As your company grows and you start marketing over more channels, tracking the results of your work can get complicated. An August 2016 report by the Harvard Business Review Analytic Services indicated that chief marketing officers consider competent data analysis one of the most critical skills they’re considering for their future marketing teams. Most businesses have access to tools that present them with digital marketing metrics.
The trick is determining what those metrics mean so you can use them to adapt your marketing strategy.
First, you need to identify your key performance indicators. Key Performance Indicators (KPIs) are quantifiable metrics that serve as a sort of organizational pulse. They can be specified for each sector of your business, like marketing and sales, or for your business as a whole.
By identifying and tracking marketing KPIs, you can determine if your marketing is actually contributing to your objectives. Here are a few common marketing KPIs to consider:
At the end of the day, business is all about sales. The number of sales you are making and the amount of revenue you are earning from those sales is possibly the most important KPI to keep track of. Sales are made at the bottom of the marketing and sales funnel. If you aren’t getting sales, something is going wrong within the body of your marketing and sales machine. You should check your other digital marketing metrics to find opportunities for improvement.
This KPI takes into account your general marketing overhead and the number of leads you are generating. If you are spending too much time and money on each lead, you may need to focus on your targeting. Look at the effectiveness of your content offers, for example.
Analyze all of your marketing channels individually to determine your cost per lead for each. You can then weigh and measure which channels offer the lowest cost per lead. Afterward, adjust your budget and marketing mix to accommodate.
This KPI represents your net revenue after incorporating your marketing overhead. In an optimal year, your total revenue will be exponentially greater than the budget you allocate to marketing. This would indicate that every dollar you spend on marketing is giving you a significant return.
If you are spending too much on marketing without meeting your goals, you should investigate more specific metrics to see what isn’t working. Some areas to review are your overall budget, your budget by marketing channel, your sales pipeline, and your general overhead.
This ratio indicates the percentage of your website visitors that are turning into leads. You could have thousands or hundreds of thousands of people visiting your website. The bigger concern is how many of them actually end up completing an action.
An "action" could be submitting a form, watching a demo, making a phone call, or leaving a comment. If this ratio is low, it means people are finding you online, but they aren’t engaging. To improve it, you need to determine which CTAs on your website are effective and which aren’t. Also, take into account where they are housed and how they are designed. Make sure they are relevant to the content around them.
This ratio indicates the percentage of your acquired leads that are turning into real customers. If your sales and marketing teams are working in alignment and you are nurturing your leads properly, you should see a high ratio. If this ratio is low, it could mean that you need to improve the way you follow up with leads or that you’re pushing the wrong types of content at the wrong stage of the buyer’s journey.
Just like cost per lead, marketing automation can have a huge impact on this KPI. Using marketing tools to manage your leads will allow you to streamline all of your marketing and sales efforts so you don’t miss an opportunity to gain a new customer.