How do you define marketing effectiveness? If you ask 10 different marketers you’re likely to get 11 different responses. Is it about building brand awareness? Generating social media chatter? How many email subscribers you have? Something else?
Defining marketing effectiveness is a really big question and one you need to be able to answer if you’re going to grow your brand and your business long term. You’ve got to have a firm grasp around which channels are driving the most growth (and which ones are underperforming) so you can deploy your marketing resources and course correct as necessary.
It’s easy to get caught up with soft metrics and leading indicators such as social media comments and shares, but ultimately marketing is about selling more. A sentiment reflected by Matt Pechman at Diageo, on the Avid Impact podcast.
“How many cases are we selling year-over-year? How much growth are we driving for the business? That’s the ultimate score card. That’s whether you’re winning and losing.”Matt Pechman, Director of Gins at Diageo
In other words, without sales and profitable sales growth none of the other metrics matter. But marketing effectiveness also can mean so much more. Once you establish that as your top line goal, you can start looking beyond ROI and focus on other key aspects including brand awareness.
The most important thing to keep in mind when defining and measuring marketing effectiveness is to not get distracted by shiny objects. For most businesses, that means social media metrics such as reach and audience size. It’s easy to get a false sense of accomplishment when you see a Facebook post has the potential to be seen by thousands of people but you can’t lose sight of your top-line goal—is it helping you sell more products?
That was just the case with an ecommerce business that recently approached us for marketing help. At first glance, they were doing everything right.
They were very active on Facebook, Instagram, Twitter, and Pinterest.
They were blogging at least once a week.
They were sending out email newsletters a few times a month.
They were also outsourcing all of that for $600/month. A tremendous value if you just focus on what you’re getting for the money.
However, when you started looking at results it was obvious their efforts weren’t driving any sales. We spent some time learning about their goals and then started working with them to align those goals with their overarching marketing strategy.
In their case, it actually made sense to dial things back so they could focus their efforts on the areas that are most likely going to generate more conversions. And you could see the impact right away. By focusing first on their website, we were able to make some immediate changes that lead to an increase in the percentage of customers that added items to their online shopping cart, reached the checkout, and actually made a purchase—which had a direct impact on that top-line goal we talked about earlier.
With today’s connected consumer, every touch point matters. That means you need to have a firm grasp around what marketing effectiveness means for your business and how to zero in on the right measures.
Key Marketing Metrics
Here are some marketing metrics we've found found most useful over the years while growing our company and working with clients.
- Number of Leads/Conversions. Baseline measure of online and offline inquiries and conversion actions.
- Customer Acquisition Cost (CPC). How much does it cost to acquire a new customer?
- Customer Lifetime Value (CLV). How much is a customer worth over their entire future relationship with your business?
- Sales Revenue. The ultimate measure of marketing effectiveness. Are your campaigns driving sales?
- Website Traffic By Source. How many people visited your website after engaging with your marketing campaign? What was the lift in traffic?
- Website Conversion Percentage. Once prospective customers land on your website, how likely are they to make a purchase or take a conversion action?
Start with bottom line sales and work out from there, making sure you’re able to track which marketing channels are doing the heavy lifting and which campaigns are driving the most growth. You want to strike a balance between sales, brand awareness, ad spend, and cost of goods sold so you can generate the most conversions at the lowest cost-per-customer acquisition.
If you’re unclear about whether a leading indicator such as social media chatter is meaningful, take a look at whether that chatter is having an impact on traffic to your store and if that traffic is actually leading to an increase in sales—the baseline measure of marketing effectiveness.