Digital marketing and its corresponding metrics of success and ROI are evolving at break-neck speed.
Over the last few years (and especially due to COVID), the transformation to digital has accelerated years ahead of what was expected.
Any marketer who has ever dipped their toe into the Google Analytics pool can attest that the sheer volume of data available can be overwhelming.
In order to cut through the noise and accurately measure the ROI of your digital marketing efforts, it’s important that you’ve identified the key metrics you want to track.
In this article, you’ll find 15 essential metrics that will help you measure the ROI of your digital marketing, tell you if your efforts are successful, and show you where adjustments may be needed.
Which Metrics Help You Measure Digital Marketing ROI?
1. Cost Per Lead
If your website is collecting leads, you need to know how much you’re paying for each lead.
If the cost of each lead is more than what you produce by closing leads, that indicates a backward return on investment.
Knowing your cost per lead lets you know how well your marketing efforts are performing and give you the insight you’ll need for making further strategic and budget decisions.
2. Lead Close Rate
How do you track your lead closes?
Too often, this is happening offline which means that data isn’t being integrated into analytics or the online data you’re gathering.
That’s fine, but you need to make sure you keep an eye on your lead close rate so you can check that against the leads being generated.
This will help ensure your digital marketing efforts are delivering leads profitably.
This information is also helpful to use as a control against new digital marketing efforts.
If you suddenly get an influx of new leads but find they close at a lower rate, you may need to adjust your targeting efforts.
Measuring close rates also gives you insight into how sales teams and representatives are closing leads into sales.
3. Cost Per Acquisition
Using the data above, you should now be able to figure out your cost per acquisition.
This can be figured out simply by dividing your marketing costs by the number of sales generated.
You now know what it costs to get a sale, which will help you get a firmer grasp on your ROI.
Many digital marketing leaders operate on Cost per Acquisition (CPA) models as they only pay for lead or sales based on a set amount or goal.
This helps push and drive goals to conversions or pre-set outcomes.
4. Average Order Value
While you want to see the number of your orders increase, paying attention to the value of the average ticket can reap significant rewards.
AOV is an essential metric that can help marketers keep track of profits and manage revenue growth and profit reporting.
A slight increase in average order value can bring in thousands of dollars of new revenue and can often be as simple as improving user experience and providing up-sell opportunities.
5. Conversion Rates By Channel
Integrated digital marketing strategies are now essential to overall performance and revenue.
CMOs are increasingly looking and under pressure to see what channels are performing and what channels are the most cost-effective.
As marketers, we all like to know where our traffic is coming from.
Whether it’s organic, paid, social media, or other avenues, this information tells us where the bulk of our customers are and/or where the marketing efforts are producing the most buzz.
But that’s not the whole story.
Conversion rates can be a better indicator of success and let you know where the best opportunities lie.
Let’s say 75% of your traffic comes from organic marketing and 25% from PPC. But lo and behold, your PPC conversion rates are double that of organic.
What you learn from this is simple: Invest more in PPC. If you can increase PPC traffic to match organic, you’ve just doubled your ROI.
Attribution reporting also helps you understand how channels interact and which channels can influence others with conversion lift.
6. Conversion Rates By Device
Just like checking conversion rates by channel, you want to do the same by the device.
If one device has lackluster conversion performance, it may be time for you to reinvest in that area, especially if you see traffic for that device increasing.
Mobile is an excellent example of how device shifts happen, and depending on the device, conversion rates will vary.
This is especially true for marketers in ecommerce and retail, where more and more are purchasing via mobile and tablet devices.
7. Exit Rate
How many visitors leave your website from a specific landing page?
Your website analytics should give you the specific number of exits from each of your landing pages.
It may also give a percentage that is the number of exits/the number of page views the landing page has received.
Use the highest number of exits or highest exit rate percentage to determine which landing pages need conversion rate optimization and additional improvement for stickiness.
8. Blog Click-Through Rates
Blogs are a great way to showcase your brand and thought-leadership and get traffic to your site, but what are you doing with that traffic?
While blogs have notorious high bounce and exit rates, that doesn’t mean you have to resign yourself to those ridiculously valueless numbers.
Instead, use them to set goals for driving traffic from your blog to your main site.
A small increase in blog click-throughs can provide valuable new business at almost no additional marketing costs.
9. Customer Lifetime Value
You can’t truly understand the ROI of your marketing efforts until you have a good idea of what the average customer will spend over their lifetime.
Let’s say, for example, that it costs you $500 to bring in a new sale or client. But they only make a $500 purchase.
Well, that seems like a net loss once you consider the cost of everything else beyond your marketing investment.
But what if you knew that that customer would go on to spend $500 every six months for the next five years.
The average lifetime value of that client is $5,000.
Now, $500 to get that customer doesn’t seem so bad, eh?
That’s not to say you want to come out at a loss on every first-time customer, but if the initial investment brings a hefty long-term profit, you can more easily chalk up that first sale as a marketing expense, knowing profits are to come.
Net Promoter Score (NPS) is a metric where customers indicate if they would recommend a product or service to other people and companies.
Based on a scale of 1-10, the scores given are a good indicator of customer loyalty and satisfaction.
Tracking promoters v detractors (customers who have left or are thinking of going) helps you measure and improve customer service strategies and tactics.
11. Time Invested In Project/Campaign Vs. Returns
Do you know how much time each person in your organization invested in a particular project or campaign?
If you want to get the most out of each employee’s expertise, you need to ensure that they are working on projects that are worth their time.
For example, if you have programmers who range from entry to expert, who would you want to work on the projects that generate the highest revenue in your organization?
The expert-level programmers, of course.
Once you know the value of your projects, you can distribute the right people to the right projects.
12. Traffic To Lead Ratio
An increase in website traffic is a positive sign that your digital marketing campaigns are working. But do those results actually affect your company’s bottom line?
Another way to determine the value of your marketing campaigns is with the traffic to lead ratio. This KPI simply measures the percentage of visitors who turn into leads.
For example, let’s say that your website received 5,000 visitors this month. 500 visitors converted into a lead. For this month, you would have a 10:1 traffic to lead ratio or 10% conversion rate for visitors to leads.
Measuring Return on Ad Spend helps identify how well your advertising and paid campaigns are doing.
Digital Marketers are able to see that they spent X and got Y.
This is particularly important when reviewing performance, comparing channel spend and forecasting for the future.
The majority of marketers work to a rule that you should have a 3X return on your investment.
14. Overall Revenue
As marketers, we are constantly challenged with comparisons to sales performance.
Try to avoid these conflicts by measuring and attributing everything you do.
This could be an entire campaign, a marketing touch or assist, or an asset.
Ensure that your marketing and sales team has synergy in tracking and reporting on bottom-line revenue.
Agree on rules and accountability paths on leads, opportunities, and any marketing activity that impacts or influences sales revenue.
15. Customer Retention Rate
Do you know how to measure the number of customers your business has retained?
To calculate your customer retention rate over a specific time period, use the following formula.
Customer Retention Rate = ((E – N) / S) x 100
For the time period you are analyzing, you will use the number of customers you ended the period with (E), the number of customers you gained during the period (N), and the number of customers you started the period with (S).
Let’s say that you began the quarter with 200 customers. During the quarter, you gained 35 customers and lost five.
Your formula would look like this:
97.5% = ((230 – 35) / 200) x 100
Regardless of your industry and type of business “what is the ROI?” is the question all CEOs and CMOs will be asking this year.
As digital marketing grows and adoption soars, so does the pressure to deliver results.
Utilize the digital metrics identified in this article and let the data tell your ROI story.
This content was originally published here.