Measuring marketing effectiveness isn’t just for C-Level Marketing Executives at Fortune 500 companies and marketing geeks like me; it’s also what separates successful small businesses from the failures.
Without putting sound tools in place to measure your marketing effectiveness, you’re going to be wasting a ton of time, money, energy and resources on the wrong marketing activities. How can you know what gives you your biggest bank for the buck if you don’t measure? Guessing can only get you so far. When we perform ROI analysis for the small businesses we work with they are always surprised to see how poorly most of their marketing is actually performing.
To make sure your business is on the right track to maximum profitability and marketing effectiveness implement these 5 marketing metrics immediately!
- Profit margin – Yes, I consider this a marketing metric because if you don’t know the margins on every type of work you do, product you sell, and/or every client you work with, you are most likely not operating at peak performance and profitability. Study this – constantly – and re-price, restructure, or abandon products, services, and customers that are bringing down your bottom line. Focus on what is most profitable and you will be more successful. Knowing your niche is half of the battle in marketing!
- Customer Acquisition Cost – How much does it cost you in marketing and advertising to earn a new client? This needs to be tracked and measured by each source. For example, does it cost less to acquire a client through networking than it does PPC advertising?
- Live Time Value of a Client (LTV) – Knowing the cost to acquire a client is great, but then you need to know the value of a client. How much is that new client worth to you over the life of the client? Is it a one-time sale or an ongoing sale? Do you cross and upsell knowing the LTV of your best clients is key to studying and learning where and how to attract more of them!
- Number of Leads by Source – If you don’t know this you may as well as grab your wallet, head into the restroom and flush all your money down the toilet now. Because that is exactly what you’re doing if you’re investing in marketing and not measuring whether or not you’re getting (leads from it. It’s imperative that every business knows exactly how many leads they get from every marketing; from advertising, to social media, to networking – and yes, even referrals.
- Conversion Rate – Leads are great and all but if they aren’t converting to actual paying clients, who cares? Knowing which sources convert the most leads to actual business (and the value of each conversion) is going to be key in measuring the success of any marketing campaign or promotion you do!
These are just the basic KPIs to track, there are literally dozens more that can be tracked to further refine your marketing and increase your profitability. But start here and become an expert at these 5 before moving on. And if you need help, this is what we love to do! Feel free to contact us to find out how you can get a professional ROI and KPI Analysis!