We’ve all heard the line “you can’t manage what you can’t measure”. Pressures around costs versus campaign results, digitalisation, global competition and keeping up with ever-changing trends are just a few of the factors that loom large in the minds of us marketers. Maximising the effectiveness of brand communications is a key focus of successful organisations, yet it can be a struggle to find the right way to do it. John Wanamaker, once a very successful US merchant and the owner of the department stores chain under the same name, was credited with coining the phrase “Half the money I spend on advertising is wasted; the trouble is I don't know which half”. The question is how to measure the effectiveness of marketing, there’s a gazillion metrics out there, but which matter to your business?
Return on Marketing Investment
ROMI or in other words marketing contribution to revenue is likely to be the metric that every CEO really cares about. The question is simple: what percentage of business revenue can be traced back to your marketing efforts? This metric reflects the profitability of your investments. To calculate ROMI simply deduct the marketing spend from the overall profit and divide the balance into them. Obviously, the higher number the better your marketing game is. Measuring your marketing return on investment is important for many reasons. It is the way to justify your expenses and determine the most effective marketing channels based on the available data. Also, it gives a great opportunity to learn from the competition, and many companies have public financials allowing businesses in the same industry to compare their expenses and margins.
Conversion rate is one of the most important metrics in the marketing and one of the best ways to measure the performance of your advertising campaign. A conversion refers to any desired action that you want the user to take. This could be, and usually is related to making a purchase, but also calculated for other goals such as registering on your site, engaging with the online chat, calling a business, submitting a form, upgrading their service and so on. You might want to measure conversion rates per marketing channel to establish its effectiveness or based on the stage of the buyer’s journey to determine how successful a particular campaign is in moving leads down the funnel. Calculating conversion is actually really easy. Divide the number of conversions in a given time frame by the number of people who visited your site and multiply it by 100%.
Cost Per Lead
Converting the lead is one part of the job but being in control of the Cost Per Lead is a whole new subject. The question is how much does it cost you to convert a lead and is it cost efficient? The cost efficient part of the question is crucial. Anyone can throw some money into a campaign and come away with leads. In order to figure out the most effective way to spend your advertising budget you need to understand and then calculate Cost Per Lead. Here is the formula: Cost Per Lead is a total cost of campaign divided by the number of leads generated as a result of the campaign. Your goal should be to find the sweet spot that balances cost with quality and outcomes.
Brand awareness is probably one of the trickiest metrics in marketing to measure, making it difficult to estimate its effectiveness and calculate ROI. One of the ways is reviewing the growth of direct traffic. Using Direct channel data in Google Analytics you can easily track the number of people who directly typed your brand’s name in the search bar. Monitoring this over time will give you an indication of changes in brand awareness. Monitoring the growth of direct traffic over a specific period of time will give you an indication of changes in your brand awareness. Another way of measuring brand awareness is through the search volume data. You can use Google Ads Keyword Planner and Google Trends to figure out the volume of searches for your brand’s name and track it to see the changes. Other tactics of analysing this metric include customer surveys and social listening tools, start testing what works for your brand.
We could go on like this forever, suggesting plenty of other metrics to track in the quest for understanding and optimising your marketing efforts. Yet we believe every brand has different objectives and strategies and the performance metrics must be matched to these on a case by case basis. As a full service marketing agency we are here to support your next marketing move. Contact us to arrange your complimentary consultation today, email email@example.com.