3 minute read.
Whether you’re the Managing Director, Head of Sales or CFO, as a Board level executive, you should know whether your company’s marketing activity is effective and having a positive impact on your bottom line. To do this you need to understand the data that’s truly useful to your company, rather than the ‘vanity’ metrics that look impressive but in reality, mean very little.
For example, it’s all well and good knowing how many visitors your website has had in the last four weeks, or the click through rate of your latest email but does that information provide you with any actionable insight?
Here are five valuable metrics you should expect your Marketing department to monitor and report:
1. Marketing contribution to revenue:
Understanding this metric is vital — what percentage of your overall company revenue can be traced back to your marketing activity? Clearly, the higher the figure, the more effective your marketing activity. However, there’s a lot that goes into calculating this statistic and it isn’t as simple as you might think, as some areas of effectiveness, such as brand awareness, may take longer to translate into revenue or may benefit the company in non-financial ways.
2. Sales pipeline growth and acceleration:
How does your marketing activity help build and accelerate the sales pipeline? How does your pipeline change from one month or quarter to the next? Your marketing team’s ability to regularly fill the pipeline with new leads and to keep those leads moving down the funnel is a critical factor of overall effectiveness.
Furthermore, it’s crucial to pay attention to both growth and acceleration, as having one without the other can be a red flag that something isn’t quite right and/or that you need to re-focus your efforts to keep the pipeline both full and flowing.
3. Conversion rates:
Conversion rates can offer different types of insight depending what you are monitoring and where. For example, you might simply measure conversion rates of different channels to understand their effectiveness. Or, you might measure conversion rates based on stages in the customer journey to determine the effectiveness of tactics within campaigns, to move leads down the funnel. In cases where the end goal is to spur prospects into action (which should be the case for most marketing activities), both of these measurements combined are important in gauging success.
4. Cost per lead, cost per opportunity:
Your marketing team may produce a remarkable volume of quality leads and work hard to convert them, but if the cost of conversion is very high, how effective are those efforts? Yes, you’re achieving the desired results, but are you doing so in the most effective way? Are those leads worth the cost? (Note that the answer could quite possibly be yes, but it’s a question you need to ask.)
Alternatively, you could find that investing more in the upfront marketing activity produces higher quality (ie, more valuable) leads and opportunities and, therefore, a better MROI. Your aim should be to identify the sweet spot that balances cost with quality and results.
A muddying factor when evaluating cost per lead / cost per opportunity is the consideration of the total lifespan value of the customer. For example, the total cost of acquiring a new customer may be £500 against a customer spend of “only” £1000 (probably not a great ratio for most businesses), but if they can easily be turned into regular repeat customers (of the same product and / or service) at little or no extra cost, then that changes things considerably. Does your CRM track this adequately? Additionally, as well as repeat business, can these customers be up-sold or cross-sold to additional or more valuable goods or services?
Also many businesses find their best new customers come via referrals from existing customers – i.e. at very little cost of acquisition. So with this in mind, clarify if your average cost of customer acquisition is a raw average or if it only includes those that have genuinely incurred a cost.
5. Brand awareness:
Getting to grips with brand awareness is particularly important as today’s purchasers tend to undertake far more research before contacting a company for more information. It is vital to understand how your brand is perceived at the consideration stage of the customer journey to drive prospects to purchase.
It’s important to note the results of brand awareness marketing activity are more long term, so you should not expect an immediate return. One way to measure the effectiveness of your brand awareness is to consider it in conjunction with your pipeline. For example, if you find that you have strong brand awareness, but your pipeline is lacking, you should ask what you else you can do to use that awareness to drive more conversions.
How are you measuring marketing success?
Once you’re confident that your marketing team are providing you with the important metrics and information that delivers real insight, you will need to agree how to define success. Are you measuring results against industry accepted benchmarks or your own previous results quarter on quarter or year on year?
In general, when it comes to determining marketing effectiveness and therefore success, your aim should be to prove your marketing efforts are contributing to the company’s bottom line. However, remember that no one metric alone will tell the entire story.
For help to establish or review your marketing effectiveness, contact Business Vitamins today.