Generally, when we think about data and data analysis, we think about complex cross-relational insights, slicing and dicing data hoping to learn how to shave microseconds off of a production time, or something equally complicated and seemingly out of reach.
Surprisingly, some of the most insightful and effective implementations of business analytics are in customer-facing departments, like marketing.
Using insights founded in data to make strategic marketing decisions is incredibly important. Is that banner ad I gave my left leg for paying dividends? Can I optimize my email marketing spend by splitting my list and testing what segments perform best for my brand? Thinking through your marketing in a way that encourages reporting of hard facts and a tight feedback loop about what actually works is great way to stay lean and focused.
These 5 key marketing insights are absolutely critical to the success of your marketing programs. Tracking a general number of leads a marketing program generates is not enough. A solid understanding of what is working, why, how, and on who is what will really help you reach your business goals.
Lead to sale conversion ratio by channel
What: Which marketing channel provides you with the most consistent lead-to-sale ratio? Email marketing may produce more leads by volume, but if those leads are consistently junk, does it make sense for your business to continue investing dollars there? This number will help you make better strategic decisions about your marketing programs.
How: Track your marketing touches correctly and document the conversions by specific channel. Use tracking links to identify where the lead converted from and then pull a ratio off of how many leads per channel convert to a sale. For example: of 25 leads generated in August by Facebook Ads, 5 converted to sales. This is a 25:5 ratio, or 20% sale conversion.
Cost per lead (per channel)
What: Do you know how many marketing dollars were spent to acquire each lead per marketing channel? This is particularly important to know: are you spending more on marketing to acquire that lead than the revenue it will ultimately generate?
How: You’ve begun tracking lead conversion by channel, now track how much you spend on each channel. You can calculate how much it costs to acquire each lead by dividing your total spend on each channel by total number of leads acquired. (Total Spend)/(Total # Leads per Channel)
Organic search web traffic
What: Anyone can purchase advertising space on the web, but a true signifier of growing brand awareness is the amount of organic search traffic you are generating month over month. Organic search traffic represents the number of people who find your company through search engines. Monitoring visitor data from organic search is a great way to find problems with your website, understand what your customer base is most interested in, and what keywords they are searching on specifically.
How: Google analytics is a great tool for collecting data tracking organic web traffic and SEO success. Simply calculate your percentage growth month over month of organic search traffic for a simple, but insightful metric.
Overall % of sales derived from marketing generated leads
What: Track what volume of leads or revenue your marketing efforts are actively producing. If you are spending $100,000 on marketing but those leads only account for $60,000 in sales, perhaps you should consider altering your strategy or pursuing a new marketing channel. Conversely, if you are spending $100,000 on marketing and marketing leads account for $300,000 in sales, you know you are doing something right.
How: Calculate the total amount of revenue marketing-generated leads have created. Divide that number by your total sales for the determined time period (monthly or quarterly is a good benchmark) and you’ll have an accurate percentage of revenue directly generated by marketing efforts. For extra granularity, you can calculate the overall percentage by channel by dividing the amount of revenue produced by a specific channel by total sales for a given time period.
Lifetime Customer Value
What: Lifetime value of a customer is an important metric to track for future marketing planning efforts. LTV (lifetime value) is a projection based on averages drawn from your existing customer base. It is important to understand your customer’s average behavior (do they purchase one large thing and are gone forever or do they purchase several small things over time?) LTV is a number that should only change as your business dimensions change, and is a good measure of the success and failure of overall marketing and retention efforts.
How: The standard LTV calculation is 52(V*W)x(T), where V equals customer expenditures per visit, W equals number of visits per week, and T equals the average total lifetime length of a customer (in years).
For example: You own a smoothie shop. Lisa Everyman purchases a blueberry smoothie valued at $5.25 (variable V) 3 times per week (variable W). You’ve found based on past measurements that a customer of your smoothie shop normally comes in regularly for 5 years (variable T), then drops off. So you can assume that Lisa Everyman’s LTV is 52(5.25*3)x(5), which equals $4095. If Lisa Everyman represents the average behavior of your customer base, you can assume that each customer has a LTV of $4095.
Using metrics like these to drive your marketing efforts will result in 2 things: smarter, more accurate decisions about marketing to your audience based on real-life customer behavior and a shift in mindset — to begin thinking about measuring your successes and failures in a completely objective light. Build a marketing dashboard for the metrics above and more with Birst Express, a free analytics platform to help you make accurate, data-driven decisions.