13 Key Performance Indicators That Measure Marketing Success
One of the core necessities of an advertising strategy is the ability to measure success. To do that, you need to identify the key performance indicators (KPIs) that put your campaign results into perspective.
What Are Key Performance Indicators?
KPIs are metrics that help ensure your marketing is moving you toward your goals. If you want to achieve maximum success, you need to consistently measure the right KPIs and make adjustments accordingly.
The list below covers thirteen of the most important KPIs you might track in your marketing campaigns.
13 Key Performance Indicators
Everyone’s favorite KPI, revenue is the most direct link to ROI. Your marketing should correlate to sales lifts. If you begin to see a drop in sales, it may be time to make an adjustment to your strategy. Clear marketing channel attribution will make strategic adjustments more accurate and easier during the campaign. In other words, separate your KPIs by the channels used, such as social media, direct mail, email and so on. That way, when one of those channels fails to perform, you’ll know which one needs an adjustment.
Leads (prospective customers) are what drive sales, but knowing how many leads you receive is only part of the equation. Develop a method for “scoring” leads so you can track them during the purchase journey. For instance, if an email contact opens an email but doesn’t click on a link, they are a cold lead and you might assign them a score of “1.” If they click on the link and sign up for updates, you might consider them a warm lead and assign them a score of “4.” This way, you establish segmented leads and can approach them with marketing messages appropriate to their scores.
3. Cost Per Lead
Generating leads is great, but you need to understand how much each lead costs. Knowing your cost per lead (CPL) will help you identify your ROI. Today, many online search engine marketing (SEM) platforms offer the option of ad bidding according to a desired CPL as opposed to cost per impression. (You guessed it, CPI.)
To calculate your CPL, divide your marketing spend by the total number of leads received.
4. Lifetime Customer Value
As the business gurus say: It’s more cost effective to retain good customers than to acquire new ones. However, not all customers represent the same value to your business. Establish the lifetime value (LTV) of your current customers and then create a customer retention marketing budget based on the average customer value. Once you’ve established your budget, develop a marketing strategy designed to nurture and retain your customers. Doing so is a lot more affordable than trying to win them back.
To identify the cost to maintain your customers, you would determine the total gross margin you anticipate from that customer over the relationship lifetime. Decide what percentage of that margin you need to invest in retaining them. Note: LTV should be about three times the cost for acquired customers.
5. Cost of Customer Acquisition
It would be easy to stop at measuring your CPL, but you’d be missing the bigger picture. Take your marketing strategy to the next level and establish the customer acquisition cost (CAC).
This cost will directly influence your future marketing budgets. This budget item can (and probably should) encompass the costs for the entire sales process in addition to marketing efforts.
You can find out the CAC by dividing the costs of sales and marketing by the number of new customers acquired during the same time frame.
6. Lead-to-Customer Ratio
In addition to CPL and CAC, it’s important to understand how many leads are transitioning to closed sales. If the number is low, there could be a breakdown between marketing and sales, or your marketing may not be successfully drawing customers far enough through the sales funnel to close the sale.
This is the moment when performance tracking can save you. When lead conversions begin to falter, you’ll realize it sooner and be able to make adjustments needed to increase conversions to healthy levels.
7. Website Traffic
If your marketing campaign lifts your website traffic, but doesn’t impact the length of time consumers spend on your pages, convert sales, lower bounce rates or generate leads, then the website content and calls to action (CTAs) on your site likely need to be evaluated and modified.
Start with using stronger verbiage in your CTAs. You should also pay attention to button colors and their position on the pages.
8. Social Media Marketing Metrics
Social media marketing has been rising in importance for years, but not every channel is a good fit for every business. Invest in the right social channels by examining how much traffic is coming to your site from each platform as well as how much of that traffic turns into actual leads.
Each social media platform provides page analytics you can review to find out how your page and shared content is performing, as well as any paid social ads. You should be actively measuring how many likes, comments and shares each post and paid ad receives.
9. Mobile Metrics
Today, much of the purchase process begins on a smartphone, even if it ends on a tablet or desktop computer. It’s crucial to understand how consumers are interacting with your marketing through their phones. Limited mobile traffic may mean Google isn’t finding your pages to be mobile-friendly, which also hurts your SEO and SEM performance.
Ensure your marketing experience is intuitive and consistent across platforms. This will make tracking leads, bounces, and conversions easier and more accurate.
10. Sales Response Time
Research shows that you’re seven times more likely to have a positive outcome (e.g., book an appointment) if you follow up with a lead within an hour of their initial request. To maintain the quality of the leads being generated and turn more leads into sales, be certain that your team is quickly responding to leads. A slow response time will negatively impact closed sales, which will skew your marketing results and measurement.
11. Email Marketing Performance
Email is an effective marketing method to nurture your customers and acquire new ones. Send concise, creative, offer-driven emails relevant to each segment of your database. Be careful to ensure your emails comply with CAN-SPAM regulations.
Email marketing performance is typically analyzed through these KPIs:
- Bounce Rate
- Open Rate
- Click-Through Rate (CTR)
- Forward Rate
An increase in unsubscribe rates may mean you’re emailing too often or the content isn’t being segmented for relevance to the recipient. Conversely, a decrease in open rates may mean you need better subject lines or the sender address appears spammy. A low CTR could mean you need to improve the creative or CTA.
12. Call Tracking
Call tracking is a measurement method by which you create and track a different telephone number for each of your marketing campaigns. For example, you may have a SEM campaign running, but instead of clicking on the ad, the consumer calls the phone number displayed in the ad. Using a call tracking solution allows you to capture the true impact of your SEM campaign instead of having to assume the only leads your campaign generated clicked the ad and possibly ending the campaign based on incomplete information.
Call tracking works for digital and direct mail campaigns and is a great way to gauge campaign success.
13. Landing Page Conversion Rates
It isn’t enough to have a landing page that looks good. You need to gauge conversion rates from the landing page to determine whether it’s doing its job. As with website traffic, low conversion rates mean page content and calls-to-action need to be reevaluated. Try A/B testing to find out which landing page versions convert the most.
Start Measuring Your Marketing Performance:
- Identify all your marketing channels and establish their performance metrics.
- Set goals for your KPIs that will help you determine whether you need to adjust your marketing strategy.
- Review your KPIs consistently to determine whether you are trending toward meeting your goals.
- For low-performing channels, determine what changes need to take place to improve performance.
- Check out Valpak’s proprietary performance dashboard and call tracking solutions for your business.
Need help with developing an effective marketing plan for your small business? Contact your local Valpak marketing coach today!