In the first three articles in our journey, we've identified and uncovered sources for improving marketing performance and generating additional profits. This final article in the series will present additional insight and strategies while providing a view of the entire process in its integrated form.

We've established the framework for mapping the customer buying cycle to your sales and marketing funnel, assessing customer leakage from the funnel, identifying your unproductive spending, and developing strategies and tactics to reduce leakage. We must now concentrate on building this process into a sustainable contributor to bottom-line profit.

To achieve this, the three big areas of focus are (1) getting the right prospects into the funnel; (2) establishing “rhythm” for the activities that maintain progression through the funnel; and (3) then bringing customer value into the process to drive ROI.

The Journey Recap

First, here is an illustration of the complete marketing profitability path that we have presented up to this point. (You also might want to review parts 1, 2 and 3 of the article series.)

So, with the framework reinforced, we can now work to…

  1. Get the right people into the funnel 
  2. Gain rhythm
  3. Drive ROI

Feeding the Right Prospects Into the Funnel

The “right” prospects who belong in our marketing and sales funnel are those who are likely to complete the cycle profitably for us. As part of our qualification process, we must ask several questions:

  1. Are the prospects “funnel-ready?” You need prospects whom you can successfully motivate to proceed through the funnel with your marketing program. You'll need answers to these questions: 

    - Do those in the target segment have a genuine need?

    - Do they generally have budget?

    - Are your contacts capable of making or influencing decisions?

    - Does your brand align with their expectations and can your product/service truly offer a solution to this need?

  2. Are these prospects likely to be receptive to marketing communications that aim to increase awareness of problems? Our marketing tactics will help identify their problems so that they move these needs from “nice to have” to “must have, now!” The prospects must be able to recognize the pain or emotional loss from not fulfilling that need if you effectively demonstrate this through your communications.

  3. Does the funnel analysis developed for each market segment demonstrate a high potential for success? Certain market segments may experience greater leakage at points within the funnel based on your ability to address their specific needs. Significant weaknesses in the funnel progression may indicate that certain segments should be excluded from additional marketing efforts.

  4. Can you manage multiple segment funnels to maximize ROI and reduce risk? Motivating your best few segments effectively through the entire sales cycle will be more profitable than motivating a broader audience partially through the sales cycle. So you want your marketing focus to be concentrated. By managing a small number of distinct market segments (two to three), you have the ability to recognize when entire segments should be eliminated and replaced with new segments. But don't go overboard and select just one market; multiple segments reduce the risk of becoming overly dependent on a single segment that might experience uncontrollable leakage late in the funnel and force your team to expend excessive budget and resources to reach short-term sales goals.

Rhythm Leverages Past Investments and Obviates the Need for New Ones

Even novice marketers know that change takes time. Take for example a company that sends invitations to a seminar series to the same list every month, yet still has new faces turning up after having ignored previous invitations for years.

We know the effect of repeating tactics, yet often we plan campaigns as if a single iteration of each of the tactics will suffice. It is hardly controversial, therefore, to suggest that campaigns need to be designed to run more than once. Now that we have seen that buyers will be at different stages in their journey at any given point in time, we can see that tactics need to be run multiple times for another reason: to catch buyers at the right stages of their unique journeys.

If we recognize that tactics must therefore run repeatedly, what effect does this have on choice of tactics?

Consider also the notion of handover of tactics. As your buyers progress from one stage to the next in their buyer's journey, you'll use different tactics to help them progress. Are your tactics going to appear logical from the buyers' perspective, or will they appear disjointed? Rhythm also requires flow from one set of tactics to the next.

A tactic that might appear to be an obvious best choice to cause progression through a particular stage in the buyer's journey, and might even appear to deliver the best ROI, may prove unattractive when we consider rhythm. When choosing tactics, stand back and look at your combined set of tactics and ask yourself, “Do I have the resources to execute those tactics every day/week/month/quarter [whatever the execution frequency]?”

Then ask another question: “Will my audience respond positively if I execute this series of tactics, and if I repeat them (or will I look stupid)?”

If the answer to either question is “no,” then you might need to choose different tactics.

“Gaining rhythm” is therefore about choosing tactics that can be executed repeatedly from a resource perspective, and from the buyer's perspective.

Driving ROI

To complete the marketing ROI picture, we need to bring customer value into the process. At the highest level, the three primary drivers of marketing ROI are these:

  1. Incremental customer value 
  2. Quantity of customers converted to sales 
  3. Investment required to achieve that conversion

In the context of managing the sales and marketing funnel, we want to prioritize where we invest our time and budget to get the greatest returns.

Calculate the return on the marketing and sales investments made to successfully progress prospects through the funnel as follows:

Return = Net Present Value of Gross Margin [which is simplistically calculated as Prospects targeted * net sales conversion rate * profit per converted customer] – Total Marketing Investment

The ROI is then calculated as Return divided by the Total Marketing Investment.

To effectively maximize profitability, you need to establish the funnel progression analysis for different segments of customer value. Uncovering the leakage points for your high-value segments may create different priorities or segment-specific strategies. In addition, one of the key principles of marketing ROI is that tiered investments will allow you to spend more to convert higher-value customers.


In our four-article series, we highlighted the following recommendations that can lead you toward increased marketing profitability:

  • Reduce leakage from the funnel, prioritizing your efforts at conversion improvements in the later stages of the funnel.

  • Accelerate leakage in early stages in the funnel for those prospects not likely to convert.

  • Recycle good prospects to bring them back into the funnel and resume their progression toward a closed sale.

  • Target the right prospects to bring in market segments that can achieve ROI objectives through the combination of high customer value and good sales conversion rates.

  • Choose tactics that you can afford to execute repeatedly, and which will appear logical from the buyers' perspective.

  • Manage stalled prospects with programs that sustain the company's positioning and awareness until the prospect's need is sufficient to make them ready to buy.

  • Monitor and manage funnel progression for each customer value segment to concentrate time and resources where the potential returns are highest.

While we have covered great distance in this series, marketing profitability is not a destination, but a continuous journey. As this process takes hold in your company, you will find opportunities for further refinement and improvement.

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image of Hugh Macfarlane

Jim Lenskold and Hugh Macfarlane Jim Lenskold is President of Lenskold Group and author of Marketing ROI, The Path to Campaign, Customer and Corporate Profitability (McGraw Hill, 2003). The Lenskold Group ( offers consulting services in the area of strategic marketing, marketing ROI, customer relationships, customer profitability and market analytics. Jim can be reached at or 973-598-1911.

Hugh Macfarlane is CEO and founder of the demand generation consultancy MathMarketing ( He is also author of The Leaky Funnel: Earn more customers by aligning Sales and Marketing to the way businesses buy (Bookman, 2003). Hugh can be contacted via or +61 3 9690 7600. In the US, contact Hugh via Lenskold Group.