September 19, 2021

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Marketing Productivity: What It Is & How to Measure It via @sejournal, @Kevin_Indig

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, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc Blogs
, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc Blogs

What’s the first thing that comes to mind when you hear the word “productivity?” Probably how to do more work, right?

Well, that’s not the productivity we’re talking about when it comes to marketing.

In his outstanding book, “The Goal,” Eliyahu M. Goldratt describes productivity as “progress toward the goal.” In other words, simply doing more of something does not increase your productivity.

It just makes you busier.

Real productivity comes from getting closer to a goal you set. That’s why it’s a fool’s errand to measure productivity in tickets closed or tasks done.

Even though it says something about the speed of the work, it says nothing about the impact on the actual outcome.

In marketing, productivity is not getting things done — it’s getting the right things done.

And without measuring marketing productivity, it’s hard to drive sales.

After all, the goal of marketing is to get people to buy a product.

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The goal of increasing marketing productivity then is to increase outcomes in the form of money or leads.

Inputs and Outputs: Looking at Marketing Like Engineering

Goals are outcomes that we can measure: Money, leads, users, etc.

Logically, there has to be an input — resources. We can define resources as people, time, efficiency, goals, or tools, and we can then select metrics to measure them.

In the process of transforming inputs into outcomes, we can assess the quality or efficiency of the process. Productivity can be increased by simply improving a process.

Again, it would be a fool’s errand to think only about speed. A process can improve by focusing on higher return projects or increasing output with constant speed by removing constraints.

Lastly, we need to remember that everything in marketing has a cost. Besides time, the cost comes from marketing assets, headcount, and advertising.

One point about productivity that’s not often discussed is that it’s also a question of cost. It’s easy to increase productivity by hiring more people, but that might lower profit margins because your headcount cost increases.

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So, most people use the word “productivity” synonymously with increased output and stable cost.

Productivity Metrics: Input, Quality, Cost, and Outcome

The four components of productivity can be measured with different metrics.

It’s essential that you choose your metrics based on your business model, company growth stage, market conditions, and type of company.

Input

  • Content: Youtube videos, ad creative, copy, blog articles, etc.
  • Backlinks: How many sites are linking to your site.
  • Marketing campaigns: Offline or online advertising.
  • Pageviews: Eyeballs on your content (can be measured across many channels like YouTube, your blog, or even podcasts).
  • Traffic: Visitors coming through organic, paid, direct, referral, or email channels.

Quality

  • Rankings: Organic rankings on Google.
  • Engagement: Interactions with your site like email sign-ups or app downloads.
  • Conversion rate: Visitors/convesions.
  • LTV: Customer lifetime value, an indicator of how good the leads or sales are you attract through marketing.

Cost

  • CAC: Customer acquisition cost, meaning the total cost of acquiring new customers.
  • K-factor: # invites/# conversions, which can be used to measure virality or word of mouth.
  • Headcount: How much it costs to employ your marketing personnel.
  • Tooling: The cost you pay for all tools your team uses.

Output

  • Revenue: The money you make from sales, measured in ARR (annual recurring revenue) or MRR (monthly recurring revenue).
  • Leads: How many visitors sign-up for your product.
  • Social shares: How often your content is shared on social media.
  • Share of voice: How much attention you catch from the total available attention.
  • ROAS: Return on ad spend, meaning revenue/cost from advertising.

The Biggest Factors Affecting Marketing Productivity

We have those four elemental components of productivity: input, quality, cost, and outcomes. However, they don’t live in a vacuum and are subject to the context in which we look at them.

The biggest factor is time.

Not the time put into marketing; that’s an input. We’re talking about productivity measured over time. If you look at productivity over a week versus a year, you might see different rates and outcomes due to seasonality and other natural fluctuations (PTO is one of them).

Another big factor is the business model of the company – or better yet, its monetization model. It makes a big difference whether a company makes money through advertising, subscriptions, licensing, or transaction.

This is important because marketing needs to drive sales, and sales volume depends on how you define a sale. For consumer subscription businesses like Spotify, for example, marketing has influence over the buyer journey from start to finish and therefore has a bigger impact on the business as a whole.

Another point to take into consideration is the type and maturity of the business. Startups in hyper-growth mode, for example, might care much more about user growth and engagement and less about cost.

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A mature company with a substantial market share might care more about cost-efficiency.

Lastly, market conditions can immensely impact marketing productivity. The pandemic is a strong example: mask and glove manufacturers faced major tailwinds when the world needed more of their product.

As a result, marketing productivity is higher because the cost is lower. The counter-example would be marketing for a bank that faces increased skepticism after an event like the 2008 subprime mortgage crisis.

7 Ways to Increase Marketing Productivity

With four basic components and many factors, there are many ways to increase productivity. I want to focus on the seven most effective ones:

1. Change Goals

If marketing productivity is progress toward the goal(s), changing goals can increase productivity. It doesn’t always have to be a lower goal; you can also narrow it further down or push it further into the future.

Most goals are not specific enough and, therefore, unattainable.

2. Hire More People

The easiest way to increase productivity is to hire more marketers. More people can get you faster to the goal or take on more work.

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3. Buy Tools That Make Work More Efficient

Sometimes, tools can be a bottleneck that hinders higher productivity.

Say you want to increase the quality of your content input. A way to do this with tools would be to subscribe to a cloud design platform that allows you to create high-quality graphics.

4. Refocus Resources on What Works

Instead of getting more resources, you can improve the efficiency of their usage and reallocate them to projects with larger opportunity sizes or proven returns.

5. Improve Bottlenecks and Constraints

Most processes tend to have hidden bottlenecks that can either be eased with more resources or more efficient workflows.

If, for example, you need engineering resources for marketing, hiring more engineers or focusing on projects that don’t need engineering resources can increase marketing productivity.

6. Reallocate Resources

Refocusing people or teams on different channels or projects can increase marketing productivity if they can make faster progress. An example would be a person who has strong SEO expertise but weak knowledge in paid advertising.

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Changing that person’s scope to something they’re familiar with can increase productivity. The same concept applies to teams and even organizations.

7. Standardize Workflows (Network Effects From Economies of Scale)

Economies of scale state that repeating the same process leads to higher efficiency. In other words, if you have done something before, you are faster doing it the second time.

As a result, a lot of context switching can decrease productivity; writing lessons and steps down in a playbook can increase productivity.

Understanding how to measure marketing productivity, control the factors impacting it, and make changes to increase marketing productivity in your own organization (or that of clients) can help drive efficiency and revenue gains alike.

How will you work to improve marketing productivity in the coming months?

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