Marketing is a significant component of any successful business plan, including those for small businesses, and you must know how to measure the effectiveness of the marketing campaigns in monetary terms. Unless you can measure the returns from marketing, you could be wasting your efforts and money and damaging your business prospects, explains Eric Dalius. The better you utilize money and time for marketing higher will be the returns from your marketing efforts that reflect the expansion of the customer base. In addition, the better you can optimize your marketing spending, the better the marketing efficiencies that can boost the returns in terms of increased revenue and customer reach.
To measure your marketing efforts, you must consider several metrics tied to your business goals. On knowing the performance level of your current marketing campaign, you can modify it or overhaul it thoroughly and then identify the factors that are giving the best value for money
Marketing campaign measurement metrics listed by Eric Dalius
Here are some of the metrics to measure in marketing campaigns. But choose only those that match your business goals. For example, if your focus is on increasing the subscriber base for your email newsletters, it does not make sense to measure the immediate return on investment.]
ROI (Return on Investment)
The basic technique of measuring your marketing efforts is to figure out the return you expect from the investment. All businesses use this yardstick to decide about investing in any area. The return on investment uses two factors – the monetary return and the time it takes to earn it. While 100% return on investment seems highly satisfying, how soon you can achieve it determines its worth. The quicker is the return higher is the gain over and above the visible numbers.
Cost per sales
Determining the money spent on each sale indicate the efficiency of the marketing strategy. When you have several marketing plans, divide the total cost of marketing that plan by the number of sales achieved to arrive at the cost incurred for each sale. By comparing the cost per sales of various marketing plans, you can decide where to focus more and which plans need tweaking to improve the figure.
Cost per lead
The method of measuring cost per lead is the same as determining cost per sales, with the only difference that you substitute the factor of sales with lead. The premise of the calculation and the decision-making process is the same as earlier because the purpose is to identify the areas that provide the best return on the investment.
The number of website visitors converting into customers or leads constitutes the conversion rate. The principle behind the measurement of this metric is the same as the others described above. Except here, you are comparing the number of visitors for a specific marketing campaign and not focusing on the cost. For example, out of 1000 visitors generated by a marketing campaign, if 5 people purchase them, the conversion rate is 0.05%.
In addition, you can measure other metrics related to incremental sales, customer lifetime value, brand awareness, and customer engagement, to name a few.