Did you know that only 1 in 4 marketers can prove the impact of their marketing efforts for their business? That's really astonishing if you think about it. We live in a marketing era with tons of data at our fingertips, yet 75% of marketers can't prove their effectiveness. How can we possibly hope to expand to new, improved marketing campaigns if we don’t know the impact of our past tactics?
Having the ability to collect and interpret data will equip you with the insight to know if your marketing activities are effective. But, where do you start? What should you be tracking? And what tools can you use to collect the necessary data?
I’ve got you covered. Below are four simple metrics to help you start tracking online marketing success. Some of them may already be familiar, but the key is tracking all of them to get the complete picture and identify areas to optimize along the way.
1. Measure Your Website Traffic
Traffic to your website is a strong, lagging indicator to watch. Attracting interested prospects to your site is one of the most important elements of an effective online marketing strategy. You can have the best lead generating offers and sales process in place, but without new traffic, your pipeline can easily grow stale.
Website traffic can come from a variety of sources. When tracking visits, it’s important to understand which channels are responsible for attracting new and returning visitors. These channels include:
- Organic Search: Traffic from search engines like Google, Bing, and Yahoo
- Direct Traffic: Visits from users with the direct link to your website
- Social Media: People who visit straight from a social site like Facebook, LinkedIn, or Twitter
- Referral Traffic: Traffic that is directed to your site through links from other websites
- Email Marketing: Visits to your site that started from an email tool
- Paid Search: Any click from a paid source like Google Adwords
- Paid Social: Traffic that comes as a result of a paid social media campaign
Step one in this process is to make sure that you have a tracking code on your website that logs any visits to your pages. The most common tool to track this type of data is Google Analytics because it's free. If you don't have website analytics right now, start by setting up a free Google Analytics account.
After you've set up your account, make sure you put the tracking code on each page of your website. This code is how Google can track the website traffic on your site.
If you've already been using Google Analytics and you're looking for a way to take your tactics to the next level, check out other marketing automation platforms like HubSpot, Marketo, or Eloqua.
2. New [Qualified] Leads
Is your website effectively generating new sales leads for your business? And, are they actually qualified to buy or just blowing smoke? Although there continue to be new ways to generate leads online such as Facebook Lead Ads, it's essential that you are tracking the effectiveness of converting new leads on your website.
Do you have some kind of lead form on your website? Either a contact form or a lead generation form for a content offer?
Any forms you have on your website should be connected to a platform that gives you the ability to track not only the total number of form submissions but also pass that information to a system (a CRM) that allows you to keep track of the specific people that convert.
Remember the importance of quality over quantity. After generating new leads, "follow" your visitor through the sales process to see if they turned into a customer or not. This will help you understand which online offers [with forms] convert more closed business.
Tracking and managing converted leads is not strictly the job of sales. It's a combined effort that will take work from both sales and marketing.
Keep in mind, if you’re looking to increase the number of leads your website is generating, look no further than the sitewide visitor-to-lead conversion rate.
Visitor-to-Lead Conversion Rate Formula:
#of leads / # of website visitors = Visitor-to-lead conversion rate
This will tell you if you’re doing a good job converting your traffic into leads or not. If you are, focus on attracting more visitors to increase leads. If not, you may want to focus on reworking your conversion opportunities to better engage your visitors.
3. New Business from New Customers
In the previous section, I briefly touched on closed business. Not surprisingly, this is likely the most important measure of success for marketing and sales. In order to track how many leads are turning into customers, it’s wise to integrate your automation platform with a CRM system to implement closed-loop reporting.
Again, you’ll want to pay close attention to the conversion rate for this metric, the lead-to-customer rate.
Lead to Customer Conversion Rate Formula:
# of customers / # of leads = Lead-to-customer conversion rate
Also, don’t forget to consider the customer’s or account's lifetime value when looking into closed business. A new customer may be worth more than just the value of the one-time purchase.
Customer Lifetime Value Formula:
Avg sale per customer x Avg number of times a customer buys per year x Avg years a customer will buy from you = Avg customer lifetime value
If your sales team is uploading deal information into your CRM, this should be easy to track and calculate. With this information, you can accurately calculate the return on your marketing investment.
4. Your Marketing Return on Investment (ROI)
Are your marketing efforts worth it? The timeless question. How can you say a marketing campaign was successful if you don’t know if you recorded a return on your investment?
When measuring ROI, you’ll need to calculate your customer acquisition costs for all online marketing efforts. How much does it cost you to acquire a new customer? This includes manpower, technology, and other expenses related to campaigns.
Return on Investment Formula:
(Sales growth - Marketing investment) / Marketing investment
In order to calculate your customer acquisition costs, like the metric above, it’s recommended to integrate your marketing automation solution with your CRM platform.
Keep in mind, if you want to accurately measure marketing ROI, you’ll need to be very diligent recording data and closely tracking the buying journey of a customer. The depth in which you’re able to drill down is dependent on the collection of information. Ideally, you’ll get the correct systems in place and benefit from the ability to truly understand the impact of specific marketing campaigns on your business.
Measuring the effectiveness of your marketing campaigns is an essential part of understanding which of your strategies and tactics are working well for your business and which ones are just wasting everyone's time (including yours). After all, as Sherlock Holmes author Sir Arthur Conan Doyle once wrote, "it is a capital mistake to theorize before one has data."