Three Metrics to Evaluate Digital Marketing Effectiveness >
Recently I had a conversation with a VP of Sales at a software company and he said this to me, “You marketing guys are all alike. I don’t want to talk about vanity metrics. We want to generate more leads to drive business.” The funny thing was I hadn’t mentioned any metrics at this point; I had merely stated that we needed to look at data and understand the story it was telling us.
Digital marketing was important to the VP of Sales, but his unfortunate experience was that many so-called marketing experts were only talking about metrics we would consider to be leading indicators instead of focusing on the metrics that are aligned to business growth. At MediaFuel, we practice Prospect2Promoter™ Growth Strategy, and the first step in the process is to ensure our clients’ marketing strategy is aligned to their business strategy.
It’s not a new concept. Nearly six years ago, an article in the Harvard Business Review stated, “the leaders of high-performing companies connect marketing to the business strategy and to the rest of the organization; inspire their organizations by engaging all levels with the brand purpose; focus their people on a few key priorities; organize agile, cross-functional teams; and build the internal capabilities needed for success.”
Through the years, we’ve more commonly heard comments like this from prospective clients, “We don’t really know whether our marketing is working. We think it is, but we’re just not sure.” Another is, “Our former agency burned us. They would tell us how great we were doing. Our website traffic was growing, we were getting clicks on our Facebook ads, but we couldn’t correlate their data to our actual sales.”
Great digital marketing agencies—and there are many—know the difference between leading indicators like clicks-throughs, sessions, unique pageviews, etc., and lagging indicators such as marketing qualified leads and sales qualified leads. They also know that both are useful, but the lagging indicators relate more directly to quarterly business performance. Whether you’re an executive at a SaaS company, a manufacturer with a dealer/distributor network or other Small Business Owner (SBO), there are three key metrics you can use to know whether your marketing is working.
- Closed Won Conversion Rates. The Closed Won conversion rate tells you how many leads turned into sales. It’s that simple. It will provide insight into the best performing leads from lead source to conversion and also help you identify which leads convert most effectively to opportunities.
- Lead Performance Through Time. A second key metric is the performance of leads over time. Marketers can spend significant time mapping the customer journey. That journey doesn’t mean a whole lot if it’s not tied to lead performance. When you look at lead performance through time, you get an indication of how many month-one leads will turn into sales that month and how they convert as they are nurtured. How leads perform through time provides a great deal of insight into what the customer journey looks like and how you can improve the prospective customer’s experience. It can also help you understand which initiatives are a waste of resources and which are working hard to help you win more business.
- Lead Attribution. One model of lead attribution involves determining the first point of contact that the prospective customer has with your business. Often referred to as a contact’s lead source, this metric helps you understand how the investments that you’re making are performing relative to one another. Among other things, it can show you that you need to put more money into organic search, increase pay-per-click spending or stop wasting money with a particular initiative that is not yielding fruit.
These three metrics are incredibly helpful to inform you whether digital marketing initiatives are contributing to the growth of your business. They are not the only metrics you need to be watching, but if you get them in place, everything else starts to line up nicely, and it gets easier to justify and understand how marketing is impacting the business.
Keep in mind there is no Silver Bullet, no Magic Eight Ball, just continuous improvement. Validate what you’re learning, and always be testing. These principles work not only in software development but also in branding and marketing.
POST WRITTEN BY
Chris is the Managing Partner at MediaFuel. MediaFuel is a digital marketing agency located in the Indianapolis area that helps small business owners and executives clarify brand messaging and generate demand for their business.