How effective is your marketing strategy? If you’re unsure, that’s a big red flag and your marketing is in trouble.
You’re certainly not alone. Only 30% of small businesses surveyed are even measuring marketing effectiveness, and 10% aren’t investing in any marketing at all.
Fortunately, there are things you can do right now to get the most out of your marketing efforts.
Data and Metrics
You can’t start measuring marketing effectiveness without understanding metrics. Metrics are simply parameters for measuring performance. Therefore, you need to use a range of marketing-specific metrics to understand whether or not your strategy is converting.
Everything from your website click-through rate to your email bounce rate are considered metrics. Let’s take a look at several types of metrics you can use to measure your marketing performance.
Marketing Objectives
First and foremost, every marketing strategy needs objectives. Whether those objectives are met is one of the simplest ways of measuring marketing effectiveness.
However, if you don’t set manageable marketing goals, this metric is useless. This is one sure-fire way to sink your marketing budget fast. Instead, use the S.M.A.R.T method to set marketing objectives that are Specific and Sensible, Measurable, Attainable, Realistic, and follow a Timetable.
An example of a S.M.A.R.T goal would be to increase the amount of unique website visitors by 50% in 3 months. This is a specific, realistic, and time-sensitive goal that you can measure and attain.
Key Performance Indicators
Once you set your marketing objectives, select your key performance indicators, which are more popularly known as ‘KPI’s.’ Think of your KPI’s as a scorecard that helps you stay on track with your marketing strategy.
There are hundreds of marketing metrics to choose from, and tracking them all would spell disaster for your marketing budget. KPI’s are select metrics that are best at measuring marketing effectiveness for your business specifically. Therefore, key performance indicators can range from your return on investment (ROI) on inbound marketing to your lead-to-customer ratio.
Let’s take a closer look at KPI’s to consider:
Customer Acquisition
Customer acquisition is a classic marketing metric used by industries across the board, from retail to B2B companies. The amount of money it takes to acquire each customer is your customer acquisition cost. Therefore, these metrics track the performance of your customer acquisition strategy.
Take note of the following marketing metrics for customer acquisition:
- Cost-per-click (CPC) for paid search marketing
- Click-through-rate on mobile banner ads
- Facebook ad conversion rate
- Engagement rate on promoted tweets
- Subscription conversion rates
- Webinar conversion rates
- Click-through-rate on email drip campaigns
These metrics are just a small sampling of what’s available. Tracking these metrics will help you craft a more cost-effective, results-driven customer acquisition strategy.
Customer Lifetime Value
Marketing isn’t just for acquiring new customers. The value of Long-term customer loyalty plays a critical role in measuring marketing effectiveness. This is also known as customer lifetime value (CLV).
Specifically, CLV metrics help forecast future profits from repeat customers overtime. To to find your customer lifetime value, track the following CLV metrics:
- Average customer lifespan
- Customer retention rate
- Profit margin per customer
- Rate of discount
- Average gross margin per customer lifespan
After finding your metrics values, plug them into various CLV equations to find your total lifetime cost per customer.
Sales Outcome
After customer focused metrics, comes your sales metrics. These performance indicators delve deep into what your customers are buying and how fast they’re buying it.
Sales metrics to track include overall sales growth, target sales, sales opportunities, your sales to date, total up-sells and cross-sells, specific product performance, and your sell-through rate.
Social Listening
Are you measuring marketing effectiveness in real-time? This is where your social media management tools come in.
Not only do you want to track the progress of your social media marketing campaigns, you also want to listen in on what your target audience is saying about your business, and competitors, in real-time. This is also called social listening. Examples of social listening includes tracking hashtags, mentions, comments, reviews, shares, likes, and any form of social media engagement.
This will help you fine tune your marketing strategy as you go.
Return On Investment (ROI)
Where did your marketing budget go? What’s leftover? Were you able to meet your marketing objectives? These are just a few questions to consider when determining your return on investment, otherwise known as your ROI.
By definition, your return on investment is the difference between your net profit and the total cost of your marketing investment. If you have a high return on investment, great! That’s a clear indicator that your marketing strategy worked. If your return on investment is low, go back to the drawing board.
A low return-on-investment can indicate several things. You may have spent too much on your marketing materials or didn’t invest in the right marketing channels. That’s why consistently measuring marketing effectiveness is critical to your overall revenue.
ROI metrics to track include unique monthly visitors, cost-per-lead, return on ad spend (ROAS), average order value, and lead-to-close ratio. As well, any of the metrics discussed in this article can be used to determine your return on investment.
Measuring Marketing Effectiveness for Your Next Campaign
Now that you have the tools to track your performance, it’s time to put them to the test.
Here’s a quick recap of what we’ve learned:
- Marketing metrics
- Marketing objectives
- Key performance indicators (KPI)
- Customer acquisition
- Customer lifetime value (CLV)
- Sales outcome
- Social listening
- Return on investment (ROI)
Ready to Meet Your Goals?
Use this blog post as a checklist for your next marketing strategy. Don’t forget to bookmark our blog for insider tips or contact us directly to learn more about our digital marketing services.
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About the Author:
Mike Carroll
Mike steers the overall strategy & direction at Bearhug Digital, promoting constant innovation and success.
Sometimes referred to as the ‘unicorn’, he has the ability to communicate and execute on big ideas effortlessly. Mike challenges his team to strive for excellence when crafting digital solutions. He leads from the front and is involved in every aspect of every project. With a passion for leveraging technology to solve business challenges, Mike’s eye for design and vision for scaleable solutions drives innovation and exponential results.
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