Tracking your key marketing metrics is vital in running an accountable, effective marketing strategy. If you aren’t measuring your performance, how do you know you’re on the right track? Firstly, you need to know what the right metrics are.
These days, there are tonnes of performance measures you can keep tabs on, but in this post, we outline some of the most crucial metrics you should be tracking, and how they’ll help you improve your overall marketing performance.
Generating leads is one of the toughest but most important marketing tasks. The main role of marketing is to find or produce leads (aka people that are potentially interested in your service and can be converted into customers).
Tracking leads is the first things you must be doing. Track the total number of leads generated per month and leads generated by each marketing channel (social media marketing, advertising, web search results, content marketing, emails, etc.).
- Qualified leads
Qualified leads are leads that you’ve seen some form of engagement from – they’re not just ‘potentially’ interested in your service, they’ve actually engaged with you in some way, and can now be transferred to your sales team.
You can calculate the rate of your leads to qualified leads by using this formula:
(Qualified leads/Total leads) x 100 = Qualified lead rate)
This will help you get a better understanding of the effectiveness of your marketing tools.
- Return on marketing investment (ROMI)
ROMI doesn’t differ much from the more well-known ‘return on investment’ (ROI) metric. But it focuses specifically on marketing investment, measuring how much revenue a marketing campaign is generating compared to the cost of running that campaign.
Here’s how ROMI is calculated:
ROMI – (income from marketing – cost of goods – marketing expenditures) /marketing expenditures * 100.
If ROMI is less than 100%, then your marketing investments cost the business. If it’s more than 100%, the push was profitable.
Bear in mind that it isn’t always possible to calculate ROMI and the result doesn’t always represent the reality. ROMI is just one metric to consider, and you should never over-emphasise a single metric on its own.
Businesses often neglect tracking referrals, but it’s an important consideration, especially in digital marketing.
There are numerous ways you can track referrals, e.g. cards and vouchers, or a manual referral process. But the most common referral strategies are run and tracked online.
This starts with a customer signing up to your offering, then inviting their friends via a unique referral link/code. To track these referrals you can use Google Analytics, or even just an Excel spreadsheet, provided you have a unique code for each new visitor.
To calculate the rate of referrals:
Total number of customers / Number of referrals = Referral rate
- Brand awareness
Essentially, brand awareness is where consumers are familiar with a particular brand. It’s one of the vaguest metrics listed here, as it’s hard to assess how many people have heard about the brand. But it can also be valuable, particularly when matched against competitor brands.
Marketers can begin by tracking the number of mentions their brand receives online. You can then also match those same metrics against your competitors.
These metrics don’t show how many people know the brand, but they do show how many people are talking about it, which can be a good way to measure the ongoing impact of your brand awareness efforts.
- Reviews and testimonials
Reviews and testimonials are another form of ‘word-of-mouth marketing’. Every business should encourage reviews – they can make or break your sales when a potential customer searches online for your brand.
- Cost of customer acquisition (CAC)
Cost of customer acquisition looks at how much it costs on average to convert a lead into a customer. It’s another metric that can prevent you wasting money on marketing campaigns which don’t deliver.
CAC is calculated with this formula:
Amount spent on lead generation / Number of new customers as a result of lead generation = Cost of customer acquisition
Similarly to ROMI, you shouldn’t just rely on it alone and overestimate the metric, as there are caveats. For example, a business may have invested in early-stage SEO, and therefore wouldn’t see measurable results for quite some time.
- Customer lifetime value (CLV)
Customer lifetime value shows how much revenue each customer brings to your business throughout the whole relationship. CLV shows you how many customers you need to breakeven and to make a profit.
Increasing CLV is important, as it’s often cheaper to keep an existing customer than it is to convert a new one. The simplest formula to measure CLV is:
Customer revenue per year x Duration of the relationship in years – Total costs of acquiring and serving the customer = CLV
This is a basic measure, but it can provide valuable insight to help keep your efforts on the right track.
Is that everything?
These are the metrics that we consider important, but there are many more you can focus on.
Marketing is multifaceted, and everything from email open rates to SEO requires attention. Just try to spend the same amount of time on measuring as you do marketing, because measuring will help you formulate more effective, adaptive strategies over time.