As you gear up for the year ahead, take some time to get strategic about your marketing goals. This will ensure your marketing dollars are being used to their best potential to help you reach your overall business goals. When it comes to marketing, proof of success can feel elusive. However, when you set specific goals, employ tactics working directly towards those goals, and determine key performance indicators (KPIs), you will more easily be able to target which tactics are driving towards success and optimize your messaging, time, and budget accordingly.
When you set your business goals for the year, align your marketing goals to them. For example, if your business goal is to increase revenue, your marketing goal might be to increase website traffic or generate leads. If your business goal is to increase market share, your marketing goal might be to increase awareness.
Next, plan tactics that help you achieve those goals. Stay specific to the goals you outlined in order to keep your marketing dollars focused. Then it’s time to set KPIs. KPIs are the data you will be measuring to track the success of each tactic. Use historical data or industry benchmarks to determine what success looks like for each KPI, and use reporting to track how each tactic is performing.
Here are some common KPIs that can help you determine which marketing tactics are working best toward your business objectives:
Conversion rate measures the percentage of visitors who take a certain action (ex. make a purchase or fill out a form). This is a great metric to determine the effectiveness of your website or campaign in converting visitors to customers.
Website traffic measures the total number of website visitors. It can indicate the reach of your online presence and the effectiveness of your marketing channels. You can further define this KPI by measuring organic traffic to determine the success of your SEO efforts or referral traffic through social media or a specific ad campaign.
Measuring likes, shares, comments, and tags on social media platforms can reflect audience engagement with your brand and the overall effectiveness of your social media marketing.
CAC measures the marketing spend it takes to turn a lead into a customer. It can help you understand the effectiveness of your marketing spend and the overall cost effectiveness of acquiring a new customer through marketing, so you can make smart budgeting decisions. To calculate CAC, you’ll take the cost of sales and marketing divided by the number of new customers.
Brand awareness can be more difficult to measure, but surveys, social media searches, and brand mentions are some metrics to consider. Awareness assesses the level of brand recognition among the target audience.
ROI is the ratio of revenue generated to the cost of the marketing campaign. ROI can provide insight into the profitability of your marketing efforts. To calculate ROI, subtract marketing expenses from sales growth and divide that by the marketing cost. Keep in mind, sales may not be directly related to your marketing. Changes in the product, overall market, or seasonality could be responsible.
CLV is the total profit your business predicts to make with each customer. This tactic can help your business understand the long-term value of a single customer and help you set baselines for other KPIs. For example, if your CAC is higher than your LTV, you’re likely spending too much on acquiring new customers.
Email marketing metrics like open rate, click rate, and conversion rate measure the effectiveness of your email campaigns in engaging and converting your audience.
NPS measures customer satisfaction and loyalty based on the likelihood of customers recommending your business. Customer satisfaction is critical for long-term success. Your net promoter score is your percentage of promoters minus your percentage of detractors. You can measure this by asking this single question after someone uses your product or service: How likely are you to recommend our service to friends and colleagues?
By setting and measuring specific KPIs, you’ll know more about your audience, be smart about your marketing spend, and feel confident in your marketing decisions year-after-year.