I am not a marketer, but I have been married to one for the last 20 years. In fact, for a good majority of those years, we worked together. Me running engineering, and my husband running marketing. I can't even count the number of times I was woken up at 6 am by him asking me to look into site performance because one of his marketing metrics was off? And yes, for those of you wondering, we are still married. What can I say? I'm a saint.
As a CIO, CTO, or VP of Engineering, you are expected to work with marketing in some fashion. Marketing is responsible for getting customers to your business, whether that business is a website, an app, or a physical store. Your marketers have the pulse on your customers and potential customers and are probably the first to tell you if something seems "off" and needs investigating.
With so many marketing metrics available and covering a wide range of topics, it can be tricky to know which are the most important to track in your business. You might ask yourself: Which metrics matter most? What exactly do they measure? And how can we use them to improve our marketing strategy? I answer those questions below by introducing you to marketing metrics. It covers the critical pieces you need to know about this set of numbers, explaining what they are, why they're helpful, and when you should use them.
The Importance of Measuring Marketing Performance
Marketers measure the performance of their marketing campaigns for two reasons. First, they need to track how well their campaigns are doing overall. Understanding a campaign's performance allows them to make decisions based on solid data rather than assumptions, hunches, or other faulty metrics. Second, metrics are essential for improving your marketing strategy over time. If you aren't measuring your progress, you can't track your successes (or failures). You cannot know if your investment is paying off or if your campaigns are effective. But if you have the right metrics, you can make strategic decisions based on facts rather than feelings or emotions. You can make data-driven choices that help your business succeed. Metrics also help you spot areas for improvement. If you notice that your customer satisfaction is declining, you can look for ways to fix the issue. Similarly, if you're not generating the ROI you were hoping for, you can adjust your strategy to increase its effectiveness.
Types of Marketing Metrics- The Three E's
When measuring your marketing performance, you'll want to keep a close eye on several metrics. These metrics include your brand engagement, customer lifetime value, customer feedback, sales, and more. Each metric tells a different story about your business and its performance. For the most part, each important metric falls under one or more of the three E's: Effectiveness, Efficiency, and Engagement.
Effectiveness - How effective are your marketing efforts?
Effectiveness metrics will help track how well your campaigns resonate with your audience. You can use these metrics to identify if people are responding to your campaigns and make changes if they aren't. And if your efforts are successful, you can use these numbers to improve your future campaigns.
Many metrics can be used to determine the effectiveness of your campaign. Some of the most important ones are:
- Click-Through-Rate (CTR) - The click-through rate will tell you how many people saw your campaign and took action on it. The CTR is calculated by dividing clicks by impressions of your ad.
- Customer-Lifetime-Value (CLV) - Customer lifetime value metrics will help you track how much each customer is worth. You can determine the CLV by multiplying your customers' average purchase value, average purchase frequency, and average customer lifespan.
- Return-on-Investment - Return on Investment (ROI) metrics will tell you how much your investment has paid off. They'll help you track your investment and find new ways to maximize your return. How to calculate your ROI depends on what went into the campaign. Generally, you will take the total profit and subtract the total cost.
- Sales - Sales trends will indicate if you saw an increase after your campaign. Of course, if you have tagged your revenue sources properly, this attribution should show up in your analytics.
Efficiency - How much does each marketing channel cost?
Efficiency metrics will tell you how much your marketing efforts cost. They'll let you know how much you're spending on each channel and where your money is going. You can then use this information to find cheaper alternatives or prioritize your ROI-based budget.
To measure your campaigns' efficiency, you will want to look at a few different metrics. These include, but are not limited to:
- Click-Through-Rate (CTR) - The CTR will tell you the rate people click on your ad. As mentioned above, the CTR is calculated by dividing clicks by impressions of your ad.
- Cost-Per-Click (CPC) - Your CPC is how much your ads cost in your ad network. CPC is calculated by dividing the total cost of your clicks by the total number of clicks.
- Cost-Per-Lead (CPL) - If your marketing costs aren't purely ad spend, then you should look at CPL. CPL is the total cost to generate a new lead. The calculation for CPL will depend on the sources for your leads, but generally, it is the total cost of customer acquisition divided by the total leads per month.
- Conversion Rate - Conversion rate is simply the total number of people who converted on your site (bought something or took an action that you consider a conversion) divided by the total number of visitors. Conversion rate is one of those metrics that everyone in a company generally looks at to determine success. If your conversion rate is up, people are generally happy.
Engagement - How do your customers engage with your brand?
Engagement metrics will help you track how your customers feel about your brand. You can use these numbers to track customer sentiment and see if your efforts are improving their opinion of your company. Engagement metrics include customer sentiment, brand recognition, and loyalty. Some of the specific metrics to track are:
- Visits - Visits are an easy and surefire way to track a campaign's performance, and if the proper tracking codes are set up, they can easily tie back to a particular campaign.
- Time on Page - Time on Page is the time someone spends on a page on your site. Measuring time on the page lets you know if a particular campaign leads to greater engagement on the page the customer is driven to.
- Average Session Duration - Similar to Time on Page but tracks the overall time a customer is on your site. The longer someone is on your site, the more engaged they are.
- Social Comments - Tracking the mentions of your company is important. It gives you insight into what customers think about your brand. Tracking this around the timing of specific campaigns is key to understanding how a particular campaign resonates with your audience.
- Brand Lift - Brand Lift metrics will help you track how your marketing efforts affect customer intent and brand awareness. Brand lift is tricky. Often companies will conduct surveys for brand awareness and rating, and some marketers might consider brand loyalty or usage a good indicator. But if I choose two metrics I would use for true brand lift, it would be to see how many searches are done for your domain or company name in Google and direct visits. Searches for your domain are a clear indicator of your brand's recognition, and you can track the changes easily through Google searches. In addition to searches for your domain, you should track improvements to traffic coming directly to your site. Direct traffic does not have a referral source associated with it, meaning the visitor typed in your domain directly. An increase in direct traffic is an excellent indicator of brand lift.
- Customer Feedback - Customer feedback metrics will show how customers feel about your product or service. You can use these numbers to track customer satisfaction, identify problem areas and improve your product over time. A great customer feedback metric is Net-Promoter-Score (NPS). These are usually collected via an email or a popup on your site, etc.
Why Is It Important to Measure?
Are tracking each of these metrics really necessary? Why not just guess at the numbers and make decisions based on that?
Marketers who guess at their numbers and base their strategy on feelings and assumptions might not be far off, but they won't have a solid foundation to build on. There are many different reasons why you need to track your marketing metrics and why it's essential to collect data rather than make assumptions. Without metrics, your decisions are based on emotions and hunches, and you don't have concrete examples to rely on, leaving you to shoot in the dark. But with metrics, you have concrete examples and data to support your decisions and choices. Proper metrics will help you strategize based on solid information. Metrics will help you track your progress over time and see where you're succeeding and where you need to improve. They'll allow you to highlight problem areas and find ways to improve your strategy in the future. Metrics will also help you identify new opportunities, explore new avenues for growth, and find new ways to improve your results over time.
The above highlighted some of the most important metrics to track, but there are many more. The ones most important to your company and your CMO or VP of Marketing will depend on the marketing campaigns' goals. Tracking these metrics allows you to make data-driven decisions and improve your marketing strategy over time. And when you know which metrics are most important to track, you can ensure you're getting the most out of your marketing efforts.If you are a CIO, CTO or VP of Engineering and you need help communicating with other areas of the business, or you need help with your organization's strategic goals, contact us. We are here to help.