Cost Per Experiment: Your New Go-To Metric for Effective Marketing
The next time you hear about a billion-dollar IPO remember this: all great business innovations start with a proof of concept.
The world is changing at an ever-accelerating rate. This pace of change necessitates being agile and experimenting to find new solutions. Jeff Bezos likes to say, “Our success at Amazon is a function of how many experiments we do per year, per month, per week, per day…”
Business-to-business marketing is no different. Cost per experiment (CPE) is the proof of concept of the marketing world. Companies that don’t know how to implement it or don’t make it a priority will fall to those who do.
In the past, B2B companies focused on things like impressions, clicks, and leads. Those metrics are essential KPIs for a robust B2B marketing program, but they don’t typically tell the story of innovation.
Cost-per-experiment (CPE) tells the story of innovation by aggregating all of these more traditional metrics, into a single measurement of marketing return on investment (ROI).
In a market landscape where the focus is increasingly on resource-intensive content like video marketing, CPE expands the myopic view of each KPI and gives a big picture view of what is working and what is not working.
Why is this important? If you have a multi-channel strategy, you need a comprehensive view of the data to impact your company’s marketing results positively.
The Death of the Isolated Marketing Channel
In the past, marketing performance was measured on a channel per channel basis. Today, B2B marketing is about marketing strategy and execution across channels. The silos of the past are now different levers in a relentlessly brand-centric machine.
To be clear, channel-specific metrics such as measuring the effectiveness of a newsletter through A/B testing are still relevant. What has changed is the complexity and cross-connection of the variables involved. Testing now needs to encompass more than just how an individual newsletter performs. It needs to account for how that performance is impacted by the content included, cross-channel messaging, and post-click activities.
Why it is Necessary to Measure Cost Per Experiment
Understanding the relationship between these different channels is not easy, and that is why measuring cost per experiment (CPE) is necessary. A lot of experimentation is needed to find the highest ROI in a complex and fast-changing environment.
Empirical Proof for Human Intuition
Human intuition is critical for innovation. However, it is also true that when innovating in environments where brand integration is required for results, and the presence of many variables makes results unpredictable, there is a need to get empirical data verifying real outcomes.
In this environment, keeping track of the impact of new strategies on your ROI is critical.
Ability to Isolate Variables
Isolating variables may seem counter-intuitive but measuring an aggregate cost per experiment allows you to isolate the small-picture impact of individual variables. By bringing all of the factors under one roof, the role any single variable is playing on the outcome becomes more evident.
For example, running an experiment where a newsletter links to different social channels will give you better insight into which one your audience prefers, which in turn should influence your marketing spend.
Fail Small, Succeed Big
Failure to experiment will lead to stagnation. However, the pressure to get innovation right often leads to hesitation or even paralysis.
Measuring cost per experiment allows you to limit the cost of testing new ideas to an amount that is comfortable. Those that fail can be abandoned relatively cheaply; those that hit can be scaled quickly.
For example, video is a format many B2B brands are considering, but often hesitate to pull the trigger on due to concerns about its effectiveness vis-a-vis other channels. Effectively measuring cost per experiment will give a complete picture of ROI impact of putting up a video before running producing video content at scale.
Building a Cost of Experiment Culture
B2B companies need to embrace the utility of the cost of experiment metric. Change can sometimes be slow to come, but there are a few actionable steps that can be taken to start the process.
Start by engaging employees who handle marketing strategy and the implementation of marketing. Ask them for a list of ideas for innovation and where they could see experimentation helping the process. A group brainstorming can be a great way to start the process.,
Next, analyze your current experimentation efforts. Ask questions like:
- What is the average timeframe from an innovative idea, to experiment implementation, to analysis, to a conclusion?
- How engaged are the various departmental stakeholders in this process?
- How often is this process undertaken?
- What percentage of innovative ideas end up getting fully tested?
Then, map out a marketing strategy, process, time allocation, and budget to allow for experimentation and tracking results. A good rule of thumb is to allocate 20% of time and budget to testing.
Not all experiments will work, but you will be surprised at the learning and results you achieve by incorporating a culture of experimentation. Many of these experiments will become game changers for the business.
If you are ready to start building an experimentation culture and tracking the cost per experiment to keep you one step ahead of your competition and maximize the ROI of your marketing spend, connect with KEO marketing today and request a complimentary marketing audit.
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With more than 25 years of hands on marketing strategy and operations experience, Sheila Kloefkorn is dedicated to developing marketing strategies and plans that help clients succeed. Some of the world's largest brands have depended on Sheila for marketing programs that delivered tangible and substantial results. Specialties: B2B marketing, lead generation, lead nurturing, sales strategy, marketing strategy, competitive marketing strategy, social media, search engine optimization (SEO), search engine marketing (SEM), mobile marketing, email marketing, website design, marketing plans.