Marketing metrics is, quite simply, collecting figures and statistics about your marketing and advertising efforts in order to find out what effect they are having. The aim is two-fold:
- To find out whether resultant sales justify the marketing spend
- To find out how to improve your marketing to produce better results
This need to measure applies to both traditional and online marketing.
Simply placing an advertisement of your business in your local paper could be wasted if you have no means of knowing whether it sends you new customers, or how many. On the other hand, if you include a voucher within a small box ad and suddenly 100 customers turn up with the voucher in their hand – and most of them turn out to be new customers – then you know it will be worthwhile putting a much larger ad in the following week.
Identifying Conversion Rate By Channel
This requires comparing your different marketing and advertising campaigns – email campaigns, newspaper ads, posters, and so on, against each other to see which ones produce more business.
The important metric here is the CPA – the cost per acquisition of each new customer. A low CPA is good. It may turn out that one method should be dropped and the money used to better effect in one of the other channels.
Acquisition doesn’t necessarily mean a sale; it can include sign-ups to your newsletter, for instance – but in that case you need further data to tell you how many sales result from the newsletter.
Return On Your Investment
Another metric is how much the average customer spends over time. In very simple terms this can be calculated from:
your total annual revenue / annual number of customers
Total annual revenue must be more than the total cost of acquiring them. Once you know all the above figures you can work out the ROI – the Return On Investment.
ROI = Net revenue per customer/Cost per acquisition
Or, more simply, how much did we spend on getting this customer, and how much did they subsequently spend on us? A high ROI is good.
Your company’s website can be one of your most valuable marketing tools. It is always there, day and night. But it is like everything else – you need to establish if the revenue it brings in pays for the cost (and good websites can be expensive).
However, once in place, other marketing efforts, such as email campaigns, Twitter or Facebook campaigns and postal mailshots, will direct potential customers to your website, so it is a multi-purpose tool. And it can aid in establishing the metrics for those other campaigns, since you can have separate “landing pages” for each channel.
Even a posted leaflet can hold the URL to a dedicated page on your website. From there, which pages the visitor looked at, and how long they spent on each one, is what matters. Crucially, you can know if that same visitor progressed to your shopping cart and buy something, or to the contact page asking for more information? Google Analytics is one tool for this.
However, the website is like any other marketing channel – you need to establish how effective it is, and how it can be improved. A website, though a must in today’s switched on world, is not a magic potion. From a marketing effectiveness viewpoint it can succeed or fail like any other marketing campaign. As with more traditional marketing, analysing the metrics is the key to a good marketing result.
Karen Harding is the marketing manager at Objective IT, one of the South East’s leading web and software development companies. To learn how marketing can help you, contact Objective IT today. Follow Objective on Twitter @ObjectiveIT
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