How will you know when you have achieved success in your business? When will you be able to say that your diversification project has proven itself?
The chances are you have some kind of figure in your head. A total amount of money you’d like to make, or a figure for how many customers you’ve helped perhaps.
Businesses can’t function effectively without numbers, neither can your marketing hence why it’s essential that you understand the importance of measuring and tracking all your marketing activity with figures and metrics.
Why should you measure your marketing efforts?
If you don’t measure or track any figures, how will you know if you’re making any money? How will you know if you’re making sales? Or profit? How will you know if all the effort you’re putting in is actually working?
By drilling down into the numbers, you’ll get a complete view of your business, its operations, and all the marketing and advertising tactics you are employing.
You’ll be able to see what happened last month or last year, and compare it with your performance this period. Have you improved? Or has something gone wrong? Or are there seasonal trends developing with your business?
The sooner you can spot any potential issues, the sooner you can fix them.
Measuring your marketing is vital if you want it to be effective and efficient, the process will allow you to keep developing the business, test new strategies and track successes (or failures).
The top marketing metrics to measure
When you start tracking and measuring marketing metrics, you’ll soon be able to set targets – or key performance indicators (KPIs) – for your business.
These give you a benchmark on where you are right now, and what you need to do to get to where you want to be.
They help you measure your progress and your achievements, keeping you on track month after month. But what should you measure?
The top metrics you should focus on depends on your business and your goals. There’s no sense in tracking everything as it’s easy to get lost in the numbers. And, there are many metrics that are red herrings and won’t do you any good to obsess about.
There are, however, a few core metrics that every business should focus on.
- Sales Revenue
This is simple and essential, and you probably do it already. You might also refer to it as your turnover. It’s basically how much you sell each period. How much money you receive for selling your services or products.
It’s not the same as profit.
Profit is how much money you actually make from your sales. It’s no use selling your products for £100 if it costs you £120 to buy, market and ship.
Your profit is the money you have left, after all your expenditures have been accounted for. This includes marketing costs, rent, wages, insurance etc.
- Website traffic
Knowing how many visitors you get to your website isn’t just about vanity. It’s an important figure to know so that you can see if your marketing efforts are working. Are they driving more users to visit your website?
It needs to be used in conjunction with other metrics, but it’s definitely something you should measure regularly.
Be sure to omit any company URLs from your Google Analytics though. And separate traffic by returning visitors vs. new visitors. This will help see how many potential new customers are coming to your website, compared with those who already know about you.
- Engagement metrics
Just getting website visitors isn’t going to help you make money, which is why it’s important to measure engagement metrics on your site too. There are several different ways of doing this including, including bounce rates, time on site, page value, and number of pages visited.
Depending on how your business operates, some will be more important than others.
- Cost per lead
Cost per lead is very important too. It tells you the average amount you spend on marketing and advertising in order to get a lead. This helps you plan your wider strategy.
If you know it costs around £10 to get a lead to your website, you’ll know that a £1,000 investment should get you around 100 leads. You can also use this in reverse; if a customer normally spends around £200 with you, you might be willing to pay £20 per lead, because you know you’ll get a good profit margin on that.
To get even more specific, and stop relying on averages, you need to drill into the different sources of your leads. For example, it might be costing you twice as much money to get a lead through pay per click advertising (PPC) as it does through paid social media. Or, you could find that whilst a PPC lead costs more money, it actually converts better and therefore is more valuable to you.
Without the metrics, you wouldn’t know this.
Another way to look at this is through your customer acquisition cost. It’s similar to cost per lead but would include everything you spend on marketing and advertising to get a customer (total spend/total new customers), including any efforts you make turning a lead into a paying customer.
- Conversion rates
Conversion rates are a great metric to use to see how effective your website is – along with engagement metrics. Your conversion rate is the number of users who do the action you want them to do – buy, get in touch, download etc. – compared with the total number of visitors to your website or landing page.
If you can tweak the layout, the design or the content of a certain page and improve the conversion rate, you’ll be making more money from the same amount of traffic.
- Revenue by channel
As well as tracking your overall sales, you should also try and dig a little deeper into the metrics, and segment by different channels.
For example, you might find that PPC is carrying your other marketing efforts. If you stopped spending on leaflets, brochures and social media, you might still make the same amount of sales, but have a bigger profit.
Equally, you might be thinking you’re getting a good return on your PPC investment, but in reality it’s the other channels – offline, social, organic – that are supporting the PPC budget.
- Customer loyalty/Retention rate
One final metric that can be useful to know (and improve) is your customer loyalty/repeat customer total. Or, if you have a business model based on subscriptions or regular purchases, your retention rate.
This is basically how many or how often your customers come back. You could use tools or surveys to monitor this, or just track email addresses (or even faces).
It’s important, because it shows you if your customers actually like and value your business, and whether they find it useful or not.
Always remember, quality not quantity
One final word of warning on metrics. Whilst it’s important to measure certain areas and to have a good understanding of the numbers, don’t obsess over them.
It’s easy to get carried away and lose sight of their purpose. They can also be confusing and could cause you to make the wrong marketing decisions if you’re not careful.
Remember that quality is more important than quantity. It’s much better to have 100 visitors to your website who all convert, than 1,000 visitors where only 10 convert.
The more – social media followers, email subscribers, open rates – doesn’t always mean the merrier.
Andy is our marketing strategy and planning partner, keep checking back for more from him and the team at Hillsgreen.
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