Do you understand your company’s marketing performance? Do you know what makes your brand’s marketing efforts successful?
All businesses have strict budgets, and no one wants to support marketing activities that lose them money. By tracking the proper KPIs, you will know which strategies to optimize, which to drop, and how to adjust your budget to the various strategies.
If you aren’t tracking the right KPIs, your company will report and make corporate decisions based on misleading information.
This post highlights the important KPIs you need to track to know whether your marketing campaigns are working or not.
What is a KPI?
KPI definition: A quantifiable metric that’s used to gauge an aspect of business performance. KPIs can be used in any part of a business operation, from employee performance to marketing and sales.
This means that marketing KPIs are related to all aspects of your marketing strategy. They are tied to efforts to boost your brand awareness, search engine optimization, or sales growth. They include data such as website traffic, SERP, online sales revenues, leads, engagement rate, and basically any actionable measurable value of your growth marketing strategies.
Your KPIs can originate from your PPC tools, social media channels, web analytics software, and lead conversion tools.
Why do you need to track KPIs?
Whether you’re doing organic growth marketing or paid, KPIs in marketing are essential because they help you measure your performance. They show how specific projects and campaigns are faring, which will help you decide whether to continue with them or not. Marketing funds should only be used on campaigns that yield positive results, and KPIs will help you identify the right campaigns to focus on.
KPIs will also help you identify the areas that need improvement. A poor-performing campaign doesn’t necessarily mean that it should be abandoned. With some adjustment, you could get the campaign to perform better, and KPIs will point you to the areas that need improvement.
Tracking KPIs also comes in handy when you need to automate repetitive tasks. You don’t need to spend your time and resources on certain events when they can be handled effectively using automation software, and your KPI marketing analytics will point you to these tasks.
You also need your KPIs to find the areas you’re losing money. Poor-performing campaigns consume marketing dollars without a significant return on investment. Your KPIs will help you determine the campaigns behaving like this and should be stopped immediately to prevent further loss of company funds.
Marketing KPIs will also let you know if you need more or less staff. By revealing your marketing team’s performance, it’ll help you decide if you need more staff on board to get the job done or if some of their tasks can be handled by automation software.
Let’s now review the common KPIs you need to track in your marketing strategy.
1. New leads/prospects
This is the simplest marketing metric, but it is still one worth watching. It indicates the number of new leads brought in by your marketing in a given period.
To measure the number of leads generated, get the latest data from your pipeline management software, and filter the leads by date to determine the new leads generated in that period. You can improve the number of leads your marketing generates by creating SEO-optimized content, increasing your budget for ad campaigns, and introducing new discount offers.
2. Sales revenue
How much have you earned from your inbound marketing campaign?
The best way to judge your marketing success is by reviewing your sales revenue over a period. Understanding your sales revenue helps in strategic planning by identifying the growth areas and those consuming marketing funds without any tangible return on investment.
Calculate your sales revenue using this formula:
(Total sales for the year) – (Total revenue from customers acquired through inbound marketing)
3. Cost per lead
How much does it cost you to acquire customers through inbound vs. outbound marketing?
To get a clear picture of your marketing efforts, you should calculate your customer acquisition costs for both inbound and outdoor marketing. Getting these figures requires the integration of your CRM and marketing automation software and accounting for all costs associated with ERP integration.
Calculating CPL for inbound marketing, relevant costs include:
- Creative and technical team
- Technology and software
- General overhead
Calculating CPL for outbound marketing, relevant costs include:
- Marketing distribution
- Manpower (sales and marketing)
- General overhead
4. Customer lifetime value (CLTV)
Loyal customers will yield more value over time. Measuring each customer’s lifetime value will help you identify their value to your company and how to increase it. CLTV is also an important gauge of your company’s ROI, and it’ll help you strategize your future business goals.
You can calculate the CLTV using this formula:
(Average sale per customer) x Average number of times a customer buys per year) x (Average retention time in months or years for a typical customer)
A great way to improve the CLTV is to develop lead nurturing campaigns targeting existing customers. This will give you the opportunity to inform your existing customers about new products, services, and resources.
5. Inbound marketing ROI
You should track your return on investment to determine the success of your marketing efforts. The ROI from different marketing events will tell you where to increase your spending to generate more growth. You will also know the activities costing you money and not yielding the desired results. This information is useful in planning for the future.
This is the formula for calculating your inbound marketing ROI:
(Sales Growth – Marketing Investment) / (Marketing Investment)
6. Lead conversion rate
How effective are you at converting leads into sales? If you generate many leads, but only a few end up becoming paying customers, there could be something wrong with how you attempt to close sales. Engage a growth marketing agency for the best strategies to turn leads into actual paying customers.
Use this formula to calculate your lead conversion rate:
(The number of leads that converted to sales) / (Total number of leads) x 100
7. Organic and paid traffic
Visitors to your site are potential leads that can turn into paying customers. Understanding your website traffic will help you figure out who these people are, how they got to your site, and what they did when they landed there.
Visitors can get to your website organically or through paid means. Organic traffic gets to your website through organic search, while paid traffic lands on your website after paying for advertising promotions on search engines. You will need CRM or CMS-integrated tools like Google Analytics to measure this.
Web traffic analytics will reveal important issues, such as:
- Page views
- Page sessions
- Average session duration
- Bounce rate
8. Close ratio
Has your sales team closed a lot of deals? The main goal of your growth marketing strategy is to close as many deals as possible, and this ratio describes how many prospects your sales team managed to convert into customers.
Compare your current close ratio with what you achieved the previous year? Is it higher or lower, and what can you do to improve it?
9. Social media reach and engagement
Social media marketing is a great strategy to connect with your audience on the platforms they spend most of their time. Distributing your content on social media will help you reach more people and increase your brand awareness.
You should track how many people can see and engage with your content on your social media pages. Besides likes, comments, and shares, you should track the metrics that determine lead conversion for your social media marketing efforts, like the traffic that gets to your site from your posts on social media.
We have highlighted what you need to do to improve your social media marketing efforts in our blog, 10 Tips to Help You Increase Social Media Engagement.
10. Email marketing performance
Email communication is a great way to connect with prospects and inform them of your offerings. Every email campaign should be tracked and analyzed to improve the experience and optimize it to bring more conversions.
Some of the things you will discover from tracking your email marketing strategy include:
- Delivery rate
- Unsubscribe rate
- Open rate
- Click-through rate
- Conversion rate
Good growth marketing takes skill
Creating an excellent growth marketing strategy doesn’t come easy. Fortunately, with the right tips and tricks, you can get exponential growth for your business from end-to-end. Our guide, What is Growth Marketing? Your Complete Guide to Business Growth, will help you take your marketing to the next level.
A successful company has a lot to measure. Tracking the various marketing KPIs we have discussed in this post will give you all the information you need to make sound business decisions. But it requires a lot of effort to keep this information updated, especially if you use multiple marketing channels.
The team at Growth Marketing Genie can help. As growth marketing experts, we are familiar with the KPIs you should be tracking to make your marketing successful. We will help you set up a monitoring system to track important business metrics and deliver KPI reports that will tell you how your business is faring at any given time.
Do you want to improve your marketing performance? Take a look at our marketing strategy page for expert tips.
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