Are You Measuring Meaningful Metrics?
If your CEO is like most, they don’t want to get into the details of daily marketing operations, after all that’s what he/she hired you for. But when it comes time to discuss marketing budgets, your CEO needs to understand the value that marketing provides to the organization. For this reason it’s important that you are providing the right, meaningful metrics on a consistent basis.
An important component of our practice at Measured Results is helping organizations to get a grip on their marketing and drive positive, measurable return on their marketing investment. The following is our guidance on making sure you’re providing the right information to your CEO.
Measuring the Trivial
When the meaningful metrics don’t paint a pretty picture, there’s a natural tendency to focus on “partial victories.” For example, if total leads and projected revenue are down, but your social media accounts drove a fair amount of followers; it would be only natural to say, “Gee, look! Our Facebook likes are up and we have more Twitter followers. These metrics might look fantastic, but will they make a meaningful impact to the bottom line?
One of the cardinal rules of managing to metrics is that the primary emphasis should be placed on the Key Performance Indicators (KPIs) that are most meaning to your organization. While some of the KPIs vary by company and industry, there are a few that are generally important to all companies.
The most meaningful metrics or KPIs to track can be organizationally dependent, but there are a few KPIs that span across most industries:
- Return on Marketing Investment – Are your marketing efforts providing a return? You shouldn’t have to guess. By continually tracking your ROI, you should always know if your marketing is a help or hindrance to the bottom line.
- Sales revenue by marketing campaign – it’s important to know where your leads are coming from. It’s even more important to know how that translates to revenue. Funding future campaigns is much simpler if you can show how past campaigns provided a positive payback.
- Sales funnel value (from marketing) – it’s important to know the value of sales opportunities in your sales pipeline. Typically, this is the value of each potential deal multiplied by the likelihood of closing (as a percentage). The sales funnel value should be valued by lead source as well as in totality.
- Cost per lead – What is the cost of each lead your organization is working? Some lead sources are more expensive than other. You should know your cost per lead, both by source as well as an average.
- Closing rate – what percentage of your leads close? Are leads from one source more likely to close than others? Consistency is Critical
It’s very important that KPIs are tracked consistently over time. If there are short-term issues in a particular area of the business, other metrics can be tracked as well, but this shouldn’t be done at the expense of tracking the metrics that really matter.
One thing to note, nearly all of the KPIs require the input, involvement and feedback of sales. Closed loop sales reporting. Too often, we see that when these (and other) KPIs aren’t tracked it’s often due to a lack of feedback from sales regarding the disposition of leads sourced from marketing. Tracking leads, by campaign and source, is critical to understanding how your marketing is performing.
If you’re not sure which marketing metrics you should be reporting, or you’re struggling to get the information your systems lack the integration you to need to gain full, closed loop reporting, we should talk.
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