If you've ever literally broken into a sweat while trying to build a report, then you've probably suffered from analysis paralysis. "Analysis paralysis" is somewhat of a buzzword in the B2B industry that many marketers joke about, but it's a real and serious issue that affects our ability to make smart, data-driven decisions for our companies.
Don't get me wrong — we're very lucky to have access to the volume and quality of data that we do. In the past, we haven't had all the resources we needed to pull data and perform accurate reporting across multiple channels. But depending on how we access, organize, interpret and leverage this data, it can either make us or break us.
New Breed's former internal marketer Amanda Nielsen knows all about this fine line between just-enough and too-much data. In her INBOUND 2018 presentation, "Avoiding Analysis Paralysis: Leveraging Data-Driven Decision Making to Drive Inbound Growth," she talked about the danger of analysis paralysis, the process for avoiding it and how to track the right metrics against your revenue goals. If you have so much data that you don't know where to start, here's a recap.
Avoiding Analysis Paralysis: A 3-Step Process
1. Prioritize the metrics that matter
When you're drowning in data, it's easy to get caught up in vanity metrics such as likes, followers, views or subscribers. Although they're easily measured, they don't actually correlate to real business success and revenue. What's important is the context behind these metrics: Was that new follower a bot or a prospect? Did someone subscribe to your blog because they're interested in your product or are they doing research for their college class?
At New Breed, we differentiate between metrics based on their ability to contribute to revenue. The three metric types that really matter are:
- Key performance indicators (KPIs): A KPI is the top, most important action a user will take that brings them closer to becoming a paying customer. For example, starting a free trial, booking a demo or requesting a quote could all be KPIs.
- Leading performance indicators (LPIs): Aside from your KPI, what's the next best action a user could take on your site? These are the predictive metrics that consistently support completion of your KPI later on, such as downloading case studies, webinars, demo videos or product FAQs.
- Tactical performance indicators (TPIs): TPIs are micro-conversions that are likely to lead users to execute LPIs, and eventually KPIs as well. This is where vanity metrics may come in. TPIs can include social engagements, open rates, page views and other metrics that help you understand a user's digital body language.
2. Develop revenue goals for your marketing team to track toward
Don't make the mistake of thinking revenue goals are exclusively for sales teams. Marketing efforts do generate ROI, and it's important to have a clear ROI goal in mind to focus your efforts and drive results. To calculate the cost of your marketing team, add up the yearly cost of marketing employees and the yearly marketing budget. Multiply this by four, and you'll have a 300 percent ROI goal for annual marketing spend.
Once you have this number, work backward from that ROI goal to determine how many deals you need to close and use conversion rate benchmarks to create lifecycle attainment quotas for each stage of the customer lifecycle. For example, based on the average B2B lifecycle conversion rate benchmarks, if you need to generate 50 new customers to achieve a 300 percent ROI, you'll need 216 opportunities, 440 SQLs, 755 MQLs and 19,359 leads.
Compare these quotas with your results from the trailing 24 months. Are you forecasted to hit those goals in the next year? What are the trends in your historical data sets telling you?
3. Identify gaps in your funnel and adjust your strategy accordingly
If the trends in your historical data sets are telling you that you won't reach your goals this year, you need to identify places in your funnel where prospects are dropping off and rework your strategy to catch up. Here are some common funnel gaps and prescriptions for each:
- Visitor-to-lead gaps: If you're generating ample traffic but nobody's converting, take a look at your form strategy, your persona-driven architecture and your conversion paths.
- Lead-to-MQL gaps: If you seem to be creating a ton of unqualified leads, you may need to rethink your buyer persona definitions, your marketing automation and your content strategy.
- MQL-to-SQL gaps: If sales is struggling to qualify your leads, evaluate sales time and resources, repurpose marketing efforts where necessary and assess your notification and outreach processes.
- SQL-to-opportunity gaps: Are fit and interest mutual? Try establishing a fit and interest matrix, reevaluating your SQL criteria and reconsidering your sales enablement content.
- Opportunity-to-win gaps: Can't seem to close? Make sure you're establishing enough trust and value for your prospects, ensure you've reached product-market-fit and reevaluate your buyer personas.
If your funnel is gap-free, but you're not retaining customers, evaluate your churn rate, assess the lifetime value of your customers and consider designating negative personas.
How New Breed Conquered Analysis Paralysis
The scariest part about analysis paralysis is that it can happen to anyone — and New Breed is no exception. Here's the story behind our experience with analysis paralysis and how we overcame it to crush our revenue goals and drive results.
Our marketing team was following the 3-step process to a tee: our KPIs, LPIs and TPIs were properly designated; a realistic revenue goal was in place; our marketing and sales teams were aligned; and our lifecycle attainment quotas were being met. However, we were still missing our revenue targets month over month.
So we dug deeper:
When it wasn't immediately obvious what was preventing us from hitting out revenue goals each month, we decided to more carefully comb through the data that was available to us. We segmented our closed deals by persona. We compared closed-won deals to closed-lost deals. Specifically, we looked at our win rate based on dollar value.
Here's what we found: Out of our four buyer personas, one in particular loved our content and was highly engaged. However, the close rate was lower, the sales cycle was long, the deal size was small and the customer lifetime value was low.
We stopped selling to that persona entirely. Instead, we marked them as a negative persona for our services. While we could technically get them to buy our product, their customer lifetime value was low, and it was getting in the way of us hitting our revenue goals.
The lesson? Just because you can sell to a specific persona doesn't mean you should. If you want to scale your business, you need to consider the mutual long-term value of a given persona, rather than just jumping at the initial sale for immediate gratification. Remember: A key step in the inbound process is delighting your customers into becoming evangelists, and you can't do that if they're churning.
Sure, analysis paralysis can happen to anyone — but with the right process and perspective, anyone can pull themselves out of it as well. Prioritize your key metrics for accurate insight into your sales and marketing performance, develop realistic revenue goals for your team, identify gaps in your funnel and adjust your strategy accordingly. By following this simple process, you can take your data by the horns and use it to develop a smarter strategy and drive better results.
Topics: Reporting & ROI