Like most things in business, marketing effectiveness needs to be tracked and key performance indicators (KPI) help us do just that.
As an executive or business owner, you want to know that your investment is yielding results. You’ve got to understand where your budget is going and where any increase in spending is needed.
That’s why you need to decide which KPI’s to track. The nature of your business will ultimately determine which ones you should track.
Here are a couple of examples:
For an online based business, website traffic, leads and lead conversions are a priority. For a restaurant owner, food cost per head and return customer growth may be more important.
You should revisit your marketing plan every year to make adjustments where necessary. However, you can’t-do that if you don’t know what’s performing currently.
Here are some appropriate KPI’s that you can start tracking today.
1. Sales Growth
Your growth in sales will tell you if your marketing efforts are hitting home. If you’re not gaining revenue from a specific strategy, there’s no point continuously investing in it.
So weed out the marketing efforts that aren’t yielding enough or no results. If this is the case take a look at your marketing alignment.
2. Unique Website Visitors
Identifying how well your website is attracting new visitors is crucial. This is an indication that your site is functioning as a business asset, rather than a glorified business card.
The more unique visitors you have, the better because you can retarget those people with paid advertising later. You’ll need a little technical know-how to setup tracking but it’s a super effective strategy.
3. Returning Website Visitors
When people return to your website, it’s an indication that you’ve impressed them well enough that they had to come back. This affords you a second chance to convert them into paying customers.
However, for some websites like the NY Times, return visits are good regardless of whether they buy something. These sites make most of their money by selling advertising.
4. Sales Qualified Leads (SQL)
SQLs are leads that are either ready to buy or have shown interest in making a purchase. Here is a quick primer on the kinds of B2B sales leads.
Depending on your process, you may hand these leads over to sales staff. These are the people that’ll most likely go on to become your customers. So it won’t be a waste of time for your salespeople.
5. Cost per Lead
Your cost per lead is a fairly simple calculation and important for budget allocation decisions in paid advertising.
Let’s look at a quick example.
If your product is worth $150 and your highest PPC (pay-per-click) bid cost is $5. Assuming 1 out of every 5 people contact you, your cost per lead will be $25.
For broad advertising like TV ads, it’s hard to accurately pinpoint cost because this kind of advertising can generate online and offline leads.
So you’ll need to decide how much a lead is worth to you and make some assumptions on how to allocate spending.
6. Performance of Sales Team
Your sales teams are an integral part of your business. So their performance is a good indication of your marketing success.
You want to track overall close rate and customer retention.
Generally, it’s cheaper to keep existing customers and much more expensive to find new ones. Strong customer retention often means that you’re keeping promises to customers and delivering great value.
A high close rate indicates that you’re sending the right leads to salespeople. These are usually referred to as MQLs (marketing qualified leads) but they’re really SQLs. They both mean the same thing.
7. Cost of Customer Acquisition (COCA)
This is the cost associated with convincing prospects to become paying customers.
Here’s how it’s calculated:
Total marketing investment / # of customers acquired = COCA
For instance, if you spent $500, 000 in sales and marketing in Q1 but got 200 customers out of it, then your COCA is $2,500. If your product is worth 5,000 each, that’s 50% ROI (return-on-investment).
8. Website Traffic to Lead Ratio
Your traffic to lead ratio is the number of people who initiate contact vs. those that didn’t. If 1000 people visited your website in one month and 100 of them contacted you, then your conversion rate is 10 percent.
9. Conversion Actions per Web Page
If possible, keep an eye on what people are doing when they arrive on your web pages.
If they’re not taking the actions that you want, then you may have to optimize your pages for conversion. Things like removing unnecessary out-links, increasing the size of tap targets and removing any distractions can make a difference.
10. Social Media Traffic
Whether free or paid, traffic from social media is a good indicator of marketing success in that area.
There are several things that you can track with social media and these are:
- Number of referral traffic coming from social channels
- Number of leads acquired from socially referred traffic
- Number of leads from social that end up becoming customers
The most commonly tracked is the amount of website traffic received from social. This is also where most businesses stop but as noted, you can track leads and customer acquisitions too.
There you have it! That’s 10 marketing KPIs that you can start tracking today.
Remember that every industry is different and you don’t have to track all of them. KPIs may also completely vary in some industries.
You’ll have to draw intelligent conclusions based on your findings after reviewing your marketing plan. An easy way to do this is to separate your findings in three categories.
- What to keep doing without changing – These are tactics that are performing well and don’t need any investment increases.
- What to increase doing because they’re effective – Double down on these processes because they’re effective but inadequately resourced.
- What to stop doing because they’re ineffective – These things are either not working at all or yielding returns that are well below your investment. You can replace or get rid of them altogether.
Finally, be sure to revisit your marketing plan every year or sooner as needed to review your progress and to make sure you are on track. This will surely improve your overall results year-over-year.
Need help with your next marketing campaign here is a free service that will help you benchmark and analyze your potential for success.
Please tell us in the comments below what KPIs you are using and work best to keep your small business on track for success.
This blog post was sponsored by Tech Help Canada