Founder & CEO of Advantages, a branding and marketing agency that connects profit to purpose through performance-focused marketing.
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Understanding the return on marketing investments is crucial to delivering effective marketing programs that achieve your company’s needs and goals. According to a 2019 survey from Content Marketing Institute, the most successful companies are those that take the time to measure their marketing ROI. So what are the marketing metrics that matter, and why do they matter?
Brand-Oriented Versus Revenue-Oriented Metrics
As a general rule, there are two broad categories of metrics that matter: brand metrics and revenue metrics. Understanding the use of both is critical to achieving a return on your marketing investment.
Brand-oriented metrics measure success in terms of awareness, relevance and differentiation. Examples include social engagement, website traffic, branded search volume and impressions. These metrics help analyze the topmost part of the marketing funnel and broadly indicate how many people are aware of your business and what portion of them are likely buyers of your product or service.
When it comes to brand awareness, it is crucial to target the right people and make them aware of your business at the right time. Measuring brand awareness demonstrates that the right people (potential customers) are responding to the delivered messages. Specifically, click-through rate, which is measured by dividing the number of people who click on your ads by the number of times your ads are shown, is a great indicator of this, as well as the average time a customer spends on your website.
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Revenue-oriented marketing metrics measure how much of the target audience is converting into paying customers. They are also known as conversion metrics because this data may be just one piece of the sales/revenue-generating process — particularly if there is a longer sales process that marketing-derived leads go through. These metrics can be broken down further into sales metrics, which can include customer lifetime value, cost of sales and customer acquisition costs. There are also finance metrics, which track the overall financial status of your company, such as your profit margin, revenue per employee and return on ad spend. These metrics provide insight into the bottom of the marketing funnel — those clients who are buying, renewing or leaving.
Because both brand-oriented and revenue-oriented metrics fluctuate, they should be measured often — on a weekly or even daily basis — and reviewed by management.
Beware of Vanity Metrics
All brand-oriented and revenue-oriented metrics are important, but it is necessary to differentiate between vanity metrics and actionable metrics. Vanity metrics look amazing on paper but do not deliver specific tangible business results. Brand awareness metrics such as the number of followers, views of a particular video or likes do not on their own drive actionable insights — therefore, they can be seen as vanity metrics, and focusing solely on them will not deliver results.
Instead, identify and focus on the actionable metrics that genuinely matter to the success of your business. These data provide insight into the tangible steps to take in order to drive profit. Among the most valuable data points are conversion rates and A/B testing results. Conversion rates indicate that the established buyer’s journey is yielding customers, and a lower yield means it is time to tweak the journey. A/B test results highlight success in messaging and calls to action. They ask: Is the audience doing what you want when you ask them to do it?
For the typical B2B company, vanity metrics are not helpful for actionable decision-making, but they are valuable as a gauge of brand awareness. Knowing follower data and engagement statistics indicate where you sit in the brand awareness value chain, which is measured in your customers’ perception of your brand’s value. Measuring metrics like your audience growth rate — which tracks how quickly you are gaining followers — and your post reach — which tracks how many people have viewed your post since it was published — are key methods of determining brand awareness. In combination with conversion metrics, vanity data is valuable but alone they do not offer sufficient insight into what is specifically working or not working in the business model.
Demonstrate Your ROI: How to Deliver to Executives
Senior executives expect information from marketing that demonstrates exactly how the investments contribute to the objectives of the organization. They want to know where the brand fits in the market and how it is perceived by the target audience — brand equity. And they need to know how many and how quickly prospects turn into paying customers: revenue.
The KPIs reported to senior management need to align with the business strategy and financial goals of the company. Start with the end goal in mind. For example, if the company’s goal is a 15% increase in revenue, then all your marketing metrics need to show the contribution marketing makes to reach that goal. Therefore, metrics such as marketing lead conversion rates and conversion velocity along with revenue per lead will highlight to executives the path that the firm’s marketing is on.
Marketing metrics are designed to help businesses grow in alignment with a company’s vision. When you identify the specific metrics that matter to your company and its goals, and then overlay a strategic approach to analyzing those metrics, your entire C-suite will appreciate it when you successfully deliver a tailored marketing program that achieves objectives that ultimately drive profit.
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Author: Fran Biderman-Gross, Forbes Councils Member
