Most marketers look at leads, sales revenue, and cost per acquisition to measure their campaigns' success. Though these represent the bottom line, they don’t give you a full picture of your performance. Tracking key performance indicators (KPIs) helps you identify which campaigns and marketing tactics have the most impact on your goals.
Maximizing your ROI potential means aligning them with your strategy, extracting insights by analyzing your data, and using relevant KPIs to accurately measure results.
Top 10 KPIs You Should Track to Measure ROI Accurately
Achieving your end results relies on gauging how well you're achieving certain goals and objectives throughout your campaign. Utilizing and tracking the right KPIs is vital to your campaign's success. Each KPI is designed to show how campaigns generate revenue using metrics that compare your performance to the previous year. You don't want to underestimate the following KPIs.
1. Marketing Revenue Attribution
Connecting marketing and sales shows which marketing efforts create downstream revenue (and which ones don’t!). They also allow you to connect lead generation and sales revenue.
It's no secret that marketing revenue attribution has its advantages. The problems happen when marketers don’t put the information they're learning to use. Knowledge is power. Putting your insights into action helps you get ahead of the competition.
When you understand your marketing revenue attribution, you can:
- Support your ROI results
- Maximize the potential of your work and budgets
- Access relevant data when necessary
2. Customer Acquisition Cost (CAC)
CAC illustrates the resources that convert a lead into a customer and increase your business's growth. This metric pinpoints the total sales and marketing costs associated with retaining a new customer in a specified time frame.
Calculating the cost of acquiring customers simply compares your Marketing Costs over the number of new customers.
To know the metric's success compare it to your customer's lifetime value (LTV). The ideal ratio is 3:1, meaning your customer’s value should be 3-times more than the cost to acquire them.
It’s crucial that you get accurate information so that your CAC is properly calculated and well understood. When done efficiently, you can use it to grow your consumer base and increase profits.
3. Customer Lifetime Value (LTV)
Lifetime Value is the expected revenue generated from one customer over the entire course of their relationship with your business. It measures the Customer Value, then expands it over the average length of their relationship with your business. This is why CTV and LTV go together like two peas in a pod. They calculate which customers are worth more effort to target.
This metric compares the value of the customer's revenue to their lifecycle (in this case, the time they spend as your customer). It's an essential component of evaluating which customers are most valuable to your company.
It is determined by this formula: Multiplying the LTV by the profit margin results in the CLV. This formula relies on having a lot of data at hand, which is can be a challenge for new businesses. However, keeping the formula in mind allows you to acquire this information as your business grows. You want to focus on how much people spend with your business, as well as how often. Putting your marketing efforts into customer retention will yield better results with this metric.
4. Digital Marketing ROI
Digital marketing ROI is vital to understanding your campaign’s entire story. The basic formula for calculating your digital marketing ROI is: However, there is a lot more that goes into getting value from this metric. Understanding your digital marketing ROI means better understanding how your campaign's various moving pieces impact your bottom line. You’ll learn how to reallocate your efforts to maximize your ROI.
To develop a better understanding of your ROI, you must additionally measure your: :
- Cost per lead
- Lead close rate
- Cost per acquisition
- Conversion rates
- Average order value through digital tactics like email, social media, and your website.
5. Traffic-to-Lead Ratio
The Traffic-to-Lead ratio is the percentage of people who land on your website then turn into an actual lead. No matter how great you think your website is, if it gets high traffic and few leads, you need to make adjustments.
This ratio should be available through your site’s analytics, but if not, simply compare your traffic over the number of leads you get over a specified period. If you have 100 customers and 10 of them become leads, your Traffic-to-Lead Ratio is 100:10 which reduces to 10:1, or 10% a conversion rate.
Staying informed of these issues lets you resolve them quickly. That way, you can focus on maintaining growth and maximizing your efforts. Innovation and adaptation are crucial to marketing and the success of any business.
6. Lead-to-Customer Ratio
The Lead-to-Customer ratio (also known as the sales conversion rate or lead conversion rate) evaluates qualified consumer leads that result in sales. This metric is useful for evaluating sales representatives and the sales team as a whole. It is also important for assessing how well your sales funnel is performing.
7. Landing Page Conversion Rates
Landing page conversion rates evaluate how well you're converting customers to a sale after they go on your site.
You can increase your landing page conversion rates by adding relevancy and value to your CTA. This means switching out wording to include what the consumer will get from the action. Instead of just "join us," try "join us for more actionable tips."
8. Organic Traffic
Organic traffic evaluates how well your SEO efforts are working out. The number follows how many visitors are directed to your site through organic efforts. Organic traffic was likely done with a specific intent that leads to conversions if you can solve their problems.
9. Social Media Traffic and Conversion Rates
Social media traffic and conversion rates measure how well your social media campaign generates traffic to your website, leading to conversions.
The key is evaluating how well these platforms attract visitors to your site. It also tracks whether the site succeeds in making conversions once prospects get there. If you're successfully getting visitors but have a high bounce rate, you may need to revise the site to accomplish your goals.
10. Mobile Traffic, Leads, and Conversion Rates
Tracking mobile traffic, leads, and conversion rates gets more crucial each day. Most consumers actively use their mobile devices, and 3.5 billion people now have smartphones. Not optimizing for mobile means you’re missing out on a huge opportunity. Continuously measure and analyze your mobile traffic, leads, and conversion rates. You can use that information to improve your strategies and techniques and embrace this growing trend.
Partner With Experts
Creating and measuring a successful campaign takes significant effort. You need to know the latest advancements, strategies, and best practices to keep up with the competition, or better yet, get ahead of the game.
That's why it's so important to work with a media partner to track and measure the ROI of your digital marketing campaigns. You can leverage their expertise to eliminate the stress and challenges associated with your marketing so you can focus on growing your business.