As the necessity of marketing efficiency becomes more clear, marketers everywhere are continuously looking for ways to improve upon that efficiency by paying closer attention to marketing metrics.
One way that many marketers are working to do this is through marketing metrics.
While these metrics can be in many different shapes and sizes, their importance as a whole simply cannot be denied.
As Warthon professor William Stewart states:
“When establishing any marketing strategy, you need to be able to quantify the information at your disposal to make better decisions.”
Stewart goes on to say that, by utilizing marketing metrics and market data, you can realize significant enhancements in marketing performance.
But, as a marketer, understanding the importance of these metrics is probably not new to you.
Marketers have been using data from their marketing strategies and campaigns to figure out the best option for maximized marketing effectiveness for decades.
The problem for many, however, has been developing an understanding of what metrics should serve as the priority.
Not only that, but the way data is being delivered is changing rapidly and causing even further confusion.
Stewart, in his article about The Importance of Marketing Metrics, reiterates this point:
“We are getting data at increasing frequency and with greater detail. Data is being disaggregated. We used to get information quarterly, then monthly, then weekly. Now it’s in real time.”
With all the data now rapidly available, how are you supposed to know which is most important?
Thus is the purpose of this article; to provide you with a deeper look into what marketing metrics should be your main priority for maximizing your marketing efforts.
So, without further ado, here are the things you need to know about the marketing metrics that should be your main priority:
#1 – Money Spent Per Customer on Average
One of the most important metrics that you need to figure out before even getting started with a new strategy is the average total of money spent per customer that you currently have.
While the way you do this will depend on the specifics of your industry, most businesses calculate the amount spent per purchase and the amount spent annually.
This process will give you invaluable insight into the marketing strategies that should be used to grow your business.
As Duct Tape Marketing contributor John Jantsch, says:
“When you stop to calculate this number you can put your focus on doing more business with existing customers or at least increasing the average dollar per sale.”
It is important to understand that, in most cases, it is much more efficient to attempt to increase the amount spent by your current customers than to market to new ones.
In fact, according to data provided by the team at Evergage, it costs 5 times more to acquire new customers than it does to keep current ones.
So, before anything else, keep in mind the importance of keeping your current customers and working to build their loyalty towards your brand.
From there, you can develop tactics to improve upon your average total of money spent per customer.
Inc.com contributor Donna Fenn put together an extremely useful article about increasing this number.
In the article, she outlines ten ways to get more sales from existing customers.
Some of these tactics include:
- Think lifetime value, not transactional value. This means coming up with ways in which you can provide lifetime value through the initial purchase with the intention of creating a model for a lifetime customer to be developed.
- Go for no-brainer upsells. While you want to avoid being manipulative, creating ways to upsell clients or allow for additional features to be purchased can be extremely effective for increasing your average spent per customer.
- Stay in touch. Sometimes just finding ways to stay in touch with your customer can keep them motivated to continue to buy from you. Making them feel as if they are a valued customer can be extremely effective.
- Create incentives for referrals. Turning your current customers into your salesmen is one of the best known ways for increasing the efficiency of your marketing efforts. It can also help with customer loyalty, which is essential for increasing your per customer average.
While these are just four of the ten tactics she outlined, utilizing them effectively can help you significantly improve the average money spent per customer.
#2 – ROI of Each Marketing Strategy
Transitioning back to marketing to customers that you do not currently have, knowing the ROI of each marketing strategy you utilize is essential.
While this may sound like Marketing 101, far too many marketers do not understand how to do this properly.
With the fact that ROI generally determines most marketing decisions, putting together inaccurate data can have significant negative consequences over both the short and long term.
One example of an area in which marketers miscalculate ROI is when they use the typical calculation of:
But, as marketing manager Seth Wilson points out:
“This method doesn’t account for things like the cost of goods, your business’ expenses, and other overhead factors.”
So, in order to properly calculate ROI, you need to look into the gross profit that is being generated.
Therefore, the formula that you should be using is:
(Gross Profit – Marketing Investment)
Ensuring that your ROI is being calculated properly will help you better identify the strategies that are actually generating profit.
It will also help you figure out which strategies are simply allowing you to break even and are ineffective towards growing the company.
#3 – Social Metrics
The role that social media has on marketing success has been debated for quite some time.
It seems, however, as if many marketers and business owners are shifting their opinion of social media marketing towards being a positive avenue to invest in.
In fact, according to statistics from HubSpot, over 80% of marketers feel that social media is important for their business.
So, as the shift towards understanding social media marketing increases, so does the need for understanding social metrics.
But what are the metrics that you should be attempting to determine?
Well, if you are currently invested in content marketing, you certainly want to have an idea of the shares, likes, and tweets that your content is receiving.
There are several tools out there for doing so, although you can also do this by using an Excel spreadsheet.
Developing an understanding of how your followers and fans are changing, and hopefully growing, is also important.
Most platforms, such as Twitter, Facebook, and Instagram, have built-in metrics that allow you to do this for free.
From there, you will certainly want to know the value that those fans and followers have to your business.
Fortunately, HubSpot developed a highly useful calculator for doing this.
So, to review, the three social metrics that you want to know include:
- The amount of shares, likes, and tweets your content is receiving
- The number of fans/followers you are gaining
- The value of each fan/follower
Once these metrics are figured out, you can work to improve those numbers while also more easily determining the amount of resources that you should devote to social media marketing.
#4 – Cost of Acquiring a New Customer
Understanding the current cost of acquiring a new customer is vital if you are seeking improvement in your overall marketing efforts.
As marketing expert and Entrepreneur contributor Lon Safko advises:
“Every business should look at its cost of customer acquisition twice a year and after each campaign.”
Safko goes on to say that far too many marketers fail to measure these costs on a regular basis.
This leads to a continuous stream of bad marketing and, as he suggests, is why most businesses fall short in what they end up budgeting for their marketing.
The problem that most businesses get into is similar to why ROI is consistently miscalculated; they do not look at the entirety of what is being spent.
To do this, you need to look into anything and everything associated with running your marketing campaign.
Simply looking at revenue and not the financial aspect of the time and resources that go into acquiring the customer is going to lead to bad data.
For more intensive detail about calculating this, check out marketer Edward Gotham’s article on How to Calculate Cost of Customer Acquisition (CAC).
#5 – Lead Scoring
Whether you are in B2B or B2C, having a steady flow of leads into your business is necessary for your company to grow and remain profitable.
With this in mind, understanding which strategies are most effective for bringing in leads is also necessary.
Most marketers do this by lead scoring.
As marketer Roberto Mejia points out, lead scoring is basically a method in which you assign points to your prospects.
Building and improving upon your lead scoring system is essential if you want to become more efficient.
Mejia points out some of the factors that go into lead scoring, which include:
- Their industry
- The size of the company they work at
- Job title
Some other, more detailed information that can go into lead scoring, includes:
- Website pages visited
- Items downloaded
- Email habits
While this serves as a good basic start for factors in lead scoring, the exact factors are refined throughout time to match the common qualities of the customers that are being converted.
If you really want to improve your lead scoring process, the best possible place to start is with your current customers.
Developing an understanding of the things that are most commonly found with your current customers will help you develop a higher quality lead scoring process.
Once your lead scoring process has been created and refined, you will want to continually gain a better idea of how customers are converting based on their lead scores.
At the end of the day, and as Act-On blogger Aleksandr Peterson points out:
“Lead scoring promises to bridge the gap between marketing efforts and sales results.”
Being that bridging that gap is one of the biggest challenges that marketers face, it is easy to see why lead scoring is so important and necessary to marketing success.
#6 – Website Metrics
Understanding the metrics surrounding your website is as important as it has ever been.
This is especially true in a world in which content marketing has become a much bigger priority for marketers in just about every industry.
Understanding how people find and use your site, along with how they convert when they reach it, are essential as the use of technology continues to increase.
As you probably already know, a strong website can significantly expedite the growth of a business.
This means that efforts should be made to optimize your website in every way possible.
To do this, you must first understand your website metrics.
Digital Marketing Philippines put together a great infographic outlining the most important website metrics when it comes to traffic generation and conversion.
For traffic generation, important metrics include:
- Overall site traffic
- Traffic sources
- Mobile traffic
- Cost per click
- Click through rate
In addition, important conversion metrics include:
- Conversion rate (CVR)
- Cost per lead (CPL)
- Bounce rate
- Average page views per visit
- Average cost per page view
- Average time on site
While this may seem like entirely too much data to decipher and analyze, free tools like Google Analytics have simplified the process significantly.
The tool allows you to monitor your website and then works to analyze an incredible amount of data for each individual page as well as all pages on your site as a whole.
While it takes a few days for the tool to generate enough data to allow you to start analyzing, it is a tremendous option for both the short and long term.
You can even create your own custom dashboard if you so choose, which will allow you to isolate the metrics that you feel are most important to measure and analyze.
If you can successfully determine and analyze these website metrics, you can then make moves towards improving them and optimizing your website.
#7 – Inbound Links
If you have not heard, inbound links are really, really important if you want to have SEO success.
In fact, according to SEO Marketing World, there is nothing more important.
As they point out, Google uses Page Rank as the number one determinant as to how web sites rank in their search engines.
If you unfamiliar with Page Rank, it is basically:
“A numerical figure assigned by Google to express the importance, relevance, and validity of a website based on the number of links pointing to the website.”
So, basically, without links to your site, it is going to be extremely difficult to have any type of success with search engines.
But how do you track these inbound links?
Well, Church Marketing Online put together a great article showing you how to do so.
In it, they point out that there are three great tools for finding out this information, including:
- Google Webmaster Tools
- Bing Webmaster Tools
- Majestic SEO
It should be pointed out that none of these tools will be able to give you 100% accurate data about all of the inbound links that are coming into your site.
They do, however, give you a fairly accurate estimate and all three of them can also give you some good information as to how strong those links are.
Increasing your inbound links is something that you should be trying to do on a regular basis.
You do, however, want to make sure that the sites that are linking to you are trusted, authoritative sites and that you are not simply trying to manipulate the system to build them.
HubSpot put together an informative article on 32 White Hat Ways to Build Inbound Links that you would be wise to check out if you are looking to build this number.
The Final Word
The use and importance of marketing metrics when making business decisions is certainly not going to decrease.
In fact, as Michael Brenner of Business2Community points out, this will only continue to evolve.
The main focus for marketers at this point is on determining which marketing metrics are most important.
The decision about which metrics are most important is going to come down to the unique goals of your business as well as the marketing methods that you currently focus on.
For example, businesses that count on content marketing to bring in customers are obviously going to want to focus more on website and social metrics.
On the other hand, B2B marketers that are more hands-on with their marketing strategies will want to have a grasp on their cost of acquiring a new customer and ROI for each strategy used.
This article has hopefully given you a better idea of the metrics that should serve as a priority when attempting to optimize marketing strategies and grow your business.