Marketing used to be a "shotgun affair." You'd run your print or radio advertising in as many outlets as your budget allowed and try to get your message out. If you did your homework, hopefully you chose to run your ads in publications, or on a radio stations that your key demographic market read or listened to.
There were few concrete ways to track the effectiveness of your efforts. If sales increased, you'd assume it was due to your efforts. Sure you could see that 500,000 people per day read the paper you'd used, but how many of them responded or engaged with your ad copy? Targeting your message was difficult, and determining your “real” ROI was challenging.
Today, as marketing's focus has migrated online, the emphasis is on creating content that educates, entertains and informs potential customers by sharing valuable information. The playing field has changed. Inbound marketing not only allows you to better target and deliver your message in a more controlled way, data allows you to see results in almost real time.
Because the internet provides information that allows you to see exactly who visited your site, how long they stayed, what content they engaged with, what conversion channel they used and where they came from, you can constantly revise information to more precisely target consumers and better address their needs and pain points. Through analytics, you can better allocate budgets, see exactly what's working, and more importantly, what isn't, and then adjust.
Let's look at some key performance indicators (KPIs) that you now have access to and how they can help you to grow your business!
What are KPIs?
Key performance indicators are specific, numerical data points that you can track to precisely measure your progress toward a specific goal. Today, as inbound matures, more business owners are completely aware of the major KPIs like; sales revenue, leads and cost per acquisition.
While these are all valid numbers to watch, there are many other KPIs you could and should be tracking in order to improve the success of your marketing efforts. Let's look at a few KPIs you can track that will help you to make informed decisions in terms of your marketing strategy and budget.
Tracking Your Efforts
Here are a few of the most important numbers to watch when developing and tracking your inbound marketing plan.
How much revenue has your inbound efforts generated? Tracking your revenue is an important metric to determine the success of your efforts. Revenue is of course the bottom line to any marketing program. By understanding what isn't working, you can shift your focus and dollars to efforts that produce. First you need to define your inbound and outbound marketing efforts. Sales effort from inbound marketing can be determined with this formula:
(Total sales per year) – (total revenue generated from customers aquired through inbound marketing)
Cost Per Lead
Calculating your customer acquisition costs for inbound marketing is an important metric. Calculating customer acquisition costs means integrating your marketing automation and CRM systems as well as all costs association with ERP integration. When calculating costs for inbound include:
- Manpower costs – both creative and technical
- Technology and software
- General overhead
By understanding your actual costs, you can directly account for new sales as well as develop effective budgets for your inbound campaigns. Another benefit of inbound is that you can break down costs by campaign type to gauge how successful each element of your strategy is actually working.
Customer Value (by campaign and lifetime value)
Inbound marketing gives you the metrics to calculate customer value for individual products or services as well as lifetime value for each customer. This can help you to target your marketing to stay in contact with leads, reduce churn and expand your customer lifetime value. By developing lead nurturing campaigns you can increase the customer lifecycle to reach out to your existing customers. Customer value can be determined with this formula:
(Average sale per customer) x (average number of annual purchases per customer) x (average retention time in months or years per typical customer)
Provide your sales team the opportunity to sell new products and services. It's always more cost effective to sell additional products and services to existing customers than bringing new ones on board!
Knowing your ROI is essential to tracking performance. It allows you to properly plan budgets and strategies moving forward. It's important to fund what is working and either adjust what isn't or reallocate funds to more effective efforts. ROI is:
(sales growth – marketing investment) / marketing investment = ROI
Traffic to Lead Ratios
Understanding your traffic and knowing where it's coming from, whether it's search, organic, direct or social media driven is extremely important. It traffic is going up, but your leads are going down, something is wrong. Track this number to measure engagement and to determine if it's time to change up your content, design, conversion form or CTA.
Landing Page Conversion Rates
A landing page that doesn't convert is useless, no matter how much traffic it gets or how great the design. If your landing pages are getting traffic but not converting, reassess. Change elements like CTA color, edit the copy down, shorten your form, add social proof, until conversions improve.
These are just a few of the key metrics to track. Also watch organic traffic numbers, social media engagement, and especially mobile traffic, leads and conversions.
Inbound marketing gives you unprecedented opportunities to refine your message, strategy and approach. The numbers don't lie! By being aware of who is visiting your site, where they come from, what they are engaging with and for how long, and all of their actions throughout their engagement you can effectively grow your business. Create informative content that addresses your target market's pain points and needs and offers solutions. These metrics are the key to building a lead generating machine!