General Business Strategy
Marketing metrics matter. Sometimes, they don’t. If that sounds contradictory, bear with me, I’ll explain.
But first of all, let’s begin with a definition.
What are marketing metrics?
Well, pretty much as you would think. They’re measurable data points that allow you to determine the effectiveness of your marketing. Eventually, of course, it’s all about the dollars – but measuring the other points along the way to that end goal can be extremely useful in optimising your efforts (and your investment). And when you’re working with SMEs all the time, as we do, optimising every dollar spent is an absolute necessity.
Before you head off and start measuring metrics, however, you need to consider what’s important in relation to whatever kind of activity you’re engaging in.
First consideration: what’s the point of your marketing?
And I don’t mean that facetiously, it’s just that measurement should be relative to your goal. So what is your activity trying to achieve? If your goal is to increase awareness of your expertise and you’re posting an article on LinkedIn to do so, then the number of people who see it, like it, and comment on it are extremely useful metrics because those people are being exposed to your brand message in exactly the way you want. It is worth noting that not everyone who will see you and interact with your post will be an ideal client and using these metrics to make decisions may lead you down the wrong path.
But if you’re running a Google AdWords campaign to generate leads? That kind of data is irrelevant, and what we’d call ‘vanity metrics’. Don’t get caught in that trap. With this kind of activity you want a ‘direct response’ that you can measure.
Let’s take a look at that now, explore some of the useful metrics, and more importantly, how you can use them to make your marketing more effective!
Examples of direct response marketing metrics.
With this kind of campaign, your goal is to get more leads, convert them into sales, and increase profitability for the business. In this particular situation the only metrics that truly matter are converted leads, and marketing ROI.
We will, however, also mention a few other metrics along the way because even if the ROI is there, we can use them to improve the performance further. And if it isn’t, then we can use them to figure out what’s going wrong.
How many leads actually converted into a sale? And what’s the ratio? If you’re not converting as many leads into sales as you would like, why? Perhaps it’s time to have a look at your sales process, or perhaps you were attracting the wrong sort of lead in which case your messaging might need adjustments.
If your campaign is not converting leads, then you probably should stop the campaign and direct your time and investment in a different approach.
Self-explanatory, perhaps, but, given not every lead is of the same value, it is important to define what a lead is for the sake of your metrics, whether it’s an enquiry form filled out, a document downloaded from your website or a good old phone call.
If your campaign is sending lots of traffic to your website but you’re not getting many leads, then you’ll need to have a look at your website to find out why. Or ensure your ad campaign is targeting the correct leads. There are always little improvements that can be made. And you can always AB test different landing pages or targeting , to see what delivers the best result.
The classic proof of the pudding, how much did you make compared to what you spent? Ideally you’d identify the cost per lead, and then compare it not just to the value of the initial sale made, but also that customer’s lifetime value, then – to be honest – you’re doing way better than most of the big companies out there.
Does your marketing ROI show you’re making $10 for every $1 spent? Great! So increase your ad spend every month, and watch the cash roll in – your metrics will show you at what point ROI reduces, and voila – you’ve found your ideal spend level. Or, if you don’t have any more in your budget you could always focus on increasing your leads to sales conversion rate. Another option to increase ROI would be to try and increase the value of each sale, perhaps adjusting your targeting and messaging – or even pricing – to do so.
Click through rate aka CTR
This demonstrates how many times your ad is shown to a prospect, compared to how many times it’s clicked on – so it’s a measure of how well your ad is working. You’ll start with a variety of ads, and Google will eventually prioritise the ads with the higher CTRs. Eventually, you should go back into your highest performing ads and create more variations, then rinse and repeat!
Cost per click aka CPC
This is how much you’re paying every time someone clicks on your ad. You want this to be as low as possible (to improve ROI), but high enough to outrank your competitors.
It’s different for every marketing situation, of course, but you can see by focusing on the key metrics that drive the business result and analyse the activity’s performance you can get all the important information needed to make informed marketing decisions and make adjustments that can increase your bottom line.
OK, now let’s talk about why, and when pure marketing metrics don’t apply!
Some marketing efforts don’t take place in the digital world, of course, and out in the real world things can get a bit messier.
Let’s say you sponsor your local football team, and for ten years you’ve had a logo on the back of their jerseys. No phone number, no website, no call to action – but it does a great job of getting you known. That’s what we’d call brand marketing, and it’s a hugely important component of marketing but can you think of a useful measurement metric in this particular instance? Nothing simple, right?
The purpose of brand marketing is to create awareness of your business, so that when people do come into contact with your direct marketing efforts, they’re more disposed to pay attention, because they’ve heard of you already. And valuing that kind of thing can be very difficult to put your finger on.
Another example could be going to a big conference. The main industry event of the year where you take a stand, hand out a zillion flyers and spend a few night in a hotel. Now, is the goal of that marketing effort to get leads, convert them into sales and increase the profitability of the business? Indirectly, yes, but are you going to measure your success only on the number of leads you get while you’re at the show?
Or, do you include the fact that you’re gaining significant exposure, your brand is out there in the big wide world, and you’re getting to spend time with a host of customer, suppliers and competitors in your industry. Maybe you hear something useful about an upcoming change in the market, or you find a new supplier that will make your life easier, and reduce your costs in the future.
How do you measure that..?
Making it more difficult is the fact that, especially if you’re in the B2B space as many of our clients are, the sales cycle can be very long. So if you’re looking at the short term financial payoff of an event, for example, you’re not going to get a metric that reflect the true value to your business in the long term.
In fact, sometimes, you have to take a bit of a leap of faith with your activities, and hope that exposure, brand marketing if you will, pays dividends over time.
Here’s a real-world example. Can you remember the last time you saw an ad for Salesforce? Maybe not. And yet, almost every businessperson is aware of them. A big part of their strategy has been to build a brand through their legendary annual conferences, massive events where you get to hear from the smartest people in B to B and get inspired by other users.
Now if Salesforce had measured the effectiveness in direct sales results from each conference, they’d probably never have done them, and perhaps wouldn’t enjoy their $146bn valuation today. But they know what’s really important is having in-depth conversations with their existing, and potential clients and they’ve built an entire strategy around bringing businesses together.
Their CEO, Bret Taylor, sums it up pretty well “Customers aren’t buying software, they’re entering a relationship.”
Measuring brand factors – hard but doable
As you can see, this kind of activity – though really important – is very hard to assess through metrics. Large companies pay for ongoing research to monitor such factors. For SMEs, you’ll need to rely on more down-to-earth techniques like asking your customers and prospects, keeping your ear to the ground and trying to gauge if you’re getting cut through or not. If so, are people getting the picture that you want to paint in their minds?
(And by the way, if you’re looking for more concrete evidence that ‘brand marketing’ actually helps make your business more profitable, despite the fact that it’s more difficult to measure, you can delve fully into the subject right here. ‘The Long and the Short of It’ is a well-researched book by Les Binet and Peter Field that demonstrates with empirical evidence the importance of long-term effects (brand marketing) along with shorter term (direct response marketing) in order to truly grow your market share).
So what does all this mean for marketing metrics?
In summary, they’re extremely valuable but you’ll need to determine what you’re trying to achieve, and then measure accordingly. If you’re trying to achieve something that’s a little bit more difficult to pinpoint – but still incredibly important to your business – like brand recognition or brand story resonance for example, then you have to adjust your approach to measurement and tolerate a little more subjectivity. This is where a bit of decisive boldness comes in handy – another necessary component of business success!
So, all the best with your efforts – and if you’d need a hand adjusting your marketing metrics to make your marketing better and increase the profitability of your business, or just some friendly advice, click here and we’ll be glad to chat!