Marketing efforts are often measured and managed in the framework of a funnel. The idea behind this is that a lot of potential customers have to learn about your product to generate a desired amount of sales because at every step of getting closer to a purchase, a certain percentage will drop off because they feel the product isn't right for them.
The classic simple funnel model is the AIDA framework. Prospects move from initial attention to concrete interest, then develop a desire to buy and finally take action — making a purchase.
AIDA is still useful as a basic starting point for understanding the customer journey, but it is overly simplistic for many modern products, particularly those with a recurring component.
Marketing Funnel with Relationship and Rentention Steps
A more modern marketing funnel might look like this:
The important addition here is the post-purchase step of building a relationship with the customer, plus a final step of retention with customers who, for example, remain paying customers of a SaaS product over time.
Some other funnels also introduce an "advocacy" step to model that happy customers often turn into the most effective promoters of a product.
Measuring the Funnel
A well-run marketing and sales organization knows how many prospect are in each stage of the funnel at any time. It also measures the conversion rates from stage to stage to understand how many people drop off in between.
Understanding the funnel holistically is essential for a good coordination between marketing, sales and customer success functions.
As a prospect migrates through the funnel, responsibilities between departments at the selling company typically shift.
Marketing is usually responsible for the top two stages of the funnel (exposure and discovery in the model above). Sales then takes over for the next two steps up to the moment of purchase. For the time after the purchase, the lead is then typically taken by the customer success or customer service department.
These handover points have to be well defined and structured. Promising prospect relationships are often lost at these points when handovers don't work seamlessly.
Product Positioning and Messaging
A first requirement for successful product messaging is to understand who you are actually selling to.
Well-defined customer personas and ideal customer profiles are the tool to achieve this. This component is often owned by the product organization but needs significant contribution (and buy-in) from marketing.
Read more here: Customer Personas
Clarity about product positioning for different target customers is the crucial interface between the product group and the marketing organization. Both should therefore work closely on getting a unified view that can be used across the company and inform all marketing initiatives.
The typical format is:
"For <target customer persona>, who need to <customer problem>, <product> is a <describe product type in a way that the customer would understand> which provides <2-3 key benefits for the customer>. Unlike <most important competitor category>, <company>'s solution <state core USP>."
See here for more details.
Product messaging takes the product positioning a few steps further and fleshes it out with crucial details. A typical framework looks like this:
This messaging plan defines the brand and product promise from different perspectives and on different levels of abstraction. The individual parts might be sourced from other parts of the company (the positioning statement for example is often the main responsibility of the product organization), but marketing's job is to bring it all together and load it up with concrete, compelling language.
All downstream marketing assets (such as campaign creative, websites, marketing collateral, etc.) should be measured against this messaging framework. Staying on message is essential for a consistent marketing impact.
The most basic way to illustrate your differentiation towards the competition is the competitive matrix. It comes in different levels of detail and aims to clarify where your product is better.
A simple format can focus on just two key features and emphasize how your product stands out:
A more detailed feature matrix will illustrate your strengths versus the competition in a number of feature categories and individual features. This is particularly useful in advanced sales conversations where customers might be interested in features that are important to them to make a final decision
Competitive matrices can be internal tools, but they are often also shared with customers (and investors). To keep them credible, make sure to not exaggerate your advantages. It is always wise to admit that you are not as strong as competitors in a small number of dimensions, preferably of course the less important ones.
Battlecards are tools that are typically created by marketing departments for sales departments. Their goal is to summarize the most important differentiators towards the competition in a condensed form that can easily be used during sales calls. They also serve as a cheat sheet and training material.
There is typically one battlecard per major competitor that can be used when customers object during a sales call and point out that they are already using product X or considering to buy product Y.
Battlecards give sales people the reassurance
Net Promoter Score (NPS)
The NPS measures customer satisfaction in the context of your customers being willing to actively recommend your product to others. It is typically measured through surveys where users are asked "How likely are you to recommend our product on a scale of 1-10?".
People who respond with a number of 6 or less are "detractors", those with 9 or 10 are "promoters". The NPS is calculated as the percentage of promoters minus the percentage of detractors, resulting in a score of -100 to 100.
An NPS above 20 is seen as favorable, above 50 is excellent, and above 80 is world class.
The absolute level of your NPS can depend on many factors, including cultural differences between geographies and market maturity. It's therefore less important to obsess over the absolute level than to measure the development of NPS over time. A declining NPS is always a strong warning sign.
Vitamin vs. Painkiller
A very simple, but effective framework to think about your product value proposition and resulting messaging is to ask yourself if your product is a vitamin (good for you, useful, but not ultimately not indispensable and not urgent to take) or a painkiller (something you really need and want, urgently).
While marketing can't of course directly change the nature of the value proposition vs. your customers' pain points, it can influence the product roadmap with market feedback and push for more painkiller-like features. Furthermore, positioning the product strongly as a painkiller (e.g. by emphasizing the importance of customer pain points) can help to increase urgency with customers.
The 40% Rule of Disappointment
A simple question to ask your customers is "How disappointed would you be if tomorrow you could no longer use our product?". As a rule of thumb, if 40% or more of customers respond with "very disappointed", you have good initial product-market fit. Obviously this can be a starting point for more in-depth customer surveys.
Competitor Traffic Measurement
One way to measure your marketing's effectiveness versus competitor is to keep an eye on their website traffic versus your own.
It should be mentioned that due to the nature of the underlying methodologies, the absolute numbers are not going to be perfectly accurate. It is therefore more important to track the development of these numbers over time to understand if you're performing better or worse than your competitors.