Good marketing takes math. Thankfully we’re not talking high-level calculus, just a few simple equations that make it easier to improve, plan and budget. Without it, how do you know what works?
Show me where the action is
So, what are some of the key, actionable metrics that you should be tracking? As a start:
- Cost Per Click (CPC) = Campaign spend / # Clicks
- Cost Per Lead (CPL) = Campaign spend / # Leads
- Cost Per Acquisition (CPA) = Campaign spend / # Purchases
- Return on Ad Spend (ROAS) = $ Sales / Spend on Ads
- Average Order Value (AOV) = $ Sales / # Orders
- Earnings Per Click (EPC) = $ Sales / # Clicks
- Retention Rate = Subscribers lost in a period / Subscribers at the start of the period
Using a handful of these metrics in combination helps you see the larger strategic picture and plan for the best chance of profitability. Here’s a couple of examples:
#1 You have a great cost per acquisition, but an ordinary subscriber retention rate. That tells me you need to re-work your onboarding emails and follow-up communications to keep clients happy and convert them into your advocates (which means more referrals – yay!).
#2 You have a low cost per lead, but a high cost per acquisition. In that case, it might be time to look at how you are nurturing leads into customers. Are follow-ups done quickly? Is your sales process multi-step? Have you overcome the most common barriers to purchase (price, complexity, too much or missing information etc.)?
You’re so vain
But not all metrics are created equal. Vanity metrics are things you can measure that might make you feel warm and fuzzy but don’t equal money in the bank. Think social media followers, email subscribers and website visits. Standalone, they don’t mean much, but they can be useful when looking at them as part of a full data set.
Take impressions, say you have amazing numbers on a recent social campaign, but your engagement levels are donuts. Maybe you’re talking to the wrong audience, or the audience doesn’t find your content valuable.
Web traffic is another example. You get a sudden spike and think great, more exposure! It could just be a farm of hackers looking for a back-end to your site. But if you look at the traffic acquisition source and leads attributed to web traffic in the same period, now we’re talking useful data.
So even if you’re no mathlete, you shouldn’t be thinking about your marketing or sales without taking data into account.
Don’t have any data? Get some.
- Set up Google Analytics and Google Search Console
- Ensure all your email campaigns have read and click reporting
- Set up a lead tracking system – even if it’s a basic Excel spreadsheet, that records incoming leads, their source (ask them how they found you), the number of contacts you have with them and if/when you convert them to a sale.
After all, how do you know where to focus your efforts if you don’t know which activities are bringing in the goods?