We know you need to measure your marketing efforts, because why else would you be spending marketing money on an online strategy? You can’t keep doing the same thing over and over while expecting new results. But do you really understand the value of digital marketing?
First, it’s important to define value. Value is an action taken when it supports your business goals. Value isn’t always about lead generation and sales, it can be about building a brand identity, creating conversations or even customer support. The value of digital marketing will be different for every business.
So before you can determine the ROI (return on investment) of your digital marketing efforts, you need to define the goals of your strategy and campaigns using KPIs.
What are your Key Performance Indicators (KPIs)?
KPIs are quantifiable measurements that help track the success of your digital marketing efforts. Here are ten examples of KPIs that businesses use to determine their online performance.
Engagement: Engaged customers tend to be more loyal to your brand and come back for repeat purchases. While social engagement is usually what people think of in terms of engagement, broaden this KPI to include website engagement such as bounce rate, time spent on the site and pages per visit.
Brand Awareness: You might be surprised at the amount of campaigns run simply for brand awareness. Although it is a difficult KPI to measure, you need your potential customers to be aware of your brand in order to grow. These can include brand mentions, social following increases, clicks on your posts, etc.
Traffic Sources: From organic to paid to email to social, where is your traffic coming from? Even organic traffic isn’t free, you have to spend money to increase your organic traffic. Organic traffic helps potential customers trust you, and you can’t put a price on trust. Paid traffic, such as a PPC campaign, can require a fairly high monthly budget, but is easily measured.
Website Traffic: Who is visiting your website? Where are they from, how did they get there, how long do they stay on your page? Of all of your website traffic, how much of it converted? Finding out more about your website traffic can help you determine what your potential customers want from you, which is essentially the basis of marketing. Some website traffic metrics to watch include sessions, users, page views, pages per session and session duration.
Reach: Digital marketing reach refers to the amount of unique views or visitors your marketing campaign gets in a given time. Expand this even further to figure out what percentage of these unique visitors fall into your target audience. While you want a wide reach, it only matters if you’re reaching people who are potential customers.
Landing Page Conversions: A landing page that doesn’t generate conversions is useless, so is it converting customers? If you’re getting high traffic but a low conversion rate, it’s time to reevaluate your landing page and make some changes.
Influence: How influential is your brand in getting prospects to perform an action? Influence drives people to download your content, buy your products, join your subscription service, share recommendations and more. This can also include any influencer marketing your business is running.
Social Media Channels: Social media allows you to distribute your content and interact with current and potential customers, so of course you need to be able to measure it. Most platforms have their own analytics you can download to see how you’re performing, so pick out the measurements that are meaningful to what you’re trying to accomplish.
Sentiment: Look beyond the “likes” and take a look at how people are responding to your marketing efforts. Connecting and engaging with your target audience on a personal level can help you analyze the feelings behind the words and gage the emotional response. How are they commenting on your content? Is your content something they find worth sharing to their network? Is the feedback positive or negative? This can help determine if your marketing efforts are driving your desired actions and if your content is resonating with your customers.
Lead Generation: Leads equal sales opportunities, which (if nurtured correctly) turn into sales growth. Determine which channels generate your best leads and give you the most bang for your buck. Cost per lead, quality, conversion ratios, traffic and sales outcomes are all metrics that contribute to analyzing your lead generation efforts.
As you can see, it’s not always about leads and sales. Your marketing efforts can be about building a brand identity, creating conversations or customer support. Building brand loyalty is an important part of your online presence and an integral part of growing your business.
If your marketing strategy is centered on sales, it’s time to break out your math skills. ROI can be (broadly) calculated through a simple mathematic equation:
(Sales Growth – Marketing Cost) / Marketing Cost – Average Organic Sales Growth = ROI
Breaking it down a little bit further, what is the cost of your customer acquisition? This is the cost of bringing in an individual potential customer for a sale, which can be calculated with this equation:
Total Marketing Investment / Number of Customers Acquired = COCA
What is a customer worth to your business over a customer lifespan? This equation for the lifetime value of a customer is helpful when determining your future business goals and marketing strategies.
Revenue x Gross Margin x Average Number of Repeat Purchases = LTV
Ultimately, your KPIs help determine the ROI of your digital marketing efforts. Once you measure your KPIs, it’s vital to take action based on the results.
Remember that digital marketing is a long-term process. The first month of your efforts might fall flat but build over the next few months, or even years. A marketing campaign is an investment into your business’s success which needs to be measured, monitored and tweaked over time. By continually measuring your KPIs, you can find out where your marketing dollars are profiting and where they are being wasted.