Today, there’s no excuse for flying blind — everything your marketing team does should be intelligent. Every decision you make should be informed by data and the results of every action you take should be bookmarked for future reference. After all, what’s the value of having access to so much data if we’re not going to use that insight to improve for the future?
But in a world where so much data is available, it can be difficult to identify which metrics are really important. Perhaps you’re looking at the wrong metrics, or, far more likely, too many metrics. While using data to your advantage is now imperative, there is such a thing as too much data. So when it comes to measuring marketing effectiveness, what metrics really matter?
5 Metrics to Measure Marketing Effectiveness
- Marketing contribution to revenue: This is the big one — what percentage of overall company revenue can be traced back to your marketing team’s efforts? Obviously, the higher the number here, the more effective your initiatives. That said, there’s a lot that goes into telling this story and it doesn’t necessarily tell the whole story, as some areas of effectiveness, like brand awareness and website activity, may take longer to translate into revenue or may benefit the company in non-monetary ways.
- Pipeline growth and acceleration: How do your marketing activities help grow and accelerate the pipeline? How does this growth and acceleration change from one month or quarter to the next? Your team’s ability to regularly fill the pipeline with new leads and to keep those leads moving down the funnel is a critical component of overall effectiveness. Additionally, it’s important to pay attention to both growth and acceleration, as having one without the other can be a warning sign that something isn’t working as planned and/or that you need to re-focus your efforts to keep the pipeline both full and flowing.
- Conversion rates: Conversion rates can tell a number of different stories depending on where you’re looking. For example, you might measure conversion rates based on channel to determine the effectiveness of efforts on any one channel or you might measure conversion rates based on stage in the buyer’s journey to determine the effectiveness of particular campaigns to move leads down the funnel. In cases where the end goal is to spur further action (which should be the case for most marketing activities), both of these are critical in determining how well you’ve done.
- Cost per lead, cost per opportunity: Your marketing team might surface a lot of quality leads and do a good job of converting those leads, but if the cost of doing so is extremely high, how effective are those efforts really? Yes, you’re achieving the desired results, but are you doing so in the most effective way possible? Are those leads worth the price tag? (Note that the answer could very well be yes here, but it is a question you need to ask.) On the flip side, you might find that investing more upfront yields higher quality (re: more valuable) lead and opportunities and, therefore, a better ROI. Your goal should be to find the sweet spot that balances cost with quality and results.
- Brand awareness: Understanding brand awareness is especially important in industries with longer sales cycles and even just in general, as buyers today tend to do far more research on their own before ever reaching out to a company for more information. It’s important to note that often times the results of brand awareness are more long term, so don’t expect an immediate return here. One way to frame the effectiveness of your brand awareness is to consider it in conjunction with your pipeline. For example, if you find that your have strong brand awareness but your pipeline is lacking, you should ask what you else you can do to use that awareness to fuel more conversions.
Properly Understanding Metrics is All About Perspective
Once you capture these metrics, you also need to determine what benchmarks you will use to define success and improvements in these areas. For example, you might use these metrics to determine effectiveness in comparison to your own results from previous quarters, years, etc. or you might use them to determine effectiveness in comparison to industry benchmarks.
In general, when it comes to determining marketing effectiveness, your end goal should be to paint a comprehensive picture of how your marketing efforts contribute to the company’s bottom line. This comprehensive picture not only includes your marketing team’s ability to bring in new leads and help convert those leads, but also how those results compare to the effort put into those activities in terms of factors like cost and awareness.
As you do so, remember that no one metric alone will tell the entire story, and in fact the story that some metrics tell might even differ when you look at them in light of other factors (e.g. brand awareness in light of pipeline growth and cost per lead or cost per opportunity in terms of conversion rates). As a result, properly measuring marketing effectiveness is also about taking on the right perspective.
How ever it is that you define and frame effectiveness, using the metrics listed above will put you in a good position to get the complete picture you need to fully understand what’s working and what’s not.