When you mention the word "success" to a business owner, there's no shortage of mental images that immediately spring to mind, which is both good and bad. It's good in the sense that there are literally dozens of ways that business owners, employees and customers can ascribe value to what businesses do day in and day out. However, some people tally success whenever a business has high customer retention or robust employee satisfaction ratings while others measure success based on sheer profitability or whether your customer base is expanding.
Therefore, the fact that success is such a malleable term, it means that unfortunately two people might not be talking about the same thing or that, for instance, the marketing metrics that you're focused in on might be measuring activities rather than ROI-yielding outcomes.
In today’s In-Sites Thought Hive, we’re laying down the facts on what we mean by measuring marketing success using key analytics.
Anything that is measured and watched, improves.—Bob Parsons
Key Marketing Metrics Measure Outcomes
When you talk about marketing metrics and key performance indicators that produce real-world results, this should typically be conveyed to you as a percentage or number that in some way relates to lead generation, lead nurturance or conversions.
Customer acquisition cost is one such key marketing metric that most business owners are already familiar with. This is the combined cost that your sales and marketing processes spend (e.g., advertising cost plus salaries and marketing overhead) in a given timeframe to attract a new customer. Meaning, customer acquisition cost or CAC is measuring a result or marketing outcome rather than an activity.
Potential Problems with Measuring Activities than Measuring Outcomes
In order to differentiate from a marketing outcome, an example of measuring a marketing activity is a metric like "reach" on social media. Your total number of followers on sites like Facebook and Twitter could indeed impact your inbound marketing…but indirectly.
In fact, the problem with measuring your success by an activity instead of an outcome is that the former might not have any connection to your business' profitability, tell you how you can improve your lead nurturing and content marketing, or give you an accurate picture of your overall marketing efforts within a given monthly, quarterly or yearly report.
Especially to know that you have, say, one hundred thousand followers on social media doesn't necessarily tell you if all, some, or most of those followers are qualified enough to send to your sales team as sales-ready leads.
We must move from numbers keeping score to numbers that drive better actions.—David Walmsley
Outcome Metrics Are Simply More Effective
On the other hand, a metric that tells you what percentage of your new customers in a given timeframe were lead generated by your marketing team is your marketing originated customer percentage. This metric conveys a lot of information in one percentage and immediately indicates whether you’re spending your marketing dollar wisely.
Contrast this metric with tracking success by social media followers, could that activity somehow translate to success? Maybe having more followers indefinitely leads to more sales. But without diving deep and using key marketing metrics, you won't really know how that happens, why certain prospects became qualified leads, or the effectiveness of your inbound marketing strategies at each stage of the sales funnel.
Simply put, you want clear cut and ongoing answers to your marketing's effectiveness, preferably displayed all in one place like a CRM's dashboard, so that you know which marketing processes to strengthen and which to minimize, scrap or repair.
Take a risk and keep testing, because what works today won’t work tomorrow, but what worked yesterday may work again.—Amrita Sahasrabudhe
The Time When Social Media Helps
Now, up to this point, it may seem like we've been picking on social media a bit. To play devil's advocate, your followers on social media and your total number of subscribers to your email list, collectively known as your "reach", could be a valuable metric.
How? If customers are acting as brand advocates, using social media to discover more about your company and its products or commonly just socially engaging with your business, then social media can be an ROI-generating behemoth.
Social media creates kinship between companies and customers, and kinship equals purchase intent.—Jay Baer
One valuable metric that business owners can take advantage of to more efficiently identify brand advocates and market to them accordingly is measuring the rates of engagement around your social media content. This tells business owners and marketing directors active on social media the frequency with which your followers, for instance, like an offer or share a blog post that you put out.
Purpose of Key Marketing Metrics
Key marketing metrics should ideally tell you which channel is driving your leads and, in turn, what content is most efficiently turning leads into conversions for your company.
You obviously still need to track your website's organic traffic, but you should also be looking at which aspects of your content marketing are producing the most subscribers, leads and conversions.
Measurement is like laundry. It piles up the longer you wait to do it.—Amber Naslund
Diving deep and taking a microscope to your key marketing metrics pays off especially in more conversions, higher customer satisfaction, and greater profitability. Because once you know what sources are the best at nurturing your leads or more specifically converting them, then that is where you know your marketing success actually happens.
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