How to Measure the Success of Your Marketing Efforts
Business owners and marketing leaders have long been looking at metrics to validate their strategies and to determine if they’re delivering results.
With marketing metrics like lead conversion rate, lead to customer ratio, revenue generated, and others, you can measure the results from your marketing efforts and identify areas that can be optimized in your process.
However, not all marketing KPIs (key performance indicators) help to measure real business outcomes — some are vanity metrics that can get you excited, but won’t affect your business’s bottom line.
In this article, we will show you how to define marketing success, and help you identify the right metrics to track the impact of your marketing efforts.
What constitutes marketing success? 🏆
You must first define what marketing success looks like before selecting your KPIs and collecting data. Your definition of success will be influenced by the goals of your marketing campaign.
Ask yourself, is the purpose of your marketing campaign to:
- Generate brand awareness
- Acquire high-value leads
- Establish thought leadership
- Boost short-term sales
- Achieve set revenue goals.
Whatever your goals from marketing may be, make sure that they are specific, measurable, achievable, relevant, and time-bound. When the purpose of your marketing campaign is fulfilled, you can then call your campaign a success. Stating your objectives will also help you identify the right metrics to measure and the type of data you need to track.
The type of metrics used will differ from one business to another. A retailer may focus on metrics like brand awareness and foot traffic, while a blogger may focus on metrics like subscriber rate and bounce rate.
Your choice of metrics should measure your activities across all marketing channels to ensure that you are accurately assessing the impact of your marketing campaign.
It is also important to note that there is a difference between marketing metrics and business outcomes. Marketing metrics like website traffic or leads help you confirm that you are getting the attention of potential customers, but they do not show whether those prospects are turning into paying customers.
To track the impact of your marketing on the growth of your business, include KPIs that track changes in revenue, profits, customer retention, and customer lifetime value (CLV).
Research by Google shows that 89% of top marketers use metrics like CLV and gross revenue to measure the effectiveness of their marketing.
10 useful metrics for measuring marketing success 📈
Below are 10 metrics that serve as the best indicators of marketing success. You may decide to add others to this list depending on your specific objectives and industry. However, the following are applicable for most businesses.
1. Website traffic growth
Website traffic refers to the total number of visitors to your website over a defined period of time. This metric is crucial to evaluating whether your marketing efforts are resonating with potential customers.
The more effective your marketing, the more visitors you should get on your website and vice-versa. If your website traffic is high, you will be able to generate more leads, sales, and any other action that translates to a conversion.
However, if your website traffic is low or not growing, it means you are wasting time and money, and you need to re-evaluate your marketing strategies.
Google Analytics is the primary tool marketers use to track website traffic. You can view the traffic coming to your primary landing pages, and track other important KPIs like CTR (click-through rate), impressions, time on page, and so on.
2. Referral traffic
This metric tracks the number of visitors that landed on your website from another domain (website) without going through a search engine.
Referrals typically come from directories, blogs, third-party websites, and social links. Content marketing and local SEO are key to getting referrals.
Referrals from other websites serve as a vote of confidence in your brand and they are a ranking factor for search engines. You can use Google Analytics and UTM tracking codes to track referrals.
3. Lead conversion rate
A lead is a prospect that has gone from being merely aware of your brand to taking a step towards becoming a paying customer.
Apathetic visitors are of little value to the advancement of your business, because they are not moving down your marketing funnel. A lead would have taken a positive step like providing their contact information, subscribing to your newsletter, or contacting your sales representative for information on your products.
Your lead conversion rate will be the percentage of website visitors that have converted into leads. For example, if your marketing campaign attracts 10,000 visitors to your website in a month, and 100 become leads, your conversion rate will be 1%.
4. Sales qualified leads
As prospects become leads and move through the marketing funnel, they will be grouped based on the expected behavioral outcome. A sales qualified lead is a lead that is believed to be close to making a purchase.
When new leads are consistently grouped as sales qualified leads, you know your marketing efforts are working.
5. Lead-to-customer ratio
This metric tracks the number of leads that are turning into paying customers. The ultimate goal of every marketing campaign is to generate sales, and this metric helps you discover if you are meeting that goal.
The metric also helps to measure the effectiveness of your sales funnel. If fewer leads than expected are turning into paying customers, you will know there are friction points in your funnel, so you can rectify the issue.
6. Revenue generated
Your marketing spend must generate enough sales to justify your investment. Measuring the increase in revenue against your marketing spend helps you evaluate the overall effectiveness of your marketing activities.
A substantial increase in sales will establish the effectiveness of your campaign in fueling the growth of your business. You should keep in mind that other factors could also contribute to an increase in revenue like the departure of a competitor.
7. Profit margin
You want your marketing efforts to not only drive up sales, but to also attract high-value customers. Your profit margins should ideally be growing along with your revenues.
The key is to target the right audience with your marketing efforts. Define your ideal customers and craft a value proposition that will get those customers to pay a fair price for your products. Low-margin customers will do more harm than good to your business.
8. Cost per lead
This calculates the average expense for each lead generated. It shows you the true cost of converting each prospect. For example, if you generate five sales from 10 leads with a $2000 budget, the cost per lead is $200.
Marketing expenses must always be kept within a range that your business can bear. Tracking cost per lead also helps you determine the segment of customers that are most profitable for you to target.
Resources are better focused on customer segments that can be converted within the scope of your budget while still meeting your revenue goals.
9. Customer lifetime value
Often, only a small percentage of your customers contribute to the majority of your revenues. These customers are high-value customers. Efficient marketing should focus on identifying your most important customers and taking every step to keep them around.
The customer lifetime value metric helps you calculate the total sales you can hope to generate during the lifespan of your relationship with a customer. For example, if a customer orders $1000 worth of branded toiletries from your company every month within the scope of a 5-year contract, the lifetime value of that customer is $60,000.
This data will help you see the value of the sales you can hope to generate from each customer, and you will identify your high-value customers to focus on.
10. Return on investment
This metric measures the revenue generated from for every dollar spent on your marketing campaign. It helps you identify the marketing activities that are generating the most sales and those that are simply a drain on your resources.
You can calculate it by dividing the revenue generated from a marketing channel by your investment in that channel.
Wrapping it up
The metrics listed above will let you analyze each step of your marketing funnel, and help you decide the tactics that you need to optimize, scrap, or scale.
If you successfully acquire the right tools and data to track each of these metrics, you will be able to effectively gauge the impact of your marketing campaign on your business.
Use these metrics to get actionable data on the success of your marketing efforts, and start making smarter decisions to optimize your campaigns.
💡 Enjoyed this article? Read more from our Marketing Masters series:
How to Succeed at Customer Retention and Loyalty: 7 Useful Tips for Ecommerce Retailers