Tracking your key marketing metrics is essential to running an accountable, effective marketing program. If you're not measuring your performance, how can you know you're on the right track? But then, extending from this, you also need to know what the right metrics are, in alignment with your broader business goals.
Are you keeping tabs on the right stats? What are the right data points to measure for your business?
These days, there's a heap of performance measures you can keep tabs on, but in this post, I want to outline some of the most important metrics you should be tracking - and how they'll help you improve your overall performance.
Generating leads is one of the hardest and most important marketing tasks. Most of what marketing does is aimed at finding or producing leads - people that are potentially interested in your product and can be converted into paying customers.
Tracking leads is the first thing you should be doing. It’s vital to both track the total number of leads generated per month and leads generated by each marketing channel (social media marketing, social advertising, search advertising, content marketing, email marketing, etc).
While there's nothing essentially wrong with tracking leads using Excel, it can be more helpful to automate the process using a dedicated Customer Relationship Management tool, such as HubSpot or Salesforce. These dedicated tools have specific features to help you keep tabs on performance, and find new opportunities.
2. Qualified leads
Measuring your 'qualified leads' is your next key step.
Qualified leads are leads that you’ve seen some level of engagement from - they're no longer 'potentially' interested in your product, they’ve actually replied to your outreach, or engaged in any other way, and can now be transferred to your sales team.
You can calculate the rate of your qualified leads to leads by using this formula:
(Qualified leads / Total leads) x 100 = Qualified lead rate
That will help you get a better understanding of the effectiveness (or not) of your marketing initiatives.
3. Return on marketing investment (ROMI)
As is clear from its name, ROMI doesn’t differ a lot from the more well-known 'return on investment' (ROI) metric. But it focuses more specifically on marketing investment - the ROMI metric measures how much revenue a marketing campaign is generating compared to the cost of running that campaign.
ROMI is calculated using this formula:
ROMI = (income from marketing – cost of goods – marketing expenditures) / marketing expenditures) * 100.
If ROMI is less than 100%, that means your marketing investments cost the business, but if it's more than 100%, the push was profitable.
Unfortunately, it’s not always possible to calculate ROMI, and the result doesn’t always represent the reality. This is why ROMI is just one metric to consider, and you should never over-emphasize any single metric on its own.
Businesses often neglect tracking referrals, but it's an important consideration, especially in digital marketing.
There are a number of ways that you can track referrals. For brick and mortar stores, manual referral processes, using referral cards and coupons, for example, might be the easiest options. However, the most popular referral programs are usually run and tracked online.
The most common version of an online referral program starts with a customer signing up to the program, then inviting their friends or followers via a unique referral link or code. Uber and AirBnB are known for having used referral systems as their main approach for attracting customers - through their processes, every signed up friend received a discount for the service, which helped to increase the customer base.
To track such referrals, all you need is an Excel spreadsheet, or you can use Google Analytics, provided you have a unique code for each new visitor.
You can also calculate the rate of referrals using the formula:
Total number of customers / Number of referrals = Referral rate
You need to operate within the rules of each platform, and use programs that are of value to your audience, but referrals can be a great way to help boost brand awareness. Which leads to the next point.
5. Brand awareness
Brand awareness is, essentially, the extent to which consumers are familiar with a particular brand. It might be one of the most vague metrics on this list, 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.
To assess brand awareness, marketers can first track the number of mentions their brand generates online, including in social media posts, blogs, etc. This can be tracked through various social media monitoring tools, including Mention, Hootsuite, BuzzSumo, Awario, etc.
You can then also match those same metrics against those of your competitors to get some idea of comparative share of voice.
While these metrics don’t show how many people know the brand, 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.
6. Testimonials and reviews
Testimonials and reviews are also known as 'word-of-mouth marketing'. Every business should encourage reviews and testimonials - they can make or break your sales when a potential customer searches for your brand online. And, of course, these are also worth measuring.
Using tools like Reputology or ReviewTrackers, you can find your brand’s reviews, collect them in one place, and measure their growth every month. You should also analyze them by sentiment in order to measure positive and negative reviews separately.
7. 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, in addition to ROMI, that can help you avoid wasting money on marketing campaigns which simply don’t deliver.
CAC is calculated with the formula:
Amount spent on lead generation / Number of new customers as a result of lead generation = Cost of customer acquisition
Just like with ROMI, you shouldn’t rely on it alone and overestimate the metric, as there are a number of caveats. For example, a company may have invested in early-stage SEO, and as such, can’t expect to see measurable results for some time.
8. Customer lifetime value (CLV)
Customer lifetime value shows how much revenue each customer brings to your business, not just with every purchase, but throughout your whole relationship. CLV shows how many customers you need to break even, and to make profit.
Increasing customer lifetime value is important, as it's usually cheaper to keep an existing customer than it is to convert a new one.
The simplest formula to measure CLV is the following:
Customer revenue per year x Duration of the relationship in years - Total costs of acquiring and serving the customer = SLV
This is a fairly basic measure, but it can provide valuable insight to help keep your effortss on the right track.
Is that all?
These are the metrics that I consider important in 2020, however there are many more you can focus on.
Marketing is multifaceted, and everything from SEO to email open rates requires attention. Just make sure you spend at least the same amount of time marketing as you do measuring, because the latter will help you formulate more effective, adaptive strategies over time.