No doubt, having the best marketing strategy is critical in today’s competitive business environment. However, it is not enough to have a good strategy; you also need to know how to measure your success and what metrics are important for each of them.
A good campaign should stride towards a goal, i.e., maximising returns while minimising costs. But without knowing whether you’re on track, it may be challenging to determine when you’ve reached that goal. Remember, if it can’t be measured, it doesn’t exist.
The following guide will dig into the marketing metrics that matter the most and help you understand how to reevaluate them. But first, where do you start?
Marketing metrics explained: Where to start
Before you even start measuring a marketing metric, there must have been a campaign to refer to, right? So in that light, let’s look at the steps involved in getting your measurements right:
- Define your organisational goals. What goals does your organisation want to achieve? These could include increasing sales or customer satisfaction.
- Create campaigns and marketing initiatives relevant to that goal. For example, if you want to increase sales, you’ll likely create campaigns related to product promotion and pricing.
- Implement the right metrics to measure the success of your campaign. For example, you might use different metrics (as you’ll discover below) depending on the channel used. This includes looking at the results from various channels (such as social media, email, etc.).
- Confirm if you’re meeting your goals. Once you’ve implemented your metrics, check if they’re helping you reach your goals. If not, make changes accordingly.
Note: You also want to ensure that sales and marketing efforts align throughout the process. But why? For starters, it encourages better cross-functional collaboration between departments. It also helps you avoid wasting time and money by focusing on irrelevant activities. Consequently, this boosts workplace morale, ultimately translating to higher productivity and revenue growth.
What are the top marketing metrics?
Once you’ve defined your goals and created the appropriate campaigns, it’s time to measure their effectiveness. The following sections will take you through the different types of marketing metrics available and explain which ones you should focus on.
1. Cost of Acquisition
The cost of acquisition is perhaps the most critical marketing metric. It encompasses all the expenses incurred during the buying cycle, including advertising, lead generation, other marketing costs and direct sales costs (including sales commissions etc.).
This metric is especially useful because it shows exactly how much you spent on acquiring new customers. As such, it gives you an idea of how much you need to invest to convert more customers.
In addition, it provides insight into your return on investment (ROI). That is, how much did each dollar invested generate in terms of leads or sales.
In short, the acquisition cost tells you the total profit margin by comparing how much you paid for each conversion versus what you earned per sale. You can also use this metric as a guide for renumerating your sales team, given their effort in both generating and converting leads.
2. Cost per Lead
The cost per lead (CPL) is another helpful metric, but it becomes even more powerful when used as a part of the cost of acquisition metric. It compares the cost of marketing spending versus the total number of new leads.
For instance, let’s say you spent $1,000 on marketing and generated 100 leads. Then, you’d calculate the cost per lead by dividing the amount paid by the number of leads generated.
That way, you can see whether your marketing budget effectively drove qualified leads. In the above example, your CPL would be $10. So depending on the price of your product, you’d tell if your campaign is successful or not. Your CPL is incredibly useful in comparing different campaigns and lead sources to determine how to most effectively invest marketing budgets to generate the most leads.
3. Conversion Rate
The conversion rate reflects the percentage of leads who become customers. Therefore, the first step in capturing your desired conversion rate is having a comprehensive grasp of qualifying a lead and converting them into a customer.
To do so, you’ll have to understand the buyer journey. This involves understanding where prospects start their journeys with your company, how they progress along the path, and what actions they take at each stage.
You can then set up automated processes to capture data from these stages and track conversions based on the actions taken.
As a rule of thumb, you should aim for a minimum conversion rate of 10%. However, some industries require higher rates, while others may struggle to achieve anything close to that figure.
The key takeaway here is that lead volume and the CPL isn’t everything. You must define the best/most appropriate lead sources and campaigns to target to ensure an adequate conversion rate. Failure to do this will likely result in lower conversion rates, and this often increases the cost of acquisition as your sales team will be working through a higher volume of leads with a lower propensity to convert.
The yield represents the average revenue per dollar spent. It provides insights into the total revenue generated per source (Facebook, Email marketing, and other digital advertising channels).
It’s important to note that this metric doesn’t necessarily reflect the quality of your leads or their immediate readiness to buy. For instance, if you’re paying Facebook ads to drive traffic to your website, you might end up with lower quality leads or at least a % with a lower propensity to purchase immediately.
However, you can still use this metric to determine which sources produce high yields.
5. Reactivated leads
Reactivated leads usually measure the rate of customer acquisition through re-marketing efforts. Reactivating customers means reaching out to them again after an initial interaction. This metric focuses on tracking a single prospect’s journey through various engagements instead of creating new leads.
For example, let’s say you send an email to a potential customer, and they respond positively. You can then follow him up via phone calls and other channels to keep building a relationship with them. This process continues until the customer buys your product. At that point, you can count their interactions as one lead.
In addition to providing insight into the effectiveness of your sales team, this metric helps you identify the true value of the acquisition cost. How? We hear you ask. Well, you’ll need to count all the customer engagements instead of just the last one that resulted in a conversion. Think of it in the line of the first touch vs. last touch attribution – only the latter will give you the complete picture.
Other marketing metrics
On top of the above strategic metrics, you should also consider observing the below housekeeping metrics to monitor trends and measure individual marketing campaigns.
- Tracking visitors to your site. This includes counting unique visits, page views, sessions, time on site, bounce rate, and more. It’s essential to know how many people visit your site, how long they spend there, and what pages they view.
- Attribution model. This refers to how you attribute the performance of different parts of your business. For example, you could assign credit for generating leads or converting prospects to specific departments within your organisation. Marketing attribution is especially useful when you want to see how much money certain activities generate. For example, you can compare the revenue generated by social media posts versus paid advertising.
- Cost per click. This is a vital advertising metric that measures the efficiency of your ad campaign. Essentially, it tells you how much you pay for each visitor that clicks on your ads.
- Click conversion rate. This metric measures the percentage of users who graduate to quality leads after visiting your site. For example, it indicates how well optimised your website is and the enquiry experience through the site. Further, you can evaluate these metrics to determine how they impact your customer acquisition cost.
The importance of metrics reporting and reevaluation
Don’t just sit back and wait for your numbers to tell you everything about your business. Instead, you should evaluate your metrics every quarter to ensure that they are still the right metrics for your company and that they’re updated to account for any updated fields or new campaigns.
The reward? You will:
- Effortlessly capture changes in Google Ads, cost-per-lead, etc.
- Avoid channel conflicts (for example, if you have different lead sources competing on the same channel for the same leads – e.g. 3rd party lead providers)
- Identify which channels work best for your business
- Make sure you’re not wasting money on ineffective channels
- Measure the success of your content
- Track the progress of your SEO efforts
N/B: We suggest you report on these metrics monthly and re-evaluate them quarterly.
As we’ve mentioned, there’s no single “right” set of metrics for every business. However, the ones listed here are some of the most important metrics to keep an eye on. But we also acknowledge that selecting valuable metrics for your business may be challenging – and we’re here to help! So call Fluent Group today with questions or for an evaluation of existing metrics.