DO YOU KNOW THESE METRICS?
When done right, a company’s marketing effort can get confusing. It can leave you scratching your head and wondering what’s actually working. Are you spending too much or not enough? How do you forecast for the future? Are you getting your fair share of wins compared with your competitors?
As a busy CEO, what information should be considered critical to know? And what metrics should be reported to you?
To understand how all of these pieces fit together, we consulted marketing leadership company, Atlas Rose.
Brett Kozimor, Chief Marketing Officer for Atlas Rose, advises executives to take a deep breath. He explains, “First, understand the end goal. The most effective marketing professionals in the world have a dashboard where they can quickly understand the health of marketing systems. Thousands of data points are fed into systems which then compile and summarize performance in real-time.”
While that may sound complicated and difficult, Kozimor stresses that it’s actually pretty simple. “Most of the data generated by marketing departments already exists in a digital form. And you can access great platforms for free that will help you distill data into actionable metrics.”
You might look at social media engagement, click-through rates on Facebook ads, or the cost to acquire a new customer from Google Search. In the pre-internet days, advertising data was subjective–or, at best, hand calculated and prone to errors. Not so anymore. Today, we have all the data we need. We just need to get it to our fingertips quickly and understand what it means.
“The numbers are the truth. We simply need to organize and interpret them to make informed decisions.” – Brett Kozimor
To compile a mountain of marketing data, Atlas Rose partnered with software developers to perfect what they call the Atlas Rose Operating System (arOS). Their CEO clients who use it can instantly assess the health of their organizations. arOS is used as a company-wide tool combining sales, operations, fulfillment, marketing, and other departments. Because the whole team enters data and uses the same system, you can trust the information compiled is accurate and keeping your departments running at peak efficiency.
Need to know what metrics to track? Here are a few of our go-to’s at Atlas Rose:
WEBSITE LEADS/EMAIL SIGNUPS
Every organization defines a lead differently, but all companies should have a website that converts interest into action. That could be an instant chat, email, phone call, or form fill.
Tracking this metric indicates how the user experience and traffic generation are working together. A healthy contact list is the lifeblood of your business. Not everyone is ready to take action immediately, but if you nurture them to the sale, they will choose your brand over another.
Every company needs to know the lifetime value of a customer relationship. The methods to calculate this vary, but it can be as simple as plotting on an excel sheet or entering search parameters in a custom-made software tool. This metric is important because leadership needs to know how much to spend to acquire new customers. Once these numbers are understood, projections about the future and how much it costs becomes easier.
RETURN ON AD SPEND
All digital paid search campaigns through Facebook and Google should be set up to track conversions. From there we can determine if a sale was made. Ultimately, the return on ad spend number tells us how effective a specific campaign was. The CEO doesn’t need to know the details but does need to understand that for every dollar that was spent, it yielded X amount of business either in product sales or lead value generated.
It can be argued that customer sentiment is the most important metric of all. It determines how often a repeat purchase is made and how it relates to your reputation. In 2003, the Net Promoter Score was created and it has only grown in popularity. Customers are asked with just a single question how likely they are to recommend the company. The response can range from 1-10 with lower scores signifying detractors and higher numbers suggesting promoters of the brand.
A conversion can be something other than a sale. For e-commerce companies, it could be getting to a checkout page or learning the identity of a website visitor. An example of a conversation rate would be if your site had 19,000 website visitors and 3,500 took the desired action. Your conversion rate would be 18.4%.
COST PER CONVERSION
The costs to earn a conversion vary greatly between B2C and B2B focused companies. The cost per conversion metric wraps up the entire marketing spend and tells management how much money it takes to earn a new customer. Typically in e-commerce businesses that figure is much lower than in business services. In B2B, the customer engagement is longer and the average invoice is greater. Therefore, a higher cost per conversion can be justified.
AVERAGE ORDER VALUE
Average order value can be particularly useful for companies that take orders online. It’s calculated by taking the total sales divided by the number of orders. For example, if your total sales for the month were $48,500 and you had 235 customers, your AOV for the month would be $206.28. This metric can be useful when calculating pricing and upsell strategies.
Branden O’Neil, Atlas Rose president cautions not to be fooled by what he calls “Vanity metrics.” That is the number of impressions or page views on a “contact us” page. Keeping track of these as standalone metrics means very little and should not be included on the management dashboard. However, these same numbers could be an indicator of another problem or opportunity that exists. Marketing managers should be ready to explain how these numbers relate to the overall marketing effort.
Creating systems to compile and report data is simply a tool for the CEO and senior leadership to make decisions. While every organization wants to move fast, O’Neil and Kozimor agree that it takes time for marketing answers to reveal themselves. For that reason, they consult with clients to never make big decisions with less than 90 days worth of data. The only caveat is for enterprise-level clients that collect large amounts of data.
Moving at a calculated pace and being deliberate gives management confidence to move forward with data-driven decisions.