[MUSIC] Marketing is the process of taking an individual or business from point A to point Z, moving them from being a suspect, someone who might be in your market, to a prospect to an engaged individual, to a customer, and beyond. In other words, consumers are on a journey, and the key to success is to understand and manage that journey. When we examined the engagement and embrace marketing strategies of nurture and social IMC, we discuss them in terms of two very different sets of metrics. Engagement Marketing uses social metrics, growth in likes or views of our content, as key performance indicators. The embrace strategies not only use the same metrics as engagement, but because they are linked to our sales and marketing systems, they can be treated more like traditional marketing channels. We can measure them using revenues, investments, profits, and then we can justify them with social break-even and ROI numbers. While these metrics will be exploiting greater detail in MOOC 5, you may be wondering why these strategies have different metrics. The answer is in the development of the performance funnel. This is a performance funnel. It is designed to track a relationship, from start to finish, within a marketing channel. If you start at the top of the funnel, it begins with the target market you want to develop. It shows the size of the total market, and from using social monitoring tools, estimates the likely size of the social market. From there, it follows a consumer's journey. If we built a virtual community, we would need to attract the target market to our landing page, where the information exchange would occur. We would then give them access to our private virtual community, and they would be there until they made a product inquiry. And from there, move to their first purchase. In the performance funnel, a consumer must move through each step for us to develop them into a customer, donor, or whatever behavior we want to develop. If you consider the consumer journey for your customers, you will notice that with each successive step, the numbers become smaller. If a social market contains 5 million consumers, our marketing program to drive them to our landing page will likely have a response rate of 2%, meaning the funnel will shrink by 98% as we move from the total social market to the information exchange. The same is true with each step in the performance funnel. Each step shrinks the market. That's the bad news. But the good news is we only need a small percentage to make our organization more profitable. Another piece of good news is that once we develop the performance funnel for our program, we can find sources that let us develop the likely performance numbers, so we can justify and manage our social programs. While we will get into the performance funnel metrics in detail in MOOC 5, let's look at them strategically so you understand the terms and concepts we will use to manage social programs. For each successive step in a performance funnel, we have fewer and fewer individuals. For management, we can use this fact to develop metrics that are called key performance indicators, or KPIs. What is a KPI? It is a percentage, or other measure, which is calculated based on the falloff between two successive steps in the performance funnel. Going back to our sample performance funnel, you have a total social market. That is the number of people on social, and in your target market. You can then create a marketing program to engage that market and bring some of them to the landing page. The difference between the number on your landing page and the number you market it to is your response per se. Likewise, between the landing page and the completed registration, there will be people who will give you a false email address, fail to complete the form, or just leave. The percentage between the total number on the landing page and the ones who complete registration is the registration percent, or registration rate and so on. Each step becomes a key performance metric, or KPI. If we view the performance funnel as a total process, we are investing marketing budget into a specific social program designed for a specific market. So at the top of the funnel, we make an investment. At the bottom of the funnel, a small number of individuals will move through the funnel and make a purchase or donation. This is revenue. The difference between revenue and investment is profit, another KPI. In addition, we can make other business calculations, like ROI and break-even, to justify our social investment to senior management. The response percent and registration percent are examples of effectiveness KPI. It means, how effectively are we moving to each successive step in the performance funnel. KPI's, like ROI and profits in other business measures, show efficiency. How efficiently is our marketing investment producing profits and revenues? Together they provide us the key metric we need to justify our marketing program. [MUSIC]
