Dial in your marketing efforts with these top KPI’s

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half” - John Wanamaker

This quote is almost 100 years old, yet it still hits a major vein in today’s marketing world. Luckily there is hope. This article will introduce a selection of commonly used measures to dial in your marketing performance.

Key Performance Indicators, short KPI’s, are indexes measuring the effectiveness of your advertising business objectives. The amount of information available to us to analyse our marketing efforts, target groups and/or future trends is crushing. Although it may be tempting to go after every single piece of information available, you may want use your time more efficiently and only select relevant reports to detect inefficiencies and to optimize your marketing efforts over time. Talking about time: A lot of marketing efforts are not immediate and therefore harder to measure. If applicable, set generous timelines to evaluate your marketing objectives’ performances.

Marketing Return on Investment (MROI)

MROI= (Value gained through marketing effort - cost of marketing effort) / cost of marketing effort

As its name states, the Marketing Return on Investment (MROI) measures the value generated through your marketing efforts, minus their cost. The higher this value, the better the the overall return on investment (ROI).

Thus an easy formula, it can be pretty complex to measure and therefore posts a very elaborate index to use. Reasons are the level of detail when considering the costs as well as the definition of the incremental value generated directly by the specific marketing efforts. You will need to be able to define your base sales and associate all relevant cost and sales gains. Overall this is a great internal tool to measure the performance of your marketing team and to detect inefficiencies in your marketing mix.

Traffic to Lead

TTL = website visitors/ leads

This index measures the percentage of leads generated from visitors of your website. It provides helpful information on the effectiveness of your website as a tool to generate business. Average rates range from 2% up to 8% for the very successful ones. (Tip: For more accurate rates, consider the total number of unique visitors instead of total website visits. If you are looking to improve this ratio, maybe work on producing more compelling your content, call to actions check bounce rates, or overall structure of your website.

Cost per lead

CPL = Cost of marketing effort / number of leads

This ratio determines the cost required to land a qualified lead. It is a helpful indicator for budgeting decisions or to measure the cost-effectiveness of your marketing efforts for a given period or campaign. Depending on your industry, cost per lead benchmarks from $20 to $80 per lead. A higher cost per lead could imply a higher quality lead and therefore lower overall customer acquisition costs. Lower costs-per-lead often speaks for a successful campaign. Time to convert those leads.

Lead to Customer

LTC = (leads converted to sales/ total number of leads) * 100

The ‘lead to customer rate’ or ‘lead conversion rate’ figure provides helpful information on how many of your leads actually converted into sales. This is helpful to measure not only the effectiveness of your marketing efforts, but may as well provide feedback on how well your sales team converts leads into actual sales. Average benchmarks are as usual highly dependent on the industry you are working in, but should range within 2% - 10%. Ways to improve these rates could be focusing on clear Call-to-Actions or to streamline your customer journey.

Customer lifetime value

CLV = ((average annual transactions x average order value)*average gross margin)*average customer lifespan in years

This -simplified- metric is focusing on your existing customers to determine their overall net value during the entire relationship with your business. This is helpful to forecast and justify your retention marketing efforts by quantifying the customer experience versus the total generated profits. Furthermore will provide information on the ROI of you customer acquisition and targeting efficiency.

Organic Traffic

This metric is looking at the sources of your overall website visits. The organic traffic describes visits resulting from unpaid sources, meaning people either entering your web URL directly or they find your website using a search engine.

Organic traffic KPI in combination other metrics like MROI, or ‘click through rates’ are used to determine the efficiency of your inbound marketing efforts. Depending on your industry, benchmark ratios can range between 25% to over 50%. Content marketing and SEO are the key drivers to improve this metric.

Contact me with any feedback or questions you may have regarding your marketing performance. As always any feedback is appreciated.

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