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I overheard a CEO last week ask the marketing guy: “Hey, are we any good at generating business using digital?” Easy enough question right, but if you consider it for a while, holistic metrics like ROI and ROMI do not fully offer insight into whether a company is maximizing its digital business opportunity.
But how can we measure this? Enter the Digital Business Quotient (DBQ).
The online revolution and resulting marketing transformation has presented real opportunity for businesses to leapfrog competition, engage with target markets, elevate sales and marketing performance and impact the top and bottom line. Marketers are both excited and apprehensive about their elevated role and opportunity to connect with prospects/customers in new ways using digital channels, practices and technologies.
Correspondingly, there needs to be an all-embracing metric that gauges how well this new responsibility is performing.
What exactly is the Digital Business Quotient?
Consider a new metric I have labeled the Digital Business Quotient (DBQ) – a strategic metric that incorporates all the contributing factors needed to determine not only how effective an organization is at digital marketing, but also to what degree it is leveraging its digital market opportunity. The DBQ considers 3 key areas of the customer acquisition lifecycle: the reach/penetration of target market(s), demand creation effectiveness, and ability to convert interest into tangible business outcomes.
This should not be taken lightly, as the DBQ metric considers many aspects of your organization’s marketing performance that involves considerable analysis to accurately calculate. But it may be possible to determine a ‘gut check’ score by roughly estimating answers to 3 questions:
- To what degree (out of 100) are you reaching or connecting with your target market(s)? e.g. I estimate we have some form of digital contact with 50% of our target audience.
- How effective and efficient are our programs/campaigns in bringing traffic to our online assets (website, landing pages, content and social pages)? Tough to score without real analysis but take a swing e.g. I reckon we score a 50% efficiency/effectiveness rating at generating interest and actual visits from our target audience.
- How effective is our marketing at converting that online interest into tangible outcomes (captured contacts, prospects, qualified leads, sales etc)? Again, tough to score without analysis, but consider whether your organization captures, measures and nurtures your target market prospects all the way along the decision cycle? e.g. I would give us 3 out of 10, or 30% rating.
Using this example, the DBQ is calculated as:
DBQ = #1 * Avg(#2 + #3) which would result in:
DBQ = 50% of 40% = 20%
(which means a significant missed opportunity)
There may well be questions about the algorithm used here (and feel free to share opinion), but what this number tells us is that we are connecting with 50% of our target market, and are 40% effective at generating interest followed by some form of tangible conversion. So we can arguably state that we are fulfilling 20% of our overall target market opportunity via digital.
Perhaps the greatest value this metric brings is that through the process of measuring its DBQ an organization will identify which digital aspects of its marketing (and sales to some degree) require transformation and optimization.
I'll be following this up with Part II of this blog where we will dive deeper into the analysis aspects of the DBQ, and identify which variables we need to analyze to calculate a more accurate number.
Comments/discussion welcome as always!