In my previous article A Business Owner's System Toolkit, I refer to success measures such as KPIs and provide examples that should be used to guide a business' journey in relation to the categories of their processes. After this, in my next article Finance's Role in The Buyer's Journey, I mention the 5 stages of that journey.
Today we will discuss why succeeding in each of the stages must be measured by mapping it to the appropriate KPIs. Being able to quantify success at each of the 5 stages is vital for a holistic approach to the Buyer's journey.
Awareness
It's important to note that, in the Buyer's journey, awareness doesn't just mean that a potential customer is aware that your business exists, so measuring this won't give us the key indicator of how we are doing at this stage. Awareness means that potential customers have become aware of their "pain point". They are saying:
"I have an issue with [X], I wonder if there’s something I can do about it."
While the Awareness stage of the Buyer's Journey lives squarely in the Marketing realm, (which Peter Drucker states is one of the 3 core functions of any business), all aspects of the business clearly play a role in providing answers to this question.
So, how do we measure success in delivering services to buyers at this stage?
It clearly starts with defining what issues your business addresses. Once that's done, you want to maximize the number of potential buyers with those issues who are aware that you offer solutions to them. This is known as a qualified lead. Too many businesses spend too little time defining what "qualified" means as it relates to their business. First, do that, and then measure.
The KPI for this is # of "Marketing Qualified Leads" ("MQL") generated. This is a continuous process, and over time the meaning of qualified for your business will get more and more focused. As a result, this measure will also mature, and deliver better results for less cost, enhancing ROI, every financial professional's dream measure (and one of them for every ambitious business owner).
Consideration
The consideration stage sees the customer move from basic research toward building a list of possible solutions. So from your point of view as a business, this stage is about showing how you can help resolve consideration stage buyers’ pain points in a way that builds confidence in the quality and competitiveness of your offering.
This is commonly referred to as a "Sales Qualified Lead" ("SQL"). There's always an "event" that moves an MQL to an SQL. Success here is measured with the KPI that measures the % of MQLs that convert to SQLs - known as the Conversion Rate. If we've defined qualified properly, then this measure is all we need to measure our success along this stage of our customer's journey.
Purchase
Here's where the rubber hits the road for any business in its own journey to success. At the purchase stage, a buyer has moved on from that initial question and is now asking:
“I’m either going to purchase [X] or [Y], depending on which one seems better.”
They are spending their time assessing options that relate to 2 factors "fit" and "pricing". "Fit" is how well each choice fits the need created by the pain originally identified, and "pricing" - at what cost. This is the buyer's version of ROI. These need to align with the business's offer to deliver, or the journey will come to an abrupt end.
The KPI here is simply "Close Rate" - what % of SQLs become Customers.
Retention
Many business owners think that the buyer's journey ends when they become a customer. I strongly beg to differ. As I state (again in my article "Finance's Role in the Buyer's Journey"), while clearly necessary for success, a solid Close Rate ratio is only the beginning. Retention, and the next stage, Advocacy, are where real success happens and truly needs to be measured.
Retention, which can be measured in terms of loyalty, should be measured. If your business provides recurring services, then a "Churn Rate" KPI will speak to this. The lower the churn rate, the better the retention.
This can be supercharged if you offer varying levels of your services, so be sure to track your customer's upgrade rate. Be careful though, just because a customer doesn't upgrade doesn't mean they aren't happy. Don't start measuring the upgrade rate of your customer base. Instead, segment your customers into those that could benefit from an upgrade, then treat them on a new buyer's journey, measure through the 5 stages once again from that perspective, using the same KPIs for this journey.
Advocacy
The ultimate behaviour of a buyer as it relates to their journey with your company is for your business to be invited into a very exclusive and protected part of a buyer's community of businesses they purchase from, the ones that they are prepared to refer to their closest friends and associates. Tools exist to track this. Do it continuously and closely. While one way this is done, it isn't just done by tracking referral sources.
I have mentioned in other articles the concept of Net Promoter Score ("NPS"). This is not just your KPI for Advocacy, it's the KPI for the Buyer's Journey itself, and if it's not one of your KPIs for the Business itself, it definitely should be.
Summary
Simple, short, and sweet - Embrace the Buyer's Journey by defining it for your business, then, using the KPIs I've mentioned, measuring it throughout the 5 stages, and adjusting accordingly. Rewards will start to flow.
