How does your boss know your marketing strategies are working?
If you are not demonstrating your value as a marketing manager, you might soon find yourself managing a cardboard box on the side of state highway one. But how do you demonstrate your value? You’re running ads, your store is making sales, ipso facto your efforts are working, right?Not necessarily.
I’m not trying to say that your strategies have failed. In fact, you might be doing a murderously good job. But why assume, when you can measure the results? By tracking some metrics, you can also save money by trimming the campaigns that aren’t working.
The problem is that it’s difficult to directly tie any given promotion to a sale. That’s why you need to track several metrics- this will allow you to make inferences based on the results. It doesn’t matter the budget of your campaigns, the size of your company, or the particular tactics you use. You need to track the results. There are dozens of metrics you could be tracking, but not all of them will benefit your marketing strategy.
So we decided to make it easy for you, to give you five metrics you can use to show your boss you’re CRUSHING IT as a marketing manager.
How do you get your customers to spend more money?
That is one of the questions you should be asking yourself every day as a marketing manager. It’s probably the most important number to track when trying to understand consumer spending habits. The formula for this is simply (Total Revenue)/(Number of Orders Taken) within a given time period.
You don’t need to look at this every day, or even after every campaign. You just need to keep an eye on it over time.
If it rises during certain times, you can connect it to campaigns running during that time. If it falls, you’re doing something you want to avoid. Don’t make the mistake of using the number of transactions to gauge success. After all, 50 sales that make $2,500 is better than 100 sales that make $1,000. You want to get as much money as possible out of your existing customers. To do that, you’ll want to encourage them to add more items to their carts, or buy other products of higher value. This is how you increase your average order value.
LTV means Life Time Value, the amount of money a customer will spend before leaving your business.
You calculate it like this:
A customer who stays with your business a long time becomes more profitable. You need to make sure your customer’s lifetime value is as high as possible. The best way to do this is to focus not only on customer retention but customer acquisition.
Of course, you want new customers, but it’s easier to sell to people who you’ve already earned the trust from. Your existing customers will spend 67% more than new customers. What’s better than that if you want to increase average order value?!
So don’t make the mistake of shying away from a strategy that doesn’t seem profitable in the short term. Keep customer lifetime value in mind when thinking about your acquisition strategies. Don’t not implement a strategy just because the AOV would be less than the CPA. Account for how much the customer will spend over time.
Speaking of CPA, what’s your Cost Per Acquisition, and why is it significant?
Well, would you like to have made a $100 sale if it costs you $101 to bring that buyer to your website? Controlling your Cost Per Acquisition is key to profitability.
To calculate this, simply divide the number of sales by the number of visitors to your website, or for ads, divide the number of clicks by the ad spend. A low CPA does not mean that your efforts are at fault- if you have a large amount of traffic, but low sales, something else, such as your website design, could be preventing people from making a purchase.
That’s why you need to analyze your website design– websites with simple designs tend to have higher conversion rates. These people are already on your website. Sometimes they are just a click or two away from buying. It’s your job to make sure that happens. You might need to raise your prices or change your marketing strategy if your CPA is too high, though this could have its potential problems, too.
Cost Per Click is CPA, but for bringing traffic to your website. This can be used for Pay-Per-Click (PPC) marketing campaigns, as well as organic traffic, if you’re spending money on SEO. The “click” obviously represents a visit to your site, or an interaction with your product or service. Each click represents attention from someone who is searching for something you offer.
You can determine this on your end by dividing spend by traffic, although every PPC platform will have its own formula. Here is how Google calculates how much it will charge you per ad click:
What is a good CPC? That varies by industry, and depends on how much the lead is worth to you. $200 is a phenomenal cost-per-click if you are selling a high-ticket item, but would be catastrophic if your products sell for $39.99.
Cost Per Click should always be considered in tandem with value, which is why we’ve ranked it below CPA.
Cost Per Lead determines how effective your marketing campaigns are at generating new leads. It’s simply Cost Per Acquisition, but counting Form Submissions rather than eCommerce sales. Leads are individuals that express interest in your products or services by getting in touch with you. They are people who are in the market, and ready to talk to a business to see what they offer.
To calculate Cost Per Lead, simply divide your ad spend by the number of leads brought in.
A sale shows you a quantifiable dollar amount, so Cost Per Lead provides your team with a tangible dollar figure, so you can demonstrate how much money is appropriate to spend on acquiring new leads. It also demonstrates your return on marketing investment.
You want to have the lowest cost-per-lead that you can. A low CPL with a high volume of leads indicates that your campaign is doing well.
Anyone can just throw together a marketing campaign using AdWords, Facebook Ads, etc.
The value comes from being able to demonstrate that your influence has a positive effect on the performance of the business. If you haven’t been tracking your metrics yet, it’s not too late to start.
Zyber can help by providing an all-in-one dashboard that puts everything you need to know all on one page, so you can understand at-a-glance how your business is performing. Click here to find out more!
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