Companies invest heavily in aggressive and far-reaching sales and marketing campaigns. After pouring in money to improve brand recognition and generate leads, the most important question each organization should be answering is – “are we successful?”
Defining success too broadly doesn’t guide a company’s decision-making while focusing on specific data without linking it to larger goals leads to data bloating and wasted time.
In this article we will highlight:
- common mistakes to avoid when dealing with data
- key metrics for measuring success
- tools and resources companies can use
The Absence of Metrics is a Race Without a Finish Line
Businesses that don’t track data simply can’t measure growth or lack of it. The marketing teams focus heavily on launching multi-faceted campaigns but often not enough on defining which metrics they will follow. This is especially the case with entrepreneurs and small businesses.
B2B buyers have many interactions with a potential vendor before they make a decision and can be exposed to multiple campaigns. As a result, it becomes hard to tell which campaign was effective. Even worse, it becomes impossible to determine if the ROI is positive or negative, or even how it performs over time.
Track the Right Metrics by Identifying Key Indicators
Not all data is good data. Companies that track vanity metrics simply because they think they should receive no real insight into their performance. Metrics that only measure activity such as traffic or clicks are a distraction to an organization’s goals if they don’t drive the decision-making in the company. This is often the case with startups because they often shift directions as they narrow down their niche services.
Too much data prevents teams from using the information to their advantage. While metrics and indicators impact a business’s outcomes overall, identifying key performance indicators (KPIs) will make the most impact on strategic decisions and overall business outcomes. Here are some of the most common KPIs and how to calculate them:
Cost Per Acquisition (CPA)
This metric shows the total cost of acquiring a new customer. It allows companies to analyze how their marketing budget is performing and how much growth they afford.
CPA = Variable Marketing Cost / New Customers Acquired
For example, if in July 2022, a company’s VMC on Google was $31,000, and they acquired 2300 new customers, their CPA (in July, for Google) would be $13.47.
Ad Click-Through Rate (CTR)
This metric shows the number of people that click on an ad per 100 impressions. Knowing the CTR can let companies know to change their copy or ad images.
CTR = Numbers of Clicks / Number of Impressions
For example, if an ad is shown 100 times and receives 5 clicks, the CTR is 5%
This metric shows the total revenue generated from monetizing user engagement on a website and is often calculated using CPM (cost per 1000 views). It allows companies to assess the value of their website traffic and overall ad strategy.
AR = (Total Impressions / 1000) * CPM
For example, a $25 CPM means that a company will be purchasing ads for 2.5 cents each. If the company’s campaign goal is to purchase 100,000 impressions at a $25 CPM, the total cost of the campaign is $2500.
This metric shows the percentage of visitors who navigate away from a site after viewing only one page. Knowing the bounce rate can signal whether a company needs to redesign its landing page.
BR = Single Page Sessions / Total Sessions
For example, if 100 users land on a website and 5 of them exit without going to another page, the website’s bounce rate is 5%.
Website Conversion Rate
This metric broadly shows the percentage of website visitors who take a set action, such as signing up for a newsletter or downloading an e-book. It is useful in seeing if a company’s marketing initiatives are driving people to take the desired action.
CR = (Goals Achieved / Total visitors) * 100
For example, if a landing page has 10,000 visitors and 1500 of those visitors take the desired action, then the conversion rate is 15%.
These are just some of the metrics an organization can use to measure success. KPIs are inextricably linked to the goals of a marketing or sales campaign. So, while all KPIs are metrics, not all metrics are KPIs. Ideally, an organization will identify 5-8 clear KPIs to prioritize and measure data and use them to implement their strategic plan.
Maximize Strategic Insight by Comparing KPIs
Identifying KPIs is a crucial step to determine the effectiveness of a sale or marketing campaign. But to maximize their strategic insight companies should go one step further and analyze KPIs in conjunction with each other.
Instead of looking at LTV (Lifetime Value) and CAC (Customer Acquisition Cost) independently, a company can focus on the LTV:CAC ratio which shows how much they should be spending to acquire a customer.
This ratio can provide insight into whether the company is spending too much and can afford to diverge a part of its budget elsewhere. Conversely, it can show if the company is spending too little and missing opportunities.
Drawing Conclusions Doesn’t Have to be Complicated
Once a company identifies its campaign benchmarks, there are many resources that its marketing team can use to track the outcomes.
Google Analytics, Adsense, and Semrush are easy-to-use tools that are a starting point for entrepreneurs who want to better understand their website and social media channels.
For medium to large-sized companies, KPI dashboard software like Scoro, Datapine, and Tableau provide clear analytics at different price points.
In business, there is no single standard for success. But with the right strategy, metrics, and tools, marketing teams can understand the cost and pay-off of each marketing tactic. As a company reconciles its aims and outcomes, it will see, simply, what works and what doesn’t.
If you would like to learn more about how to define your KPIs to maximize your ROI, contact CONVRG today so our team of expert digital marketing specialists can guide you through the process.