In the world of vanity metrics, what drives growth?
With so many digital tools available, it’s challenging to determine what metrics actually drive business results. Is it Time on Page, Social Followers, Newsletter Subscribers, Bounce Rates? Probably not. While these vanity metrics can occupy a lot of a marketing team’s time, they often over shadow the metrics that lead to tangible results. They shouldn’t be ignored, but they can’t be your main focus. When 100,000 Twitter followers provide only 10 customers, does it matter that the business has a strong social presence?
At the same time, only focusing on direct dollar revenue ROI is too narrow of a scope. It prevents you from seeing what advertising strategies are benefiting your business in the long term. Brand awareness, loyalty, trust are all important parts of any successful marketing strategy, meaning we can’t abandon all marketing metrics for direct dollars tunnel vision.
What’s the balance? As usual, the solution lies somewhere in the middle and revolves around your business and your goals. You need to determine what metrics are leading indicators for your marketing success. These metrics are going to vary by business type– an ecommerce company is going to focus more on website visits and time on page than a grocery store– but here are a few metrics that we all need to keep an eye on.
A conversion rate is the percentage of users who take a desired action, and move from one stage of the lifecycle flow to another. This multiple stage journey takes a contact from a lead to, eventually, a customer. Ideally, you want a contact to move quickly from one stage to another, but contacts often get stuck. This happens when they agree with your brand and message, but aren’t convinced that your product is the right one for them. You need to be able to prove your product’s value, so contacts move toward buying. To see how many customers are making it through each stage, divide the number of contacts from one stage by the number of contacts from the previous stage to find your conversion rate.
Reach and Website Visits
Before we can get into qualified leads and ROI, your message needs to get out to your customers. Reach gives you the total number of people being exposed to your media during a specific period of time. Measuring website visits helps you see how many people were exposed to your media and then made it to your website. Reach and visit goals vary drastically by industry but the key is to set a baseline goal. Need 100 new clients? Determine the reach needed to drive enough traffic to obtain one client, then multiply it. That’s the number you’ll need to hit your new client goals.
Determine what an ideal lead looks like for your company. Then evaluate the leads you’re receiving. The more they fit the qualified lead status, the less time you have to spend in the sales process deciding if they are a good fit for your services. That leaves your team with more time to work with profitable clients. This method will help you shorten the sales cycle and get you that high ROI number you’ve been dreaming of.
Return on Marketing Investment (ROMI)
For a well-rounded look at how your marketing is performing, track ROI alongside the metrics above. We recommend a ROMI calculation over the standard ROI because ROI doesn’t incorporate strategies like radio, sponsorships, and events. Excluding these from your ROI calculation is not only unwise, it’s inaccurate. ROMI allows you to factor in more than just direct revenue dollars generated by evaluating your marketing investment as an overall part of the company’s strategy.
The below ROMI calculation should be simple enough, just make sure to take every detail into account. Your Net Profit includes everything from sales (after discounts and returns) to operating expenses. Whereas Marketing Expenses include any discounts you offered on your products and services along with ads, graphics, etc.
If you take away anything from this article, let it be this—don’t get caught up in the details, look at the big picture. Stick to metrics like those listed above to help you see how your marketing is doing and where it can improve. If you have extra time, take into account the vanity metrics, but think of them in the context of the other more actionable metrics. Keeping the big picture perspective will prevent you from going down the metric rabbit hole, and, ultimately, help you focus on the metrics that matter to your business.