If you’re a CEO or CFO, chances are you have experienced what I call Wedding Crashers Syndrome with your marketing team.
Most people have seen or heard about the movie Wedding Crashers. Vince Vaughn and Owen Wilson are two guys who crash weddings to meet women. Throughout the movie, they mention the rules of crashing created by the infamous Chaz.
Rule #1–Never leave a fellow crasher behind.
We finally see Chaz late in the movie when Owen Wilson thinks he’s lost the woman of his dreams and decides to visit him. Chaz’s Mom answers the door and screams for Chaz who walks down the stairs and asks Wilson if he’d like some meatloaf. Initially, Wilson declines but later says “Sure, I’ll have some meatloaf.” Chaz screams “MOM! The Meatloaf!”
After yelling again for his Mom to bring the meatloaf, Chaz says: “I never know what she’s doing back there.”
CEOs and CFOs often feel the same way about their marketing. They don’t know what marketing is doing back there because internal teams often focus more on tactical marketing metrics instead of strategic marketing KPI’s.
Senior leaders want to know what drives customer retention not how many impressions a post received. They would rather talk about what it costs to land a new customer than the bounce rate on their website.
Senior leadership doesn’t get excited about tactical marketing metrics because they don’t see the direct impact on the top and bottom line. It makes them wonder what marketing is doing back there.
4 Strategic Marketing KPI’s that Eliminate Wedding Crashers Syndrome
Customer Lifetime Value (LTV) = Profit per year per customer X Number of Years customer retained.
LTV takes into account churn rate and shows the long-term value of a customer. You can drill down into each market segment to learn the value of different types of customers.
Customer Acquisition Cost (CAC) = (Sales Expense + Marketing Expense)/Number of New Customers.
CAC shows your cost to acquire a new customer. If you can’t calculate what it’s costing you to create a lead and turn it into a client, you can’t evaluate the effectiveness of your marketing or your sales efforts.
LTV:CTC Ratio = LTV/CAC. This ratio gives you insights on budgeting and ROI. If the ratio is very high, you’re leaving money on the table and should be investing more on customer acquisition because new customers are highly profitable. If it’s below 1, you are losing money on every customer which is unsustainable. The target range is industry dependent but it must be greater than 1 while 3 is generally a good benchmark.
Net Promoter Score (NPS) = Promoters % – Detractors %.
NPS is a predictor of growth and asks customers two questions:
On a scale of 0-10, how likely is it that you’d recommend (brand) to a friend or colleague?
And a follow-up question, such as “can you tell us why you gave that score?”
NPS goes beyond customer satisfaction to gauge whether customers like your company so much they’d tell their friends about it. Today customer satisfaction is the bare minimum while customer recommendations, reviews and testimonials fuel growth.
When internal marketers build these 4 Strategic Marketing KPI’s into your system, it enables senior leaders to make marketing, branding and sales decisions the same way they make other financial decisions. It brings clarity to both the how and the why behind the organization’s marketing efforts and sales activities.
Put an end to Wedding Crashers Syndrome. Implement strategic marketing KPI’s senior leaders can leverage to make better decisions that impact both the top and bottom line.