered by WPeMatico