KPI Myopia: Why Do Marketers Focus On Conversions And Ignore Revenue?
Does your organisation have any of these symptoms?
- Strategic inflexibility
- Irritated clients or bosses
- Anemic sales pipelines
- Spiralling therapy bills (I’m not kidding)
If these symptoms are familiar, then your organisation may have been diagnosed with a case of ‘KPI Myopia’. Defined as a focus on traffic and web form submissions at the expense of common sense and actual ROI.
In this article, we explore some of the causes of this phenomenon in non e-commerce environments, and its insidious impact on business.
I’ll round things off by focusing on a potential cure, we’ve developed here at Semetrical called ‘S.A.M Technology’ or ‘Systematic Attribution Marketing Technology’.
This technology makes it easy to get revenue metrics in front of our digital teams allowing you:
- To harness KPI myopia for good
- Focus on actual pipeline metrics
- Drive actions which improve ROI + Profit.
You can learn more about our S.A.M Technology as a GA & CRM connector, and request a consultation.
Intrigued? Read on.
What can cause KPI Myopia?
Teams Cannot See Offsite Behaviours: Revenue Generated & Lead Behaviours
In e-commerce companies, revenue data is generated immediately after a purchase on site. This data is then immediately sent back into the analytics systems used by digital marketing teams. This is a data rich environment. Digital teams can explore in detail the behaviours and campaigns that lead to the purchase and take actions. Furthermore the link between digital actions and ROI is clear and stakeholders and clients are more focused on it as a result.
The lead generation environment is in direct contrast to this. The sales pipeline and the generation of revenue are abstract concepts taking place in different systems, weeks or months after the generation of the initial lead.
Sales are progressed by different departments and tracked and reported on by different systems and stakeholders. It is a data poor environment where actions to one stage of the pipeline can take weeks or months to ripple through to digital teams if it comes through at all.
Someone in the marketing department of a B2B firm may never even see actual revenue data, despite playing a key role in the generation of those leads. This is doubly true in an agency environment where clients rarely share sensitive sales or revenue information from the get-go. Triply so in a large organisation with many siloed teams and a top down communications style.
Lead Gen User Journeys Are Longer And Mainly Progress Offsite
As you can see in the diagram, for B2B organisations the lead generation user journeys are often far longer than activity conducted on-site, and therefore marketers lack important off-site data in their decision-making process such as lead scoring, sales qualification, face to face pitch completion and sales.
Teams Do Not Want To Be Accountable For Results They Cannot See
When data does come through it is often sparse and of poor quality. Think a single last click revenue figure per channel rather than the detailed breakdown of the user journeys available to e-commerce marketers.
The insights digital teams can take from this data is limited and so is there ability to take meaningful actions. No sane manager wants to be held accountable for results they can’t measure or influence.
Which environment would you rather be accountable in?
Take a second to look at the diagram and as a marketer, which environment would you prefer to be accountable in? S.A.M Technology enables you to expand the ‘Things You Can See & Control’ section of the Lead Generation Environment.
Teams End Up Focused On The Metrics They Can See
Efforts are therefore made to associate “success” for digital teams with the metrics they have full visibility on and have the most control over. These metrics tend to be ones which are trackable via the website. The most common of which are form submissions and traffic numbers.
Communication of success, failure and opportunities with other teams and stakeholders is framed in terms of these metrics. Over time it becomes increasingly harder (and less desirable) to think outside of these metrics and re-educate others to focus on the bigger picture.
Teams are now using metrics which ignore the majority of the customer journey!
Side Note- Algorithms Exacerbate KPI Myopia
The increasing empowerment of algorithms in marketing teams exacerbates KPI Myopia.
Algorithms have no concept of your organisation, its goals, processes or politics. They will optimise towards one specific KPI and will do so blindly at the expense of everything else. This KPI tends to be form submissions as these are the only ‘lead’ metric available to feed the algorithm with.
Algorithms control more marketing responsibilities each year. This means over time, more and more of the marketing work is then conducted with a blind focus on form submissions. This will eventually lead to less than desirable results.
Of course in some instances Humans could hardly do any better. These tools should be labelled “Do Not Operate When Visually Impaired”.
Teams Act On Metrics They Can See At The Expense Of The Ones They Can’t
Myopia Sets In And Mistakes Are Made:
Form submissions are now the main KPI and the main focus of digital teams (both human and robotic). Wider stakeholders accept that form submissions =”success” and the day to conversations are focused on improving submission volumes and efficiencies.
Few people are motivated to challenge this focus and the opportunities to do so are limited. The impetus to challenge the narrative that forms=success is rarely present.
Clients and bosses are happy working towards form submissions and the agencies and in-house teams responsible for this are happy to perpetuate this narrative.
However because form submissions are distanced from revenue generation actions which at first glance seem beneficial and logical can actually end up causing damage further down the pipeline.
Our brains and the actions have now become myopic!
What Can Myopic Mistakes look Like?
An illustration of chronic KPI Myopia:
Below are a few examples that illustrate how KPI Myopia plays out and leads to less than ideal results.
Had revenue or other pipeline metrics (MQLs,lead status e.t.c) been the primary KPI all these situations could have been avoided.
Assuming That A Lower CPA Always Means A Higher ROI
The digital team for a client with a 3-4 month sales pipeline was focusing on generating web form submissions. There was no visibility over revenue generated from digital activity. Facebook saw a lower cost per lead (last click – GA) vs paid search.
Significant budget allocated to Facebook as a result under the assumption that this would increase revenue and that more form submissions was always a good thing.
Later investigation revealed that Paid Search was a significantly more profitable channel on an ROI basis. Facebook leads are rarely converted to Sales and the decision which looked beneficial at first glance turned out to be harmful.
Focusing On Lead Quantity And Ignoring Quality
A growth team for a company with a 6 month sales-pipeline was focused on web form submission. A significant amount of marketing spend was allocated to Google Smart Display campaigns (ml to the nth degree) on the basis of its strong CPA performance.
Later investigation revealed that many of the leads generated were from bots and the true cost per lead was much higher!
Form submission metrics failed to reflect lead quality and because the data needed to prove this was not visible, money, time & influence were wasted.
Failing To Prioritise The Sharing Of Vital Backend Data
A digital team for a B2B company was focused on form submission generation. Digital activity was established and measured against this. Following strong results on a CPA basis investment was increased significantly.
A couple of months later the sales team began to complain about the quality of leads. Eventually after investigation it was discovered that the majority of leads generated were either spam or from users with no purchase intent.
Efforts to solve this problem by passing back lead quality metrics to GA stalled as the wider business failed to provide the marketing team with the technical resources needed to implement.
At this point stakeholder expectations were not met , the growth strategy was cancelled and the marketing team was re-structured.
What Can We Do About It
The cure for KPI Myopia is not a simple one. Organisational cultures and structures do not change overnight and the time required to do so is in jarring opposition with the expectations of immediate results from managers + shareholders + clients. Algorithms are here to stay, processes are never perfect and humans are always going to be human.
Why not learn to love the bomb. Harness this myopia for your own good!
Use SAM and get revenue metrics in front of your digital teams. Expect the same laser focus on a single KPI (ROI or Lead Quality) except this time, you can be sure that actions which improve results will actually lead to value generated!
