If you want to make sure your company is successful, you need to have knowledge of marketing. One of the biggest challenges that marketers face is having enough patience and prudence to wait on results and determine which methods are fruitful versus those that are a mere waste of time and funds. Unfortunately, it can take weeks or even months for the full effect of your efforts to become apparent, so it is imperative to start tracking any available analytics that might provide insight into your current performance within a campaign.
The best marketers use key performance indicators (KPIs) to track their progress in specific areas, and then use this data to hone in on effective strategies and identify weaknesses that need to be addressed. Now that you know why you need them and what they're used for, here are the top seven marketing KPIs every entrepreneur should know about.
If you don't know about this metric as an entrepreneur, you're probably not very experienced. The conversion rate is the percentage of leads or site visitors who perform a desired action versus the percentage of leads/visitors who do not.
The “desired action” in question could be anything from buying a product, to signing up for a subscription, to opting into a newsletter, to clicking an ad. Obviously, you want your conversion rates to be as high as possible. In fact, that's the main goal in marketing, which is why it's at the top of this list.
You might not be tracking every aspect of revenue generation or comparing your data to your marketing efforts to find a correlation between your efforts and increases in revenue. But you should be. That's what tracking KPIs is all about – using analytics to identify what works.
If you're not analyzing your sales revenue in relation to marketing efforts on a daily and weekly basis, you're limiting your businesses. After all, the last thing you want to do is waste time on sales efforts that aren't yielding results.
Cost Per Lead
It's also important to calculate how much each lead and customer is costing you in terms of advertising budget. Are you spending more to acquire customers through inbound marketing than you are through outbound marketing? If you are, the sooner you know about it, the better.
Identifying the most cost-effective method of lead generation is just one of the advantages of keeping track of this crucial KPI. Because spending money to make money only works when you spend less than you make.
ROI for Inbound Marketing
Inbound marketing is the practice of bringing customers to your company or website passively, rather than aggressively going out and seeking new clients/customers. Inbound techniques might include search engine optimization, content development, banner advertisements, and other methods that increase your brand's visibility and presence.
The greatest businesses reap huge ROIs from inbound marketing, so this is a KPI that should never be ignored. Remember, sometimes playing hard to get actually works out.
Organic Search Traffic
Reiterating the importance of effective inbound marketing, organic search traffic is a KPI that shows how strong your company's ranking authority is within the search engine result pages (SERPs). Ultimately, most of your online marketing efforts should be put towards ranking higher in major search engines like Google for popular keywords and queries.
Developing and distributing great content related to your brand is by far the best way to increase the amount of traffic gained from organic search results.
Social Media Engagement
Businesses that are firmly rooted in social media have a higher chance of continuing and thriving, so it's important to keep an eye on the amount of traffic coming from social media as well as the percentage of those visitors who are converted into customers. Tracking KPIs related to social networking will ensure that you're at least aware of where you're at and what needs improvement in this pivotal department.
If you're slacking on your social media game, you might want to try increasing social media engagement and presence and monitoring your KPIs along the way.
Average Customer Value
Finally, while all of the above KPIs are useful in their own regard, they won't help you manage your budget if you don't know the average value of your customers. There are several ways to calculate the average customer value metric, either in the short-term or long-term.
Essentially, your average customer value is the average sales revenue generated by each customer minus the cost of lead acquisition, multiplied by the average number of sales per customer. Figure out this number fast so you know how successful you need to be to stay afloat.