Marketing KPIs vs Realistic Goals
In this article series, we consider effective marketing management and the role of measurement. In the first post, we looked at how many marketing teams still operate without a robust measurement framework in place and the opportunity costs of failing to evidence marketing delivery. We also talked about the value of holding a marketing strategy workshop as the means to prepare appropriate marketing KPIs.
The ultimate goal of marketing KPIs would be to demonstrate a direct relationship between increased revenue or profit, and the marketing campaign costs incurred. Every marketing manager dreams of being able to evidence, for example, that their new campaign costing £25,000 generated nearly £375,000 in sales. Unfortunately, a wide variety of business factors are likely to have contributed to that figure – factors that may be removed from the marketing campaign in question. So, at best we can provide ‘guesstimates’ and say that an increase in revenue or profit will have been partially attributable to a marketing campaign. This means, however, that we need to look elsewhere for our hard measures. Here are 7 that are worth considering.
1. Cost per lead
This turns the attention to outbound marketing and tells you how much it is costing to acquire each customer through these methods. This can be a challenging measure to calculate, as input costs can include manpower, overheads, technology, advertising and marketing distribution – but it is a valuable one to consider.
2. Inbound marketing ROI
This allows you to assess the performance of your activity and helps with marketing strategy planning and budgeting for the following year. Subtract marketing investment costs from sales growth revenue, and then divide it by investment to reach the ROI.
3. Customer value
There are different ways to calculate customer value. Valuable customers will be happy, engaged, of low-churn and inclined to stay for the longer term. Assess lifetime value of a customer by multiplying their average sale by their average purchase frequencies in a year – and then again for the average typical retention time in years or months. You can then look to develop targeted lead nurturing marketing campaigns that engage with these existing customers to maximise their lifetime value.
4. New contact rate
Website traffic is a key area for marketing KPIs development and you must know whether it is being driven by direct, organic, social or referral activity. For example, if your traffic grows or remains steady, but the proportion of leads begins to drop, then you know that there is a missing element on the page. Track the traffic-to-lead ratio to assess whether your website pages need developing further with new forms, text, contact details or designs to engage visitors and encourage that CTA follow-through.
5. Landing page conversion rates
Most marketing teams will work hard on their campaign landing pages, ensuring that they look great, have powerful copy and all the necessary information, functionality and calls-to-action CTAs. But if they don’t convert, they are largely useless, even if the traffic is high. Again, if you have high traffic and low conversions, then something needs to be changed on the page. You can use A/B testing to see which actions will drive forward conversion increases, such as by shortening forms, adding reviews, adjusting your CTA copy and so forth.
6. Lead to customer ratios
Your marketing may be excellent – but you need to know whether the sales team is able to take your leads and close on them. You need to know the conversion rate of leads which are sales qualified, and sales accepted. The former are those which are viewed as being ready based on certain completed activities – such as a completed online form from a lead who is ready to complete the purchase. An accepted lead is just an opportunity for the sales team to make contact. Looking at the two measures, you must ask whether your campaigns are capturing these leads at the right volume, whether the CRM is passing suitably qualified leads to the sales team in a timely manner and whether the ultimate close rate is sufficiently high. Where any gaps exist, there is an opportunity to work with sales to improve the figures.
7. Organic and social traffic
Today’s businesses will focus heavily on organic traffic for inbound marketing and social traffic to measure engagement. These link heavily with your SEO strategies and the data available from the associated digital tools is incredibly rich and deep. However, digital KPI measurement can be a specialist area of its own and many marketing teams will have specialist data analyst roles that deep dive into digital marketing data as part of their delivery roles, constantly A/B testing and refining approaches using daily performance data, as well as producing management dashboards for analysis.
Identifying measures is the first step in providing evidence that a marketing campaign is working. Once identified, the measures need to be tracked at least monthly (depending on the campaign). Take a look at our KPI software solution, Scoreboard, to get a better understanding of how this can be done.
