If you don’t measure your marketing, you can’t manage it!
It is that simple. If You Don’t Measure Your Marketing, You Can’t Manage It!
Measuring marketing success is not just important but critical. As marketing is usually one of the largest investments to a brand or company, it is pivotal to look for deeper insights to see if the campaign has met its overall marketing objectives as well as to allow informed decisions in the future.
Here are some common Key Performance Indicators (KPIs) you should consider when measuring the effectiveness of your campaigns:
1. Return On Investment (ROI)
Return on investment equates to how much you’ve invested versus how much you’ve earned. It is a ratio that compares gain or loss from an investment cost and the higher the ROI percentage, the greater the investment gains of a project.
The formula for calculating ROI is as follows:
ROI = (Current Value of Investment – Cost of Investment) / (Cost of Investment)
Here is an example:
- Paul initially invested £400 in a project (investment cost)
- The project is now worth £600 (investment gain)
- The ROI ratio would be calculated by subtracting the investment cost from the investment gain, and dividing by the initial investment cost:
(£600 – £400) / (£400) = 0.5 - The ROI percentage is therefore 0.5 x 100 = 50%
- This indicates that Paul is receiving a 50% return on investment, which is favorable to the project’s cost.
2. Customer Lifetime Value (CLV)
Customer Lifetime Value refers to the measurement of how much revenue a single customer can reasonably bring to your business throughout their entire time as a paying customer. It helps you determine which specific customers contribute the most to your business revenue so that you can continue satisfying their needs and expectations in order to retain them. This prevents you from wasting your marketing resources in the wrong direction and helps you target the ideal customer to spend more.
Here is a simple CLV formula:
CLV = (Customer Value * Average Customer Lifespan)
where Customer Value = Average Purchase Value * Average Number of Purchases
3. Cost of Customer Acquisition (CAC)
Cost of Customer Acquisition relates to the total cost involved in acquiring a new customer and this includes production costs as well as sales and marketing costs. This metric needs to be taken into consideration since it is a direct reflection of the financial stability and future success of your business as it prevents you from overspending. Remember, it is also important to design strategies to minimize your Cost of Customer Acquisition, otherwise, it might take longer to recover from it and enjoy the profit.
To calculate CAC, you simply need to divide all costs spent on acquiring new customers by the number of customers actually acquired during a given time frame.
4. Website Traffic Lead Ratio
Website Traffic Lead Ratio refers to the number of website visitors that converted into leads. No matter how great is your web design or how quick is its loading time, if you are receiving many visitors and they are not converting into leads, there is a problem. Thus, this KPI plays a great role in identifying whether your website traffic is relevant or not and encourages you to rethink your content and any other factor to capture potential leads.
To measure this KPI, you need to divide the number of website traffic by the number of leads generated within a given time period.
For example:
1,000 website traffic: 100 leads
= 10% conversion rate
5. Social Media Reach
Social Media Reach is used as a measure of brand awareness or how powerful your content is. It helps you understand how big is your audience for your message. However, this metric becomes more effective when it is compared to other engagement metrics. For example, you can use engagement metrics like clicks or replies and divide them by reach to calculate an engagement percentage and thus, identify how many people participated in your posts out of the possible audience for your campaign.
How to guide
AUDIENCE
Understand your core audience
STORY
Tell your brand story
CONVERSATION
Create your content & listen
MEASURE
Measure your Marketing
