In a survey of global marketing leaders Deliotte found that CMOs rely on three marketing metrics above all others to measure success: ROI, engagement rate and conversion rate. The problem is, not everyone agrees these metrics provide robust and credible insights. It leaves us asking, how can we prove the efficiency of these metrics to convince naysayers otherwise?
Here, we’ll go through each metrics and discuss what you can do to validate them in the eyes of your critics.
1) ROI: four measures to capture revenue
There are four main measures you can use to capture and analyse sales and revenue. Each is designed to measure different goals and KPIs. The one you choose will depend on your strategy.
2) Engagement rates
On its surface, engagement is not about ROI. Its purpose is to understand whether customers are reading, clicking, liking and sharing your content. How frequently are visitors returning to your website and social channels? Are they asking questions or commentating on your posts? Are they connecting with other community members? There's a lot to track. Thankfully, there are advanced tools that can bear the brunt of this work for you.
Underneath, engagement is more than measuring traffic and conversations. High engagement correlates to positive customer experiences, which in turn drives greater brand loyalty, sales and profits.
An important engagement measure is email engagement as this is a key marketing tool for driving traffic to your website. In the US, ROI for email is at 4,300 per cent, however, it is important to realise marketers only look at an email's open and click-through rate—not the time spent reading and engaging with the content. Take into consideration that of all the emails that are opened, over half are open for less than two seconds, and it's easy to see how results can be skewed.
This is why it's important to track your email engagement data, and it is something that advanced CMS tools can help with. There are limitations to this approach, however with enough analysis and testing, it can still provide a deeper understanding of how your audience engages with your email marketing and how to improve your content to drive engagement further.
3) Conversion rates
Conversions can be actions such as filling out a lead form on one of your landing pages, completing a checkout on an e-commerce site or a pricing request on your website.
Measuring the conversion rates of your audience as they progress down the funnel from marketing leads to sales-ready leads is a critical part of determining ROI. Moreover, it also helps measure the effectiveness of your marketing and sales teams—and their campaigns.
It's also worth monitoring conversions across all your different channels and comparing these to evaluate which media is the most effective. Measuring your social media, Google Ads and email marketing conversions next to those generated from direct and organic traffic to your site, for example, will help determine where to focus your efforts.
Depending on the setup of your site, you can measure conversions directly on your site. Alternatively, you can set up a goal in Google Analytics to track your progress. If you're suffering from low conversion, this can be the result of a bad user experience on your site due to poor design, poor customer offerings, or other content that does not engage your visitors.
Consider giving your website a once-over and calling in an expert hand if needed—it will be worth the investment.
Beware of the tracking trap
While the growth in marketing automation and tracking means that marketers are able to better track the impact of their marketing tactics, there is a downside to consider.
Beware that what you measure doesn’t always provide insight into the incremental revenue and impact of profit accounting for multiple customer touchpoints. What tends to happen is that the media channels that drive the sale (for example offline media) don’t get enough credit. This means their ROI becomes deflated and subsequently the final customer touchpoint (as an example, a pay-per-click ad) gets too much credit, which then inflates its ROI.
Also, measures today tend to put too much emphasis on short-term tactics and not strategies that measure and support important improvements (such as a website revamp or customer service training) that help yield sales in the long run.
Take for example, the fact that many of us focus on the ROI of pay-per-click. But consider that in real fact, what we really want to understand is the effectiveness of an integrated marketing campaign, and, the impact this has on your brand.
The best way to achieve this is to measure broader insights such as brand monitoring, how offline and mass marketing efforts effect online and paid marketing, and how these elements as a whole impact the consumer’s purchase decision.
The need for measurement won’t go away
The onus on measuring and improving performance is always going to be the focus for CMOs and marketing teams. The challenge is deciding on what results to measure, getting the up-to-date insights you need, analysing this thoroughly and strategically, and linking them back to marketing decisions that ultimately improve financial outcomes. Ultimately, what you decide to measure needs to be agreed on by CEOs, senior leadership teams and CMOs alike.
Implementing an effective measurement program often takes an expert hand to ensure that it is smart and focused on the business objectives.
Want to learn more about how marketing can deliver growth, and how to prove ROI for your marketing campaigns? Download our free e-book: Master your marketing ROI.