Building Your Marketing Model

Let’s face it; there are more articles about the advantages of marketing on the internet, then there are actual marketers in the industry.

Which is why I won’t waste any of your time explaining why you need to know it well.

Every significant business has dedicated teams of talented marketers working tirelessly, to craft a perfect brand image for their businesses and products.

While the final output might look incredible, the process behind that is rarely visible or accessible to outsiders. Which is why unoriginal emulation and subsequent imitation of these techniques, rarely have the desired effects for businesses.

Across industries today, if you ask senior executives about the most crucial marketing asset to any enterprise, most of them would talk about the importance of a good marketing model. Everything that we see happening around the business hinges on the accuracy and strength of this model.

For a solopreneur, first-gen business owner or a brand that has recently switched gears from a sales-driven culture to one that’s led by marketing, the process of getting this right can be extremely challenging.

Where Do We Start?

the 2 key question every business model needs to ask

Here are two key questions that every marketing model needs to answer:

1. Where should I invest marketing dollars?
Your business model needs to establish which marketing avenues are the best fit for your brand.
2. What should I expect to see in return?
Craft your business model in a manner that enables you to clearly outline your expectations on returns.

So good so far? Great! Let’s get on with the rest.

Here are three key tenets that will slowly nudge you towards the perfect marketing model for your company. They are:

(A) Historical data

(B) User journey

(C) Conversion Rates 

For businesses we often say, the numbers speak the loudest!

So when you are clueless about where to start, it is always a sound idea to begin by looking at the numbers of your business. This is what we call the historical data of your company, that shows you how far you have come and in what manner.

What you need to do next is actively try to understand the user journey of your customers. What does it take for an arbitrary individual to become a part of your customer pool? Understanding your customers is the first step to acquiring them.

However, just knowing your customer’s journey will not help you unless you have metrics to measure this process. This is where the conversion rates come in, which offer you a numerical insight into how effective your marketing practices actually are.

So let’s explore them in detail, shall we?

Part 1: Historical Data

No, MS Excel sheets displaying copy-pasted numbers, week after week, are simply not going to cut it anymore.

Knowing your numbers means knowing them in a manner that lets you draw inferences from them and helps you strategize on how to improve.

There are certain key numbers that you need to know in order to shape your marketing model accurately.

(a) Customer Lifetime Value 

(b) Lead value

(c) Customer Acquisition Cost

(d) Business sustainability

Let’s start with the concept of Customer Lifetime Value.

As opposed to just the first purchase, this metric helps you determine how valuable a customer is to your business over a lifetime.

You know what they say, retaining an existing customer is much less expensive than acquiring a new one.

This is why your CLV would inform you about the reasonable amount to spend on acquiring new customers, among other things.

A simple way to calculate CLV:

customer lifetime value

For example, if sales to a particular customer have generated $1000 over their lifetime, and the initial cost of acquiring them was $100, then your CLV would be:

$1000 – $100 = $900

Under no circumstance should you be spending more than $900 per customer, on acquisition. That would signal that your company’s financial health is taking a hit.

Let’s now inspect the concept of a lead.

So, what or who is a lead? A lead is nothing but a potential customer that is genuinely looking to purchase your product or service.

So what is the value of a lead for your business, and how do you measure it?

Let us imagine that you sell refrigerators and they retail at $500 per unit. So to you, a lead is worth $500 when it ends in sales. In reality, however, not all leads end in a purchase.

That said, let us imagine you are able to convert 4 out of the 10 leads you have, into actual sales. Now the formula to calculate the value of a lead is:

So in the example, we stated, the lead value would be:

Lead Value = 4*500/10 = $200

Remember, some leads are more profitable to pursue than others. We call them hot and cold leads respectively, depending on the extent to which they are ready to make a purchase.

Another very important metric to understand is the Customer Acquisition Cost. It answers a very simple question, how much does it cost to acquire a new customer?

Marketing efforts traditionally focus on print mediums and digital mediums. While the conversion rates for the former are difficult to measure, the latter can be easily monitored and accordingly, important demographics can be targeted.

A simplistic formula for calculating CAC is:

customer acquisition cost

A more advanced version of this metric lets you calculate the CAC for each specific channel that you invest in. We cannot stress how important it is to compare the CAC for different channels.

For example, let’s say you notice that your CAC is greater for Instagram than Facebook. That would mean that the money you are spending on Instagram marketing is not fetching you more customers.

This would push you to redirect your resources to Facebook marketing, which has a lower CAC and is more profitable in this case. This metric helps marketers ensure optimal allocation of resources and zero down on the right channels.

Each business has their own philosophy when it comes to how they attribute their customer acquisitions. So choose the model that aligns best with your business’s philosophy.

Now that you understand how to calculate your CLV and CAC, you can easily find out how sustainable your business actually is. The formula goes:

business sustainability

The higher the ratio, the more sustainable your business. You should explore ways to increase your CLV or bring down your CAC in order to increase the sustainability ratio of your business.

Phew! Lots of numbers. What’s great is that now that you know your metrics, you can set your targets and accordingly pick your marketing tactics.

key numbers to know

Before that, let’s help you understand the user journey of your customers!

Part 2: User Journey


When you are attempting to understand your customer’s journey, the big looming question is,

“How do your prospects become your customers?”

In order to do so, let’s take a close look at three different approaches to understanding your user’s journey.

1. Marketing Funnels:

marketing funnel

A marketing funnel helps you visualize the path traversed by your customer, with the end destination being the final purchase that he/she makes.

From a much wider pool of options, the customer finally narrows down on your product, all the while going through various stages of consideration.

This is why marketers call it a funnel since from a wider top, it gradually tapers at the bottom.

Let’s look at a few different examples of marketing funnels below.

Newsletter Signup

Imagine that you run a fashion blog, and you want your users to sign up for your weekly newsletter. The sales funnel for you would look something like this:

i) User comes across your sign up form on a Facebook ad that you have been running. It asks for the user’s email address.

ii) The user decides to fill up the form and inputs the correct email address.

iii) They then have to open their mail where they have received a link from you, to confirm their email address. Once they confirm, the transaction is completed

Page Conversion

Let’s say you own an apparel business and you have a dedicated Facebook page to promote your business. The sales funnel to track page conversions would look like this:

i) User sees a pop-up ad (click here to know more)  for your business on Facebook, and when they click on it, they are redirected to your page.

ii) Once on your page, they find the signup form, which they have to fill up to receive updates from you.

iii) They are interested in receiving updates from you, so they fill up and submit the signup form. That would lead to the end of the funnel for the user.

Retail Store Funnel

Imagine a retail store selling furniture. What would the marketing funnel for such a store be like?

i) The customer walks into the store to buy furniture.

ii) They walk around the store, browsing through your products, and they like a chair that you have on display.

iii) They zero in on the chair after considering its features and price and express their desire to buy it.

iv) They then move to the payment area, to make the payment for the chair. At this point, the funnel is complete since the transaction is made.

E-commerce Funnel 

Let’s say you sell jewelry and your brand’s website is The sales funnel for your customer would be:

i) The customer sees your online ad and visits your website at

ii) She likes a pair of earrings and wants to buy it.

iii) She adds the product to her cart and selects the ‘checkout’ option.

iv) She subsequently proceeds to the checkout process.

v) She pays for the pair, and the checkout process is thereby completed, locking down a successful sale for you.

Now that we have a clear idea of how sales funnels look different for different entities let’s explore their actual significance. Why are funnels beneficial?

why are marketing funnel beneficial

A funnel’s true benefit lies in its ability to let you attach numbers at each stage to your customer experience, allowing you to statistically assess how a visitor moves through your website and ultimately ends up buying your product or dropping out of the funnel.

We will come back to this later, but before that, let’s check out the second approach to tracing your user’s journey.

2. Customer Journey Map

So far, we were tracing the customer’s journey through a funnel.

With a customer journey map, we have a full-fledged illustration of the different steps taken by your customer, in the process of doing business with you over time.

It is a sensory mapping of the customer’s thoughts, feelings and emotions as they go on this journey.

This method relies on actual interactions with customers, which many deem as the foundation of the move towards more customer-centric models of marketing, that we are currently witnessing.

Only by talking to customers and obtaining their feedback, you can gather significant qualitative data that would help you better assess the customer journey.

This is why the need of the hour is to focus on the customers, and not the business, Identify how they truly feel, what they are thinking and what they are experiencing when conducting business with you.

So how do you go about deriving an experience map? Well, here are a few basic pointers to help you get started.

i) Uncover the truth- Begin by understanding the touchpoints of your customers. What do they click on, and what do they pass by? How do they feel when they interact with certain aspects of your site?

ii) Chart the course- Map out how they move through your site and how it makes them feel at each point. It helps you establish a journey model for your user.

iii) Listen to their opinions and frustrations- Listen carefully to their opinions and frustrations and narrow in on opportunities to improve the user experience on your website.

Ready to learn about the third approach? Let’s get right to it!

3. The Buying Process

For a second, put yourself in the buyer’s shoes.

When buying a new product, there are certain processes you go through to make the final decision about whether or not to purchase the product.

These processes are collectively termed as the buyer’s process. While devising your marketing strategy, it helps to have a clear understanding of the buyer’s process.

Now there are three main stages that the buyer passes through during this collective process. Let’s learn all about them in-depth, with the help of examples.

Awareness Stage- This is the initial stage during which the buyer is aware of the problem in front of him/her.

awareness stage

For example, let’s say Harry realizes that public transport is too inconvenient for him, and he wants to buy a car. You, on the other hand, sells cars. Sounds perfect?

As a marketer, you have to ask yourself a few questions that will help you devise your model.

Firstly, how would Harry describe his goals and challenges?

Next, you want to figure out where Harry would go to educate himself on his goals and challenges?

After that, you should ask yourself, what would be the consequences of Harry’s inaction?

Also, are there any common misconceptions that Harry has about buying a car?

In the end, the big question is, what makes Harry either prioritize or not prioritize the purchase of the car?

Once you ask yourself these questions, you will be automatically churning out better content.

Now your buyer is aware of the problem, what next?

Consideration Stage – In the consideration stage, the buyer is actually researching the problem and looking to find a solution.

consideration stage

So Harry is convinced that he needs a car, and right now, he is looking through different options on the market.

Now ask yourself the following questions and see what answers you come up with.

What categories of solutions is Harry looking into? Does he want an SUV or a Sedan or some other category of car?

How does Harry educate himself on these various categories? Does the research on the internet, or does he ask his friends or family? Or is he simply looking at billboards on the subway?

How does Harry assess the pros and cons of each category? You are essentially trying to figure out what Harry values more. Is more mileage enough for him to overlook a more expensive model? Is luxury a consideration for him, or does he simply value functionality?

Moving on, the final question concerns how Harry decides the right product for him? What does he keep and what is he willing to compromise on? What guided his selection process?

Got the hang of how to navigate the consideration stage? Great!

Let’s focus on the final stage of the buyer’s process.

Decision Stage- The last stage of the buyer’s process refers to the final decision-making stage of the buyer.

decision stage

There are a set of 5 questions you can ask yourself, to define the decision stage. Let’s look at what they are.

What are the top criteria that Harry would be looking into when buying his car? Would it be price, mileage, look or something else? Does your product have an edge in those areas?

Next, what would make Harry pick your brand’s car, as opposed to another company’s product? What can you offer him that your competitors can’t? You can make likes and dislikes list which would help you promote the likes and fix the dislikes.

Now ask yourself, who are the stakeholders involved in Harry’s decision making? Maybe his family, friends or colleagues will weigh in on his decision? You need to assess how their perspectives may differ.

For example, Harry’s son may want a great in-built stereo system in a car. Can you offer that?

Next, does Harry have any expectations to try out your product before he purchases it? Maybe he is looking for a free test drive.

Finally, are there separate implementation plans or training strategies required before Harry can make this purchase?

Once you have all these answers, you are more than ready to start building your robust marketing model.

So far, we covered the importance of historical data and the user journey of your business. We will now look at a very important tenet; conversion rates.

Part 3: Conversion Rates

With conversion rates, you have the free hand to define what a ‘conversion’ means to you, and thereby calculate your conversion rates.

It is then nothing but the rate at which a customer performs an action, that you have benchmarked as a ‘conversion’.

The most significant benefit of tracking conversion rates is that it tells you which avenues are the most lucrative ones for your business marketing.

Let’s say you own an Ebook business, and you define conversion as a successful download.

By tracking your conversion rates for different social media platforms, you can find out which platform is bringing you more customers. Accordingly, you can invest in that avenue and cut down on unnecessary spending!

So, how do you actually measure this conversion rate?

Quite simple really, if you have defined the desired action as your lead conversion, then the formula for measuring your lead conversion rate is:

lead conversion rate

Let’s look at a few examples to understand this better.

Let’s say you run an online tech journal and get 100 leads a day, out of which, 20 become new customers. You have defined your lead conversion as a newsletter sign up. In that case, your lead conversion rate would be :

Lead conversion rate = 20 / 100 * 100 = 20%

Now that you have your conversion rate remember that it can be volatile due to numerous reasons such as variances in your industry, region, market and also seasonality. Sales might go up during festive seasons, might see a dip during a political turmoil in your region, etc.

At this point, we are going to ask you one simple yet important question, do you know your industry averages?

Most people fail to factor in the externalities that affect their average conversion rates. You have to understand that the primary factor that causes acute variation in conversion rates across industries is simply because people have different definitions of what ‘conversion’ means.

Interestingly, the idea of conversion can be better understood with the help of the sales funnel that we illustrated before. You can track conversions at each stage of the funnel.

For example, let’s say you have a laundry business. At the top of the funnel, you have defined the visitor becoming a lead as a conversion. Let’s say the conversion rate here is 6%.

Next, the lead becomes ready to nab customers, and you secure their email or contact. At this stage, let’s imagine your conversion rate is 24%.

Finally, at the end of the tunnel, the customer makes the purchase which is the ultimate conversion you were looking for. Your conversion rate at this stage is 12%.

Voila! You have a sales funnel that lets you track conversion rates at every stage, thereby helping you decide which avenues need more attention.

When you are calculating the average conversion rates for your industry, it is always advisable to do so individually for each of the channels you are using.

You will be surprised at how conversion rates can differ greatly across various channels. We have put together a list to help you realize this difference, check it out!

acquisition channel

Having said all that, we really believe that ‘conversion’ should be defined by each brand differently, according to their unique objectives. Set your own benchmarks and use that as the yardstick for all your metrics.

So, are we ready to start building that marketing model? Let’s do it!

Part 4: Build Your Marketing Model

Now that we know the three key tenets to consider before building our model let’s get down to actually shaping it.

One general trend in the market is to amplify the quantity of the marketing efforts, without trying to improve the quality. This is a cardinal sin since more doesn’t always guarantee better performance.

Instead of floating along with the generic hypotheses of requiring ‘more’ in order to be better, let’s try out a different approach to building your model.

Let’s consider that you own a business, and the following are your numbers, corresponding to your funnel:

building a model

Once you have this data with you, ask yourself two vital questions.

First, how many visitors do we need?

Second, what are we willing to pay for each visitor?

The answer to these questions can be found by navigating the funnel in a reverse direction.

organic search model

Chart out your targets for your business along the funnel, but in a reverse direction. On one side, you pen down your revenue expectations for the year, and on the other hand, you calculate the average cost of each customer.

By moving along the funnel in a reverse direction, you will be able to narrow down on the number of visitors you need and the amount you need to pay for each new customer.

In our example, the number of leads you would want your business to generate daily is 7,500, and the cost of each new lead would be $1.

So, have you generated any leads yet? If you haven’t, let us tell you the value of a lead.

Part 5: Know The Value Of Your Lead

We cannot stress enough on the need to segment your data on the basis of the channel. Which channel brings in how many customers should be closely tracked by your company.

Only when you know the performance level of your marketing campaigns on these specific channels, can you effectively decide how to spend your marketing budget and allocate your resources.

Let’s say your Facebook ads are running super well, and you have a great conversion rate, while Instagram traffic has been sparse. You can choose to focus all your efforts on getting the word out on Facebook and try a different strategy for Instagram.

We have already learned how to calculate the value of your lead, but if you don’t want to do it manually, you can always rely on Google Analytics to get the job done for you!

We have covered a lot of ground so far, let’s now do a quick recap of what we have learned.

marketing model

Part 6: Building Scenarios 

Let’s say you have five different channels to choose from, for your marketing campaign. Now, based on your historical data, you find out that two of those channels has brought you a lot of new customers.

So based on past user behavior, you make some predictions about the future success of those channels.

This is what we call building your campaign scenario, where you predict and calculate the value of a lead from a specific channel.

When building your campaign scenario, we have noticed a common misconception. Let us illustrate that with the following example:

sample scenario

On a preliminary glance, the social reach looks a lot better when compared to the organic reach, simply based on the numbers.

However, when you look at the conversion rates, the sales and the revenue earned, it is a completely different story where organic reach is winning.

Now if your leadership asks you about your campaign scenario, you can offer a more informed opinion about the expected RoI from each channel, based on the metrics you already have.

With the help of your campaign scenario, you can calculate the average lead value for each channel, based on the targets that you need to achieve.

So if your target is to earn $10k more, and you can’t decide where to spend your marketing dollars, take a look at the what your campaign scenario would look like for both organic and social reach:

sample scenario of marketing funnel

It does not take a marketing expert to figure out that the target seems much more achievable if the investment is made into increasing organic reach.

Part 7: Building Out A Practical Model

Hold on tight because we are almost there. After all that theory, we thought it’s time to let you build your practical model.

Let’s help you do this via a few examples.

Imagine that you run a weekly webinar, and the following are the numbers for an email campaign for your webinar, pegged to a funnel.

webinar email

Remember that the section about ‘opportunities created’ will be completely decided by you. Whether it is a qualified marketing lead or a sales qualified lead, will be decided by you and your team alone.

So going by this example, we can see that you closed 20 deals and earned a revenue of $4000, which makes your average customer value, $20.

Now let’s say you note down the funnel data for three consecutive months of October, November and December as we have done here:

webinar email example

Do you notice that the revenue earned for the month of December has fallen down drastically? The reason behind that is the major fall in the number of email recipients during that particular month.

We are trying to establish a simple point here. If you chart out your numbers in the manner that we just taught you, you will easily spot the point where your drop off is occurring, thereby helping you make changes to that aspect.

Similarly, now, let’s look at an example of a social media campaign that you have crafted for your business. Let’s assume that your funnel looks something like this:

social campaign

Now we have already demonstrated how charting out these numbers can help you spot the areas that need improvement, but what’s more, it can also help you compare different campaigns that you are parallelly running to decide which one is performing better.

If you are running three campaigns in one go, you can compare your campaign numbers like this.

social campaign example

The value of such a comparison is apparent in first glance. You can compare how they have performed stand-alone by comparing the amount spent on the ad alongside the revenue earned.

Inter campaign comparison can be made by looking at the conversion rates and average customer value of each campaign. The idea is to collect enough data over a long period of time, which would inform you about what works and what doesn’t work.

Now a lot of you have been asking about paid campaigns, and how to correctly assess their performance.

The funnel here depicts a real-world example of numbers along a marketing funnel for a paid campaign.

paid campaign

From the numbers, we can calculate the cost of each click by dividing the revenue generated by the number of clicks. In this case, it is $8.

This number, which we call the cost per click, will help us determine the LTV to CAC ratio, which we learnt how to derive earlier on. It is an important ratio that helps us understand the sustainability of our business.

Now let’s compare three different ad campaigns.

paid campaign example

As you can see, with a model like this, you can directly trace that the drop in performance of Ad 3’s campaign is due to the drop in impressions.

A model like this would help you compare one campaign against the historical data of other campaigns, to figure out where it went wrong.

Phew! Good job on understanding the practical models. You are absolutely ready to start building your own now.


Congratulations! You are now completely ready to build your business marketing model and impress your leadership.

Remember to follow the simple steps we told you and in no time, and you will have your very own marketing model.

As an exercise, start building your own model for each of your company’s channels today. Good luck!

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