Your marketing budget can either consist of money invested or money wasted. That will depend on how well you can track the effectiveness of your marketing and implement winning strategies.
In theory, tracking is indispensable. In practice, however, most marketers are still treating it like a choice. A 2015 Forbes Insights Report has shown that only 22% of marketers rely on data-driven initiatives. The rest of them are setting themselves up for failure, simply by not measuring the impact of their marketing efforts.
The only way to ensure marketing effectiveness is to track it, measure it, and implement strategies that have proven to be successful. But first, you should know the important metrics you can track, and why they matter to your business.
Metrics to Track the Effectiveness of Your Marketing
Conversion Rate
What percentage of your visitors are completing the goals you need them to complete on your website? Your conversion rate will tell you exactly that.
By measuring the performance of your web pages, you can easily put a figure on the success of your site and identify key areas for improvement.
Similarly, when you understand how many of your visitors are becoming leads, and how many of those leads are becoming customers, you have a clearer view of potential weak points in your marketing strategy. So you can strengthen them ASAP.
Return on Investment (ROI)
This is quite possibly the most important figure for business owners. Your ROI dictates whether your investment on a specific marketing strategy was worth it, or if you should go back to the drawing board.
Your ROI helps you and your team understand whether you’re using your marketing resources to their full potential. A higher ROI indicates a more successful and profitable strategy.
After all, it wouldn’t be smart to keep investing in unfruitful tactics. While a marketing campaign could look good and speak to your target audience, only the ROI can determine a marketing activity’s measurable worth.
Measuring ROI makes it clear just how much you should – or if you even should – reinvest into certain marketing activities.
Cost Per Acquisition (CPA)
Do you know how much it costs your business to generate one new customer? You definitely should.
The CPA metric gives you insights on how much it typically costs you to convert a lead into a customer. Knowing this type of information sets a baseline for how much your business should be prepared to spend in order to win the heart of a prospective customer.
By the way, it shouldn’t be confused with the cost of acquiring a customer (CAC).
The more data-driven you are, the more realistic you can be with the budget you’ll allocate to your upcoming strategies and campaigns.
The lower the CPA, the more effective your strategy. Even a loss can be a win, because a higher CPA can help you determine whether your strategy needs to be revised for effectiveness.
Customer Lifetime Value (CLV)
Your most powerful customers are the ones who keep coming back. Your business’ CLV goes hand in hand with customer retention, satisfaction and loyalty.
Your total customer lifetime value impacts your profitability because you’ll plan your marketing activities according to the long-term revenue from a new customer – rather than just the first purchase.
Measuring CLV can help you learn how much your customers like your product or service, as well as what you should improve to earn their loyalty. As a result, you can optimise the value of every customer relationship you have.
Retention Rate
Retention rate helps you understand how well your product or service is performing. You’ll do that by analysing the percentage of customers who keep paying for your product or service over a certain period.
Although subscription businesses are a prime example of retention rate in action, all businesses can benefit from this metric.
Your retention rate also allows you to determine why many customers aren’t using your products anymore, consequently giving you insights on what to improve. For example, if only 10% of customers are choosing to make additional purchases from you, that leaves a big window of opportunity for post-sale nurturing and marketing.
Referral Source
How are new customers finding your business? Common referral sources include Google searches, LinkedIn, and social media platforms. Of course, referral sources will vary widely across businesses, which is why you should keep an eye on your metrics.
When you know the best source of customers for your business, you can focus more of your marketing budget and efforts where your target audience is more likely to see you. Otherwise, you’ll just be blowing up money on ineffective channels.
How to Track Your Marketing, and How Often to Check Your Analytics
To start tracking your marketing efforts, you can use any analytics platform available to you. Many businesses got started in Google Analytics, as it gives them a comprehensive set of tracking tools, free of charge.
If you’re looking for a GDPR compliant alternative to GA, we’d highly recommend using Usefathom.com for simple, safe, and easy to use analytics. FathomAnalytics is included in our WordPress Care Plan for ongoing maintenance of your web properties.
Pro tip: heat mapping tools like Hotjar can help you see how effectively your page is laid out by showing you where people click on your website and where they stop scrolling.
You don’t have to track every metric under the sun. You need to find the data that’s most relevant to your goals, then track and optimise from there.
As for how often you should monitor that data, the unhelpful answer is: it depends. If your website gets plenty of traffic and is profitable, its success justifies weekly check-ins and reporting. Just be sure your check-ins are periodical and constantly documented, so you can compare your growth over time. Trust us: if you track, measure, and improve the effectiveness of your marketing, there will be growth
