CEOs continue to be frustrated by marketers. This is fuelled by what they see as an inability to prove the ROI of their campaigns. In fact, the 2012 Fournaise Global Marketing Effectiveness Program Report revealed 80% of CEOs didn’t trust in marketers’ ability to deliver growth.
This is a particularly swift blow for traditional marketers who find it near impossible to be able to provide accurate, quantifiable results for their marketing efforts. How on earth are you supposed to gauge whether that exceptionally expensive billboard generated leads and whether those leads landed up being closed as paid customers ?
Fortunately, the inbound marketing approach does not suffer from the same weakness and we are able to quite easily provide comprehensive reporting regarding our online marketing activities, which will appease CEOs and boost credibility with senior management.
Why analytics is so crucial to successful digital marketing
We live in a world driven by large volumes of data. Virtually everything we do can be quantified or measured in some way, including our online behaviour and actions. Data can be derived from everything we do online, and its valuable information digital marketers can use to improve the way they approach prospects, design websites and create content.
If you’re not using this data to inform your digital marketing decisions or to measure the actions you’ve taken, you’ll never see the efficacy (or lack thereof) of your marketing. This failure to see results is what often drives companies to give up on their digital marketing campaigns too soon. Thus, they miss out on the opportunities right in front of them, if they’d only taken the time to do a little research and analysis.
If you feel like your digital marketing isn’t going anywhere, perhaps it’s time you started digging into the analytics behind it to find out why and then taking steps to set it on course again. If this sounds like you, there are a few things you should know when starting out.
Key areas to grasp when starting out with analytics
Area 1: Which tools should you use
There are a host of tools out there to help you gather and break down your data. It’s important to acknowledge that no one tool is going to be as effective at doing so than using several different options at once, each uniquely designed to perform a specific function. It’s best to have a variety of tools at hand and to familiarise yourself with them, so that you can get the most out of each one.
A few of the must-haves include:
- Google Analytics
- An SEO platform, like MOZ
- A comprehensive CRM such as HubSpot
Using tools like HubSpot, you’ll also be able to draw data and insights from critical areas, such as your emails and social media accounts.
Area 2: The importance of setting goals
There’s no point in collecting data and trying to make sense of it, when you have no definitive goals to measure your inferences against. You need to develop SMART goals for your digital marketing, and then compare the results of your data against those goals.
- Are these goals realistic considering what the data has revealed?
- Where can I make changes to bring my business closer to its marketing goals?
- Do my goals need reevaluating to be more realistic?
- Can my goals be measured considering this data, or are they too vague?
- Have I given my marketing enough time to meet these goals?
Area 3: Which key metrics to measure
Depending on your goals, you’re going to need to keep an eye on specific metrics, to see how close you are to achieving them. Examples of these metrics may be:
- The total visits to your website
- The channels that drive traffic to your website
- New versus returning website traffic
- How long visitors are spending on your site, and what interactions they’re performing while there
- Bounce rate (or how quickly visitors leave your site on arrival)
- Exit rate (how often visitors are dropping out of your sales funnel midway through converting, and where these drop-off points are occurring)
- Total conversions
- CTR or click-through-rate
- The total cost per conversion (CPC)
- Your lead-to-close ratio
- The total cost to acquire a customer (cost per acquisition)
- Email open rate
And so, the list goes on. There are many metrics to look at, but you’ll be focusing specifically on ones relevant to meeting your marketing goals.
Area 4: How to convey your insights to the relevant parties
Proving marketing ROI has long since been a thorn in the side of marketing everywhere. And while it may seem like data derived from analytics finally gives marketers the weapon they need to show tangible results, it’s how they use that weapon that matters most.
Marketing analysts need to understand how to transform and clean up data to ensure it is easily understandable to their C-suite. It should be conveyed as more of a story and less of a barrage of percentages and numbers that won't necessarily express a clear enough view of how marketing is meeting its goals, or perhaps what it requires to meet them.
Understanding how to wield analytics to your best advantage is the most significant step you can take towards empowering your teams to start creating marketing campaigns that convert and close with ease, or that can be tweaked to show more meaningful results than previously seen.
Area 5: Conduct Plenty of Experiments and Tests
Remember those science experiments you used to do back in school? You know, the ones where you had a "control" sample and then completed testing on your other samples before comparing the results to one another?
Well, data-driven marketing embraces a scientific approach by encouraging plenty of experimentation and testing, whether it’s changing variables like your social media sharing times, or A/B testing the performance of your content, offers and ideas against an alternative version. Don't be afraid to be creative and change things up here - it's through experimentation and testing that you'll generate the data you'll need to pinpoint what works, and what doesn't.
Area 6: Compile Your Findings
Once you've done sufficient testing and experimentation, you're going to want to compile a comprehensive overview of your findings to evaluate the effects your changes have had. Hubspot's Reports feature helps you generate in-depth reports that can be collated for specific date ranges, activities and channels. Using these reports, it's possible for you to not only make objective, informed marketing decisions going forward but also to motivate for an increased marketing budget (and prove your ROI!).
Area 7: Apply Your Discoveries
Taking your findings from above into account, use the information to transform your inbound marketing activities. The outcomes of your tests and experiments will open up new avenues that allow you to target your unique audience in a powerful way, boosting your interactions and ability to zero-in on exactly what your buyer persona needs and wants.
What is The Difference Between Web and Marketing Analytics?
HubSpot’s CMO Mike Volpe provides a comprehensive explanation: “Web analytics measure things a webmaster cares about, like page load times, page views per visit, and time on site. Marketing analytics, on the other hand, measure business metrics like traffic, leads, and sales, and which events (both on and off your website) influence whether leads become customers. Marketing analytics includes data not only from your website, but also from other sources like email, social media, and even offline events. Marketing analytics are also usually people-centric, featuring the prospect, lead, or customer as the unit of focus, whereas web analytics usually regard the page view as the unit of focus in its reports."
Marketing analytics opened up a whole new world for those smart, modern marketers who were early adopters and continue to base marketing strategies on data that indicates success or failure of specific tactics, sources and campaigns.
Let’s Highlight 3 of the Finest Benefits of Marketing Analytics
Incorporates Different Marketing Channels
Marketing analytics allows you to track the performance of your various marketing channels, such as social media, blogging, email, SEO, etc. and effortlessly tie the effect of multiple channels' performances together. You can examine an email shoot’s click-through-rate to your website and track their activity on your site once there. You can compare these results to say a blog post with the same offer embedded as a CTA or perhaps a tweet, easily determining which channel is best for lead generation or nurturing.
Highlights People-Centric Data
People-centric data allows you to track how individual prospects and leads are interacting with your various marketing campaigns and channels. With marketing analytics you can see how they found your website for the first time, whether that was through a search engine using one of your keywords (showing your SEO effectiveness) or perhaps a direct visit (indicating your offline branding initiatives are successful). You are able to tell how they continue to interact with your marketing providing you with valuable lead intelligence which can be used to develop highly relevant lead nurturing campaigns. This is also helpful in establishing key conversion pieces for specific buying cycle stages which in turn allows you to accurate score leads for sales-readiness based on actions.
Integrates with CRM for Closed-loop Reporting
Probably the most appealing function of marketing analytics, when integrated with your CRM system, is the ability to link marketing activities to sales results via closed-loop reporting. This allows you to track the sales outcomes after your marketing leads have been handed over, which in turn helps you determine whether your marketing campaigns are translating into revenue for the business. In addition, this insight can aid you in focussing lead generation efforts specifically on the channels that you know produce a higher customer conversion rate than those are preferred for engagement.
And This All Helps You Earn Boardroom Cred!
Modern marketers using marketing analytics are measurement masters. They can confidently walk into the C-suite boardroom armed with the black and white (or colourful PowerPoint presentation – as they are creative like that) proof of their team’s contribution to the bottom-line. The metrics they report on are aligned to the overall business objectives and show return on investment that the board can relate to. They are well respected by their colleagues and considered an integral decision maker in terms of tactical strategy and business development.
What To Measure, Analyse and Report on for an Inbound Marketing Campaign?
I have split the reporting requirements into 2 sections, namely programme and profit performance indicators. The programme performance metrics will cover metrics of specific campaign elements while the profit performance indicators relate to the ROI orientated that the c-suite chaps (and ladies) are after.
Programme Performance Indicators
Your call-to-action button entices your prospects to click through to your landing page where your offer is homed. Here you want to establish whether it is doing it is job by looking at the number of views received in relation to the number of clicks to determine your conversion rate. The higher the conversion rate, the more effective your CTA is.
Your landing page outlines the value the offer holds for your prospect. If it conveys this well they will go on to download the offer by completing the form. Here, again, you will consider the number of page views compared to the form submission rate to establish the conversion rate of the page. Considering prospects are already somewhat familiar with the crux of the offer (via the CTA, social media post or email message) you should anticipate a high conversion rate. If yours is on the lower end, you may want to consider implementing an A/B test on certain elements to improve performance.
Promote your offer via email to your established leads. As with any email you’ll want to have a look at the delivery, open and bounce rates but more importantly for campaign performance measurement will be your click-through-rate to your landing page. In order to report on source performance, isolate the conversions that can be attributed to email clicks.
Throughout your campaign period you should blog around your offer’s primary keywords in order to attract search-based traffic (as well as to have content to share out on social media leading to your offer). Measure the efficacy of your blogging by tracking page views, keyword rankings in organic search and the conversion assists.
Another channel should use to promote your campaign is social media. Use views, shares and re-posts as well as traffic and leads directly attributed to social media to establish the engagement and conversion rates of your social promotion.
Use what you know from your sources of leads generated during your campaign to establish the channels that work best for you. By measuring conversion by source you will be know where to plug additional efforts and budget with your next campaign.
Just a quick tip here: HubSpot’s Campaign Reporting Tool does a great job of compiling all this information for you at a named campaign level in a one-pager.
Profit Performance Indicators
Lead Conversion Rate
In order to establish how many of your leads converted into customers, it helps to have closed-loop reporting set up that will show the activity on leads from a sales perspective. The lead conversion rate will provide a good indication of the quality of lead generated. You could go a step further here and break it down by source to not only determine the most effective channel for lead generation but revenue generation too.
Cost Per Lead (CPL)
It’s no surprise that the c-suite will want to see the lowest number possible here. Fortunately leads generated via inbound marketing cost on average 61% less than those generated by outbound strategies. You will need to calculate the costs of the entire campaign and divide the total by the number of leads generated in order to establish your CPL. The more leads you are able to generate for the campaign the lower your cost per lead will be.
Cost Per Customer Acquisition (CPA)
There is no point in spending more to acquire a customer than the value they represent to the business. In order to establish your cost per customer acquisition, you’ll need to calculate the total cost spent to convert that lead into a customer (which may include sales costs too) and divide that by the total number of customers acquired throughout the campaign.
Lifetime Value of Customer (LTV)
As mentioned above, this is an important metric as it allows you to determine whether you are acquiring customers cost-effectively or not. This will also help to estimate how much recurring or repeat revenue you’ll generate from a given customer and what budget is required for a customer acquisition campaign and is a key element in measuring overall ROI. To establish the lifetime value of a customer, multiply the gross margin by the number of transactions anticipated and the average retention rate. (You may need to call on sales or finance to provide you with the numbers for this calculation.)
And finally …
Marketing or Campaign ROI
The ultimate measure of how well you are executing your marketing efforts and campaigns. In order to calculate your ROI deduct the cost per customer acquisition from the lifetime value of the customer and then divide that number by the cost per customer acquisition.
ROI = (Customer Lifetime Value - Cost per Customer Acquistion) / Cost per Customer Acquisition
ROI is generally expressed as a percentage, so multiply your result by 100 and hey presto, you’re done!
Now you’re armed with the all-important KPIs that your management team can understand and appreciate. With solid data backing up your claims, you can be sure that the execs will be willing to evaluate budget requests for marketing campaigns as they can see – in black and white – the impact on the bottom line. While there is no doubt that inbound marketing leads to greater brand awareness and increased traffic, these benefits will follow if you’re committed to tracking meaningful KPIs that help predict revenue too!
How do you report on your marketing campaigns? Do you include metrics that directly relate to P&L? What other indicators are useful? Share your thoughts in the comments.