When marketing strategies are endlessly diverse, businesses often end up confused about which ones to employ, change, or drop. This is where the importance of marketing metrics becomes apparent: marketers need to be systematic in monitoring the performance of their current strategies and determining what works.
But exactly what aspects need to be measured? Here are the top 10 marketing metrics that many of today’s businesses consider important.
Return on Investment (ROI)
Marketing is an investment in that it uses resources like finances, time, and talent with the goal of attracting and keeping profitable customers for the business.
ROI is essentially the profit gained from the investment. The basic way to calculate the marketing ROI is as follows: (Attributable Revenue – Cost) / (Cost).
How much revenue are marketing efforts raking in? Companies have varied ways of determining the answer for themselves. They might decide the value of each customer gained through marketing, or they might factor in other forms of value such as brand awareness. However the calculation, this metric should truly reflect what the company deems as revenue.
In most cases, customers are gained through marketing efforts, but there are some that skip the marketing stream. It’s important to determine marketing-originated customers as this number can affect the calculation of other marketing metrics such as the attributable revenue.
How did each customer reach the company? That is the big question to answer for this metric.
Gaining potential customers starts with making people aware of the company and what it offers. That is brand awareness.
In traditional marketing, a common way to measure this is through surveys and brand research. However, modern marketing methods, especially those done online, can easily use tools such as Google AdWords.
When a customer refers a prospect or when a website links visitors to the company page, it is a badge of reliability. Keeping track of referrals helps determine which actions have made people satisfied enough to refer to the company (for example: Which company webpage is the most linked to?).
Pinpointing referrals comes side by side with determining where customers and leads come from.
Engagement with current customers and potential ones is a relatively new metric. Traditional marketing methods are commonly one-way: a company sends a message to its audience and the audience simply listens. With the rise of online and social marketing, the conversation has become two-way, with the audience now having the ability to talk to the company.
Measuring engagement can be easily aided with tools such as social media statistics.
The sales and marketing funnel, in simple terms, is the path each customer has taken to get to the point of purchasing from the business. This typically involves how the customer started out as a lead or potential, what conversations he/she has had with the company, and how both parties closed the deal. In online marketing, tracking the funnel means following which pages in the company website a visitor looks at, how he/she got to the sign-up page, and the like.
If the funnel is about the path, conversion is about the goal. Conversion is the turning of leads into actual customers – that is, the signing of a contract, the purchasing of a product, and similar events.
Questions to answer about conversion include: How many leads have converted versus those who have not? Which campaigns led to the most conversion? What factors contributed most to conversion?
Marketing does not stop at attracting customers – it must also strive to keep them. Customer churn is the rate of customers who stop purchasing from or subscribing to the company in relation to the entire customer base. Regular monitoring of the churn rate is vital as it is not only an indicator of business performance, it can also be a warning sign if the company has a serious issue with its customers.
Customer Lifetime Value
The marketing ideal is to gain customers and keep them buying. The customer lifetime value refers to the profit a business can gain from a customer over the long term. The more a customer comes back to buy from the company, the larger his/her lifetime value. This value serves as a foundation for future marketing efforts – the larger the value, the more a company should strive to keep the customer.
These 10 metrics are basic and commonly used, but there are many factors in each business that dictate what’s important. Thus, it is the company ultimately that decides what to keep track of and where to steer.