Measuring Marketing Effectiveness: Setting Goals and Tracking KPIs
Marketing teams strive to maximize their impact and demonstrate the value of their efforts. But how exactly should you measure marketing effectiveness?
Defining clear objectives, setting measurable goals, and tracking key performance indicators (KPIs) provides the insights you need to understand what’s working and what’s not. This enables data-driven optimization to get the most out of your marketing.
In this comprehensive guide, we'll explore how to:
- Set objectives to focus your efforts
- Develop SMART marketing goals that align to objectives
- Identify and track KPIs that map to your goals
- Continuously optimize based on your findings
Let's dive in.
How To Measure Marketing Effectiveness
Marketing effectiveness is measured by the short-term and long-term revenue generated by a campaign and by how well the company’s costs of customer acquisition are lowered during that campaign.
Set Clear Objectives to Focus Your Marketing Efforts
It all starts with defining your purpose. Marketing objectives state what you want to accomplish. Setting objectives provides direction and gives your efforts focus.
Common marketing objectives include:
- Increase brand awareness
- Generate leads
- Drive sales
- Improve customer retention
To set effective objectives:
- Align to overall business goals
- Prioritize based on resources and capabilities
- Be specific about the target audience
- Set a timeframe for completion
For example, an objective could be:
“Increase brand awareness among small business owners in the financial services industry by 15% within the next 6 months.”
With a focused objective like this, you can then set goals and KPIs that directly map back to achieving it.
Measuring marketing effectiveness: setting goals and tracking KPIs
With the amount of data and analytics available to your marketing team, there are literally hundreds of metrics you could be tracking: likes on social media, referral traffic, click-through rates, and bounce rates.
All of them have the potential to tell you some critical information that will help guide your marketing strategy, but how do you decide which ones are actually relevant to you?
When Williamson, a manufacturer of infrared pyrometers for industrial applications, worked with us to create a new website, their primary goal was to improve their customers’ user journey and increase their brand awareness.
Measuring the marketing effectiveness for their new site solely through metrics like unique traffic and leads generated would not properly indicate whether they were achieving those goals. Instead, they focused on KPIs such as customer churn rate and lifetime value per customer to help understand if they were moving in the right direction.
Develop SMART Marketing Goals
While objectives state the “what,” goals define the “how” in specific, measurable terms.
Follow the SMART framework for setting goals:
- Specific: Clearly defines what will be accomplished
- Measurable: Includes quantifiable metrics to track progress
- Achievable: Within resources and capabilities
- Relevant: Aligns with stated objectives
- Time-bound: Includes a deadline
Building on our example objective, SMART goals could include
- Generate 5,000 leads from business owners in the cleantech industry in the next 6 months
- Increase website traffic from small business keywords by 30% in 6 months
- Gain 15,000 new social media followers from the target audience within 6 months
Identify KPIs to Gauge Marketing Performance
Key performance indicators (KPIs) are the specific metrics used to measure progress towards your goals.
Common marketing KPIs include:
- Website traffic
- Lead generation
- Sales revenue
- Conversion rates
- Social media reach/engagement
- Email clickthrough rates
- Directly map to stated goals
- Provide quantitative data to inform decisions
- Are easily measurable through analytics
- Focus on outcomes over outputs
- Leads generated: Total number of leads captured from target audience
- Website traffic: Number of site visits from small business keywords
- Social followers: Follower count increase on LinkedIn and Twitter
The right KPIs give clear insight into progress made and areas needing improvement.
Track and Report on KPIs
Once you’ve identified relevant KPIs, it’s essential to track them on an ongoing basis.
Marketing analytics tools like Google Analytics, SEMrush, and HubSpot provide data to monitor your KPIs. Pull reports frequently to assess performance.
Share reports and insights with stakeholders. This keeps everyone aligned on progress made towards objectives and goals. It also prompts discussion on optimization opportunities.
At minimum, aim to report on KPIs on a monthly basis. But in today's data-driven marketing environment, real-time dashboards give instant visibility into performance.
Marketing engagement KPIs
If your goal is to improve how visitors and customers engage with you online, increasing the amount of traffic to your website won’t necessarily help you. Instead, you want people to actually engage with your content: click on your links, spend time on your website, or even share your social posts!
According to 2022 Google Adwords, the average click-through rate (CTR) for the industrial services industry is only 5.6%. That means for every 1000 people that see your ad, only 56 are actually engaging with it!
Rather than focusing on getting more people to see your ad, your time is better served improving this conversion rate. Also, make sure to always track your progress, for any digital marketing campaign you are running.
Here are a few KPIs to focus on to measure marketing effectiveness regarding engagement:
Click-through Rate
CTR is a good KPI for measuring the engagement of anything from landing pages to emails to ads. It measures the percent of people who click on a link they saw.
Bounce Rate
The percent of website visitors who leave your site after only visiting one page.
Time on Site and Pages Per Visit
Measuring engagement with your website can be determined by how long and deeply a visitor explores your site.
Social Media Likes and Replies
On social media, number of followers is far less important than the number of people who are engaging with your content through likes, replies, and shares.
Unique visitors
This metric refers to the exact number of your website’s visitors during a specific timeframe. Even though Google places more emphasis on tracking page views, knowing the precise number of visitors on your site is nonetheless valuable.
Page Scroll (Page Depth)
This KPI measures how your audience interacts with your pages, or more precisely how far they scroll down before they leave the page in question.
Page scroll is an excellent indicator of the readability of your blog (and other pages on your website), and it can also provide insight about the overall quality of content.
Lead generation KPIs
Another common marketing goal is to improve the number and quality of leads. It is typically the area where your marketing team feels the most pressure from sales and executives. Determining the success of lead generation efforts requires tracking several KPIs, including:
Cost Per Lead
The total lead generation spend divided by the number of leads generated gives you an idea of the average cost per lead. Inbound marketing can help lower this figure as you build a more sustainable marketing funnel.
Conversion Rate
For lead generation, conversion rate refers to the percent of website visitors that eventually become leads. This helps measure the effectiveness of your marketing funnel and determine where in the funnel you are losing the most visitors.
Lead Quality
Measuring lead quality will require working with your sales team to determine what constitutes a qualified lead and using lead scoring to automatically rate leads. This should be the most important lead generation KPI as a high amount of low-quality leads will never beat a small amount of leads that are a better fit for your business.
Main Lead Channels
Your prospects will be using various methods to find goods and services, and in today’s market it’s extremely difficult to generate new leads without having a multitude of channels. The main channels for lead generation include appearing on organic search results, referral, social media and paid channels.
Sales effectiveness KPIs
Once leads are handed off, the primary goal of sales should be to improve how they convert leads into customers. This should be a concern of both sales and marketing as both departments can contribute to improving these KPIs:
Lead to Customer Ratio
The percent of leads that convert into customers. This is the most basic way to measure the effectiveness of the sales department.
Average Sales Cycle
Long sales cycles can drain sales resources and negatively affect the company’s cash flow. For manufacturing companies with sales periods of months or even a year, shortening that period by even a month can significantly impact total sales.
Monthly Sales Growth
Tracking monthly sales growth allows businesses to quickly react to issues, but also to respond to opportunities and positive trends.
Also, by establishing realistic sales targets you’ll be able to motivate your sales department and provide alignment of their efforts with the expectations of your company.
Average Profit Margin
Among the most important sales KPIs is the average profit margin, which calculates how much of the sales revenue results in profits.
It’s typically analyzed for specific products, sales people or by a territory, and is calculated by subtracting the production costs from the revenue of sales.
Customer success KPIs
While new leads and sales are valuable, your highest value is in keeping your current customers and increasing their value. Customer success KPIs include:
Customer Retention Rate
This is the percent of customers you keep compared to the number you had at the start of the period, not counting new customers.
Lifetime Customer Value
The average dollar amount each customer is worth to your business. Increasing this number through additional customer support, account managers, or customer resources can have a much more significant effect on your bottom line than making new sales.
Customer Churn Rate
Customer churn rate is a valuable performance indicator as it shows the percentage of customers who have opted out of your product or service.
These include canceled subscriptions, closed accounts and losing recurring contracts, and determining the churn rate is essential for a successful customer strategy.
Average Revenue Per User
Average Revenue Per User (typically abbreviated as ARPU) is an important metric showing the average revenue per a single user or customer over a specific period of time.
This KPI gives businesses precious insight about financial forecasting, customer understanding and the company’s profit generation capabilities.
Regularly Optimize Efforts to Improve Your Marketing Impact
The most important part of measuring marketing effectiveness is taking action on the insights gained.
Analyze KPI reports to find what’s exceeding expectations and what’s underperforming. Then you can shift focus and resources to fine-tune strategies and tactics accordingly.
Common optimization actions include:
- Improving underperforming landing pages or email campaigns
- Increasing investment in high ROI channels
- Targeting more relevant keywords and audiences
- Creating new content around high-interest topics
- Testing messaging to identify what resonates best
Ongoing optimization is crucial for improving marketing impact over time. Measure, analyze, and test to keep refining your approach.
Pay Attention to the Right Marketing Metrics: Key Takeaways
When you’re paying attention the right metrics, you can understand if your efforts are driving results – and if they’re not, you’ll be armed with the knowledge necessary to make changes.
There you have it—a comprehensive guide to assessing your marketing efforts.
Here are the key takeaways:
- Set objectives to provide focus and direction
- Develop SMART goals that align to objectives
- Identify quantifiable KPIs that map to goals
- Track KPIs frequently and share reports
- Continuously optimize based on insights gained
Defining marketing objectives, setting measurable goals, and monitoring KPIs provides the data you need to understand performance. More importantly, it empowers you to actively improve your marketing strategy over time.
Focus on the metrics that matter most. Then use the insights gleaned to make data-driven decisions that enhance marketing effectiveness. This is the formula for maximizing your marketing impact and clearly demonstrating ROI.
Over to you now! Follow these best practices to measure what matters and optimize your marketing efforts. Feel free to reach out to one of our marketing experts - if you ever need any assistance with your strategy.
