When it comes to your marketing efforts, how do you measure success? While you can take a look at how much your campaign impacted revenues, it’s tough to attribute success or failure to marketing alone. Instead, a number of seemingly complicated metrics can help gauge the efficiency of your marketing plan. Looking at things like brand awareness, net present value, and churn rate can tell you more about the return on your marketing dollars and how your customers perceive your business. What marketing metrics should you be keeping a close eye on?
Though it’s difficult to gauge and not as easy to quantify as revenues, brand awareness may be the most important marketing metric to measure. Why? Because the ultimate goal is to be the first brand that comes to mind when customers have a need for your product or service. While a large part of that is accomplished through things like price, product availability, and customer service, you can’t sell your product or service until you get folks in the door. That’s where marketing comes into play.
The only real way to measure brand awareness is to survey your audience. It’s quite simple-you want to know, for your product or service, what brand(s) come to mind? If you survey 1,000 people and your brand is listed 1,000 times, your brand awareness is off the charts! Remember, with more brand awareness comes more engagement, visibility, and even conversions. Make it your goal to not only increase brand awareness but to measure it regularly.
Your customers are the single most important part of your business. If they all were to defect to competitors overnight, you would no longer have a business. With that said, it’s important to keep an eye on how many of your customers are defecting to competitors. Churn rate is typically measured over a year and is calculated by figuring out the percentage of existing customers who stop using your product or service in that time frame. The ultimate goal is a negative churn rate-which represents a growth in your customer base.
Remember the Pareto Principle-20% of your customers represent 80% of your sales. If you haven’t highlighted those high-value customers, treat every customer like a high-value customer. Even one of those customers were to defect to a competitor, the effect on lost market share would be noticeable. One of the best ways to keep your churn rate low is to keep your customer satisfaction rating high!
How satisfied are your customers? More important than whether or not they would purchase again is whether or not they would recommend your brand to friends or family. Therein lies one of the most important marketing metrics: customer satisfaction. In a nutshell, it’s measured by counting the number of customers who would recommend your product or service. If you survey 1,000 of your customers and all 1,000 of them would definitely recommend your product or service, your customer satisfaction numbers are optimal! If not, start to look at ways to add more perceived value to the customer experience.
While it’s important to keep your customers happy with good product quality, customer service, and pricing, it’s also important to have a good digital presence. An effective website and social media presence, for example, can help your customers feel like they’re part of the brand. That’s the ultimate goal; when you develop relationships with your customers, they’re more than satisfied-they’re a part of your brand!
Customer Acquisition Cost
Even if you have a million customers, if you’re spending too much to acquire them, your business model is probably flawed. Therefore, one of the most important marketing metrics to measure is your customer acquisition costs. Simply add up your marketing costs and divide by the number of new customers acquired. The ultimate goal is to have your CAC as close to zero as possible, which is best accomplished through optimal inbound marketing and word-of-mouth marketing.
Similar to customer acquisition costs, take-rate can help gauge the cost-effectiveness of your marketing. If you send a promotional offer to 1,000 people and only 10 of them accept it, your take rate is very low. The goal is to reduce customer acquisition costs by increasing take-rate, therefore making more customers by spending less money.
ROI & NPV
As mentioned, the bottom line determines the efficiency of not only your marketing campaigns but your business as a whole. If you’re in the green, your business is firing on all cylinders. Red numbers mean you have issues to address. With that said, it’s important to keep an eye on your return on investment. Simply add up your incremental gross profits and subtract your investment to get your return. Multiply that by 100 and you’ve got the ROI for any given campaign. Unsurprisingly, the goal is to generate a positive ROI-and less money spent for more profit.
Net present value can be used to make decisions on whether an expense or investment is worth it. Simply subtract any costs from your present value to determine the net present value. If NPV is greater than zero, the benefits outweigh the cost and the decision is worth making. If not, you may need to tweak your strategy.
Start Measuring Your Marketing Metrics Today!
Marketing metrics are used by businesses all around the world to gauge the effectiveness of marketing campaigns and make changes to both day-day operations and overall strategy. If you’re not measuring the most important marketing metrics, it’s difficult to assess your overall growth and effectiveness in the marketplace. Without important feedback from customers, it’s difficult to determine where to make changes to provide the best possible customer experience.
It’s as easy as surveying your customers. Put a brand survey online, in an email, or attached to promotional offers and see what your customers have to say about you. Remember: the ultimate goal is optimal brand awareness and customer satisfaction with minimal churn. With those metrics in place, your ROI and overall profit should be positive, and your business should flourish!