Vanity metrics are the top of the funnel

About once per marketing conference, someone on stage derisively remarks about certain metrics as vanity metrics:

Twitter followers don’t matter.
Facebook Likes are unimportant.
Website visits don’t mean anything.
Who cares who re-Pinned you?

Now, imagine for a moment you owned a coffee shop. Inside you served the world’s best coffee, hand-picked single estate reserve beans custom-roasted on premises to perfection, made by baristas with doctorate degrees in chemistry. You track the number of people who purchase cups of coffee – a vitally important metric if you want to stay in business. One might call that a key performance indicator.

You track the number of people who walk into your shop, and separate those people into folks who buy and folks who don’t buy. These are important diagnostic metrics to understand; if no one buys, you’re going out of business.

A vanity metric might be the number of people who walk past your shop and wave hello.
A vanity metric might be the number of people who check in on the location-based service of your choice.
A vanity metric might be the number of people who retweet your coffee specials.

Do these metrics matter? Yes. They’re at the very top of the funnel. They’re proxies for attention.

Spiders in the funnel

If no one ever walks past your shop, certainly no one’s walking in it.

Attention is the very top of the funnel, and vanity metrics hint at whether you’re capturing any attention at all. If no one can even be bothered to press the Like button, what are your chances of convincing them to make a purchase?

Should these metrics be your goals? Of course not. Measuring the success of your marketing on attention only is foolish. Those who criticize marketers for such measurement have valid reasons to do so.

The bottom line on vanity metrics is this: if your business isn’t getting attention, you’re probably not generating any business. Measure the entire funnel, not just the bottom!

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The missing investment ingredients in marketing ROI

Slackershot - Spare Change

Do your marketing ROI calculations sync up with the reality of your company’s bottom line? Or have you put together an ROI calculation and found your net revenue projections falling short? Chances are, you’re missing some key ingredients in the calculation of ROI, especially on the I part, investment.

Recall that ROI is a simple math equation: (Earned – Spent) / Spent. Your revenue is offset by your investment.

What do you spend money on that fuels your marketing? For most marketers, we think of only campaign spends, like ad budgets or the price of a marketing agency. However, if you wanted to build a complete, thorough picture of ROI, you’ll need to detail three kinds of money: system, hard, and soft.

Let’s look at these three kinds of money through the lens of a Google AdWords campaign.

Hard Dollars

Hard dollars are actual money paid out. If you run an AdWords campaign, hard dollars would be the money you pay to Google to make the ads appear. This is the most common ingredient in ROI calculations.

Soft Dollars

How long did it take you to write your AdWords ads? How long did it take your creative team to put together some display images? How long did it take you to load the ads into the system and hit go?

Time is the greatest source of soft dollars. You account for it by what your effective hourly rate is, and add that to investment. For example, suppose your salary is $50,000 per year. Your hourly equivalent rate is $24.04 per hour. Thus, every hour you spend on AdWords adds an additional $24.04 to the cost of your campaigns.

System Dollars

You don’t just imagine an AdWords ad and it appears. You created that ad on a computer, using electricity, with an Internet connection, possibly at a desk inside a building that you pay rent on. If you work at a company, all the benefits like insurance, office perks, etc. add up to your total cost as an employee. If you’re self-employed, the money you spend on yourself in a work context adds up to your business expenses.

Those system dollars create the environment needed for you to do your work. What do they cost? The easiest way to calculate system dollars is to simply divide the operating expenses of employees (less salary and cash benefits) by the number of employees at a business level, and then add that to the effective hourly rate.

For example, if your business spends $10,000 a year in system dollars to maintain the desk, computer, etc. and your salary costs the business $50,000 per year, that puts your effective cost at $60,000 per year, or $28.85 per hour. Every hour you spend on AdWords should add $28.85 into the campaign cost.

Add The Dollars Up

While this one example may seem like overkill to compute the ROI of an AdWords campaign, you must apply this methodology to all your marketing ROI calculations. Once you’ve accounted for hard and soft dollars, ensure that you’ve accounted for system dollars and you’ll have much more accurate ROI calculations.

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Reading the Room: 5 Zones of Audience Attention

More travels, conferences, etc.

When you’re speaking, be it on stage, in a boardroom, or even with your colleagues at the water cooler, you’re likely to notice different levels of attention and engagement. I’ve noticed roughly 5 zones of attention and indicators about where people are:

  • I don’t care: The audience simply doesn’t care. They don’t want to be there.
  • I’ve already got it: The audience is bored by hearing something they’ve heard before.
  • I get it: The audience is excited and engaged by what you’re saying.
  • I think I get it: The audience is excited but confused.
  • I don’t even understand what’s being said: The audience is frustrated.

When you’re reading the room (see this previous post for the basics), pay attention to these key, visible indicators in combination:

  • Note taking: Note the pace at which people are taking notes. How fast are they typing or writing? How much are they writing?
  • Side conversations: Note the number of side conversations people have, and whether the interactions are quick check-ins (“what did he say”) vs. full conversations.
  • Posture: Disengaged audiences tend to slouch or recline. Engaged audiences lean forward or sit straight up, depending on how they’re taking notes. Frustrated audiences hunch forward but aren’t taking notes.

The 5 general zones and their corresponding indicators map out like this:

State I don’t care I’ve already got it I get it I think I get it I don’t even understand what’s being said
Note taking Low Low High Medium Low
Side convos High High Low Medium High
Posture Disengaged Disengaged Positive engaged Positive engaged Frustrated

Your task as a speaker, as a marketer, is to keep people squarely in “I get it”. Most everyone in a meeting or talk starts out there. Watch for indicators that people have strayed too far to “I’ve already got it” or “I think I get it”, as those are warning signs you’re not aligned with what they can handle.

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