Being able to assess the contribution marketing makes to your business is essential, perhaps no more so than in a small business where every penny counts. Understanding performance gives you the confidence to invest your time, budget and resources in the right places.
By following some simple steps, you can better measure your marketing investment:
The importance of measuring performance
It is important you are accountable for the marketing decisions you make. You need to be able to determine what is working and what isn’t.
Research by eMarketer found that few marketers knew what channel had the best return suggesting many marketing people still rely on their gut instinct.
Granted, some activities are easier to monitor than others. Email marketing ROI is fairly simple to measure, whereas with social media it gets more complicated. However without a solid understanding of performance you are not going to know what campaigns are losing you money and what ones are successfully fighting your corner. Gut instinct alone is not enough.
How to successfully measure your marketing efforts
There is no one-size-fits-all magic metric. Measuring performance is hugely varied and depends entirely on what it is you are measuring. Following the right steps will help you connect up your marketing activities, performance and strategy.
1. Set clear goals and objectives
Have clear goals. What is it you want to achieve for your business? Then set specific objectives for each marketing activity so you have a benchmark to measure against.
Objectives need to contain a quantifiable element to measure against. It is helpful to remember the SMART acronym (specific, measurable, achievable, timely and realistic) when you are setting objectives.
2. Decide on your key performance indicators (KPIs)
How you choose to measure performance will depend upon the objectives set. This could vary from customer satisfaction surveys to web analytics. Agree beforehand the key performance indicators you are going to use.
For example, for a social media campaign you may be interested in the percentage growth of followers, fans and likes. Whereas to gauge the effectiveness of your content marketing you could be measuring blog traffic.
Much ecommerce marketing will be designed to drive customers to your website so you will be interested in who is visiting your site, what pages are they looking at and where are they coming from. Small businesses with limited time and resources may choose to focus on a few key metrics such as cost-per acquisition, bounce or shopping cart abandonment.
3. What are your metrics telling you?
Use the information you have acquired, not only to measure your performance, but also to understand the reason behind why something did or didn’t work as you expected.
A simple example is an email marketing promotion. Your objective was to achieve a 10% increase in sales conversions for a particular product. Using click-throughs and conversions as performance indicators, you found the click-through rate was above average whereas your conversion rate had only a 3% uplift.
Using metrics you would try to understand why your sales conversions were lower than expected. You may start by looking at your landing page. Was the landing specific to the promotion? Did it accurately reflect the email offer? Was there a clear call to action?
It may be that you need to dig a bit deeper and instead of looking at one metric in isolation you should be looking at it in conjunction with others.
4. Take corrective action
If you understand why something is, or isn’t, working you can then take the corrective actions needed to improve your performance. This could range from dropping an entire campaign to tweaking a specific element. For example, your metrics may indicate an unusually high number of visitors exiting on a particular page. A quick check and you realise there is a ‘404 page not found’ error there and a simple fix is required.
What you learn will help you with decision-making and justify how you allocate your budget, time and resources. It should also feed into your future marketing strategy and plans.
Stay on track
Measuring your performance is something you need to keep on top of otherwise you run the risk of churning out activities that bring nothing to your business. Get into the routine of regularly checking metrics. In time you will be quickly able to identify any trends or blips.
Hopefully you have found these steps helpful - it would be great to see your comments below!
By Simon Horton, Founder of ShopIntegrator.
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