Business leaders without a background in marketing or technology may have a problem measuring marketing success. Weâve got the information you need to help.
There are many little white lies small business owners tell themselves regarding marketing. Have you told yourself any of these?
Thereâs the notion that marketing is not a priority for small businesses. Entrepreneurs who adopt this train of thought often justify their belief by arguing they get most of their clientele from word-of-mouth marketing anyway.
Other arguments crop up when it comes to SEO and content marketing. Some business owners have the impression that these marketing subfields are all smoke and mirrors. They may resist âtech-orientedâ changes even though upgrades such as CRM could save time while increasing productivity.
Unfortunately, these misnomers may prevent you from enjoying the marketing success you desperately long for. Keep reading as we closely examine the importance of measuring marketing effectiveness.
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What are among the top questions business owners have when it comes to marketing? They often ask questions related to how to measure the effectiveness of a digital marketing campaign.
Unfortunately, the answers to these questions donât often prove self-evident. As a result, many entrepreneurs come to the faulty conclusion that marketing isnât a major priority for their small businesses. But this conclusion couldnât be further from the truth.
What about companies that claim they get most of their business by word-of-mouth? Word-of-mouth recommendations are fantastic but donât stop there.
Why? Because this passive approach to attracting new clients and customers alone wonât sustain your enterprise over the long haul.
You need marketing if you want to grow your business and gain a steady stream of clients. Whatâs more, by diversifying the streams funneling prospects to you, you can rest assured youâll always have new customers, even when word-of-mouth traffic inevitably fades.
You may also have questions about the effectiveness of SEO and content marketing strategies. After all, these buzzwords have trended online ad nauseam for years, making many business owners wonder what gives.
But youâll never honestly know what marketing has done for you until you learn how to measure your marketing success effectively. Letâs take a closer look at measuring marketing effectiveness through the SMART marketing goals system.
SMART Marketing Goals
The SMART marketing goals system is based on a catchy acronym that will help you remember its basic principles. SMART stands for:
- Specific
- Measurable
- Attainable
- Relevant
- Time-based
Letâs take a closer look at each of these principles so that you can start crafting definable and measurable marketing outcomes for your business.
Specific
Do you feel you lack clarity regarding what is and isnât working in your marketing? If so, youâre far from alone.
Whatâs the best way to remedy this situation? By writing clear goals that refer to specific aspects of your business. Be as unambiguous and concise as possible with the outcomes you create.
Why? Because they will provide clarity when it comes to assessing precisely what youâve achieved.
Measurable
Besides making objectives specific, they also need to be quantifiable. After all, if you donât know how to measure your achievements, how can you properly assess them? How can you make adjustments over time to see improvements?
What might measurable goals look like? They might include increasing traffic to a landing page by 25 percent or reducing bounce rates by 15 percent. Remember to identify start and end points to track your companyâs track record over time.
Attainable
You should also make realistic objectives. Why? Because pie in the sky dreams will get you nowhere but discouraged.
Shooting for the impossible sets you up for failure. Instead, focus on incremental growth. Remember that SMART goals must also be achievable goals.
Relevant
You also want to ensure that your selected outcomes are highly relevant to your business. Otherwise, how will you make this objective a priority? If you donât know why your company needs to achieve a goal, itâs likely not the right one for your business.
Time-Based
Finally, frame your SMART goals within the context of time. By setting a deadline, you remove the temptation to procrastinate. You also infuse your objective with urgency, providing the impetus to help you meet this outcome.
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How to Measure Marketing Success Using SMART Goals
Now that you know the SMART goals for digital marketing systems, letâs drill down into the best metrics for measuring outcomes. There are a handful of terms that you need to know about. They include:
- Return on investment (ROI)
- Cost per win
- Cost per lead
- Conversion rate
- Purchase funnel
- Incremental sales
- Customer lifetime value (CLV)
- Multi-channel funnels and attribution
By getting a handle on these different approaches to measuring your marketing efforts, youâll better understand the possible types of SMART goals. Weâll start by looking at how to evaluate return on investment.
Return on Investment (ROI)
Of all the terms weâre about to discuss, youâre probably most familiar with return on investment or ROI. Thatâs because it refers to the sales revenue a campaign earns on every dollar spent.
In other words, if youâve spent $1,000 on a marketing campaign that brings in $5,000 in profits, this equates to an ROI of 400 percent or $4,000.
ROI represents the best key performance indicator (KPI) for assessing your marketing campaign's effectiveness. Whatâs more, ROI measures the overall quality of the leads you receive.
Cost Per Win
What does cost per win measure? It assesses the expense associated with each sale. In other words, a $1,000 marketing budget may not be helpful if each sale costs $300.
Moreover, you can use this essential metric to compare various marketing campaigns. Remember that cost per win often gets referred to interchangeably as the sale.
Cost Per Lead
Another way to measure the cost-effectiveness of a marketing campaign is by looking at the cost per lead. The cost per lead metric lets you hone in on each prospect or customer won to your company by a given campaign. That said, it doesnât allow you to measure the quality of leads as cost per win does.
Conversion Rate
A marketing campaignâs conversion rate is also known as its goal completion rate. What does conversion rate refer to? It measures the percentage of visitors whoâve converted into customers or leads (a.k.a. your websiteâs conversion rate).
When you consider conversion, bounce rate, and other behavioral data, youâll gain priceless insight into the quality of traffic visiting your website.
The conversion rate applies to more than website traffic. But you should also focus on the conversion rate of individual campaigns to better understand how each marketing effort has performed. Here are six more facts every entrepreneur must know about conversion rate optimization.
Purchase Funnel
You can also measure and analyze your current sales processes with Google Analytics or another tool. This figure provides insights into the leads created by each marketing campaign (e.g., percentages for visits, interactions, leads, sales, conversions).
As you review your purchase funnel information, keep an eye open for drop-off points. These points will provide important information about your sales and traffic cycles.
Incremental Sales
Are you interested in knowing more about incremental sales at your company? This metric measures the contribution of marketing efforts in the context of sales numbers. When you explore this number, youâll understand how well your marketing activities generate sales.
Customer Lifetime Value (CLV)
Another incredibly valuable metric to watch is your brandâs customer lifetime value. Customer lifetime value is determined by multiplying âaverage sale per customerâ by âaverage number of times a customer buys annually.â
While CLV can prove time-consuming to compile, itâs well worth it. It remains the best way to see which of your marketing efforts best attract and keep customers. Find out more about how to calculate customer lifetime value.
Multi-Channel Funnels and Attribution
What weâve talked about up to this point are metrics that let you compare individual marketing campaigns. At some point, youâll want to step back and gain a better sense of your overall marketing efforts. Attribution modeling and multi-channel funnels let you gain this holistic perspective.
Measuring Marketing Effectiveness
Weâve covered plenty of territory in this post on how to evaluate marketing success. Topics have included everything from how to set SMART marketing goals to why you need them.
Weâve also reviewed some of business owners' most common metrics to evaluate marketing campaigns. These metrics can help you craft specific, measurable, attainable, relevant, and time-based objectives.
If youâre ready to dive deeper into how to measure your marketing success, subscribe to get actionable small business tips, including digital marketing courses.
