In the general sense, this is most likely obvious to any business owner. You don’t want to spend money on something that isn’t going to make you more than what you spent. If it’s not growing your business, it could be poisonous to your long-term success.
Measuring your Return on Investment (ROI) is about knowing what success looks like for your business. What numbers are worth paying attention to?
Not everyone has a head for numbers. But if you’re looking to up your marketing prowess, it’s essential that you let the numbers be your friend. In the hectic world of business, you can always count on the fact that numbers won’t lie.
What you measure depends heavily on two things:
1. What method you’re using to promote your business.
2. What has the most value to you in those promotions.
There are two strategies that help differentiate what is worth paying attention to.
This is what you spend money on and can see some sort of return on—in some cases—in a matter of days.
The number one contender for this is paid advertising on Google and social media. Most people will look at click-throughs and conversion rates for this. This is absolutely a good place to start. Ideally your conversion rate will be somewhere between six and eight percent. If it’s much lower, you’ll definitely need to re-evaluate your paid advertising strategy.
You have to go past conversions, though. Ask yourself, what did they cost you and how much did you make off of them? If you spent $100 on a customer that made you $250, then you have to readjust your strategy. But if you have a product that gets you $1000 and you only spend $100 to get someone to buy it, then it was worth it.
It’s not just about the money you make right then and there, though. You have to consider the CLV (Customer Lifetime Value) that someone brings to the table. So maybe you spent $50 on a customer that only paid $200. But maybe that customer is already interacting with you and your staff. They’re expressing intent to come back and keep working with you or buying from you. Or even if they aren’t saying they’ll be buying from you any time soon, they say that they’ll be sure to leave you a good review and tell people they know about you. Then they have far more value than just their initial purchase.
Ask yourself, “if I impress this customer and they keep coming back, what’s their value?”
This category is much more long-term. This is where search engine optimization (SEO) lives and thrives. Its success is measured drastically different from a paid ad campaign.
The main goal of SEO is to get your page more traffic by targeting certain keywords. These keywords are likely to direct the right customers to your site.
So once again, page traffic is a good start when it comes to measuring the success of this kind of campaign. But to dig deeper, you need to look at your bounce rates.
Someone has “bounced” your page if they visit your site, only look at the first page, and leave. If you see this happening less and less as your SEO campaign continues, you’re on the right track. A decrease in bounce rates means you’re getting more people who are interested in what’s on it and it’s giving them enough relevant, helpful material to stay put. These are the people that become customers.
Like I said earlier, ask yourself what success looks like for your business. Ideally, this model will be based on past experience. If you’re a new business and you don’t have this experience to pull from, it will be important to keep asking yourself what success means for your business and changing this image accordingly.
You will use this to guide your KPIs. Then you will set goals for the next 90 days. What do you need to meet in that timeframe to get where your business needs to be?
This is how we approach most of our clients. It allows for time to achieve goals, while allowing us to adjust strategies that may not be working before something is too far gone.
First we need to ask ourselves what kind of lead they are. So let’s go over the two types you can get:
Marketing Qualified Lead – This is someone “raising their hand.” They’re showing interest in what you do. They want to learn more to decide if they want to buy. For this lead, you need to get them to buy in somehow, whether it be with time or money.
Sales Qualified Lead – This person has decided to buy whatever you’re selling. They need to be nurtured so they will continue to do this.
So with all this, here’s some final advice:
• Look at your analytics.
• Make sure you have a proven system to go from the beginning to the end of the customer value journey.
• Make sure your metrics have meaning.
If you find yourself having trouble knowing where your business is headed, or if you can’t get a handle on what you need to measure to really get the success your business needs, please don’t hesitate to