What good is a concerted, brilliantly-planned marketing campaign if you have no idea how effective and successful it is? Your efforts might as well be considered screaming blindly into the void if you have no way to measure the performance of your marketing efforts.
That’s why any digital marketing expert will be watching the metrics and analyzing data associated with their strategies. The metrics and data that correspond to marketing performance are described as your Key Performance Indicators (KPIs) and are the direct measure of success that you should be checking out.
Today, we’ll talk about the most important marketing KPIs you should be tracking in order to determine how effective your campaigns and strategies are.
There’s nothing like some good ol’ fashioned sales figures to make your efforts look good. If the direct objective of your marketing is to increase sales, then having revenue as a KPI is a great way to determine the value that your marketing is adding. Improved revenue associated with your marketing efforts can be considered a sign that they’re working! Meanwhile, stagnant revenue could show that you’re not quite hitting the mark.
More leads mean more people who have a chance of converting – that’s one of the most basic things you can think of! Having an attractive marketing campaign can push more people into your sales funnel or customer lifecycle.
Keep in mind that traffic generation is a complex KPI and must be broken down into its components when analyzed. You should look at data from a variety of traffic sources.
Organic traffic refers to visitors who end up at your content through organic appearances in search engines. This, of course, is strongly tied to the effectiveness of your SEO strategy.
Social media traffic is driven by links found on Facebook, Twitter, and other social media services, which will indicate the effectiveness of your social media campaigns. Social media itself has a variety of KPIs, including a complex ecosystem of paid and promoted reach, engagement, actions performed, and the like.
Referral traffic comes from sites that aren’t search engines, and which contain backlinks to your site. The performance of your referral traffic is a direct indicator of the effectiveness of your link-building strategies.
Email traffic is generated by your email marketing campaigns, and just like social media has its own KPIs such as delivery rate, unsubscribe rate, and click-through rate.
While having a lot of leads is undoubtedly important, it’s also equally important to look at how much it costs to generate each lead. Determine the return on investment for each lead – you might find that you’re spending so much on lead generation that it could surpass the value you get from each conversion!
One of the top KPIs for any marketing professional, the conversion rate is simply the proportion of leads generated to converted customers. It provides a seemingly clear-cut determinant of the quality of your marketing tools. Of course, don’t be too enthusiastic about conversion rates – they’re not the whole story, and they need to be used in conjunction with other KPIs to develop a meaningful narrative of performance.
One way to break down the conversion rate into meaningful bites is to look at the individual conversion rates of each component of your campaign.
For instance, each of your landing pages will have its own conversion rates, determined by its effectiveness. You could be generating plenty of leads on a page but if it’s not converting effectively, it could indicate a variety of different problems, from a CTA that fails to entice customers, to flat-out bad page design. A/B testing can help you determine what’s wrong with your landing page and help you improve conversion rates.
Customer retention rate is the ratio of return customers who continue to do business with you over a given period of time, compared to those who stop doing business with you. It’s related to the churn rate, which is the inverse operation.
Compared to fancier figures like sales and conversion rates, the retention rate is somewhat neglected, and there’s no excuse for this! After all, data shows that returning customers are 70% more likely to convert to paying customers, versus 5-20% for new customers. On top of that, loyal customers spend 67% more money than new customers. Overall, you can even improve your bottom line by 25-95% just by improving the retention rate by 5%.
That’s a lot to take in, but basically, retention rates are a great KPI that you should definitely be tracking and improving your efforts on.
Remember retention rates above? Studies show that it costs 5-7 times more to acquire a new customer than it does to retain an old one, so you’d better ensure that your acquisitions are worth it! Cost of Customer Acquisition is the cost of your total marketing divided by the number of new customers you generated.
Customer Lifetime Value
A more long-term metric than the rest, customer lifetime value is a prediction of the total net profit you’ll get from the average customer. This is a complex metric that you’ll best leave to analytics tools, but if you’re able to understand it, it’ll help you make decisions about the future of your business objectives.
Bounce rate refers to the proportion of users who visit your site and then leave it after visiting just one page. A high bounce rate may indicate that the leads you generate don’t like what they see and aren’t curious to see anything else you have to offer.
Users spending a lot of time on your site may indicate that they’re being engaged by your content. The longer a user spends on your site, the better the chance of them converting into a sale. However, this metric is somewhat more complex than others; sometimes your page doesn’t require a lot of time spent in order to convert, especially if you’re not selling a diverse array of products and services.
Another more complex metric, pages per visit describes how many pages on your site the average visitor views in a single browsing session. Depending on what your site looks like, a large number of pages visited may indicate curious, engaged visitors – or a confusing website with a lot of options that they have to go through to get anywhere.
You might have the ultimate marketing campaign that knocks every KPI out of the park, but if it’s not profitable enough to justify its existence, it may be important to scale it back, or otherwise work smarter and more efficiently to get the same results at lower cost.
There is so much data out there, so many possible KPIs, that tracking everything may result in a data overload from which no meaningful insights can be gained. Aside from knowing about the KPIs that can be tracked, you should also know which ones are most appropriate for the kind of business you’re doing.
Know what your objectives are with your campaign, and focus on reading their results and meeting those goals.
Make use of data visualization tools to help understand what the data is telling you, and so you can also correlate the data with trends and gain new insights from it.
Tracking KPIs is your primary way of knowing how effective your marketing campaigns are, so put them to good use. And remember – every KPI insight must be followed up by action. Bolster efforts in strong areas, and commit to improvements in weak areas. A marketing strategy that is constantly informed by real-time KPI tracking will not only grow stronger but will also be able to respond to changes in market trends.