How successful are your marketing campaigns? Here is the formula to calculate it: As a marketer, you need to make sure the lifetime value of your customers is as high as possible. By regularly tracking your sales conversion rate, you’ll be able to determine how much of your traffic is actually converting. Websites with simple designs have higher conversion rates. You’ll never get a 100% sales conversion rate. At the same time, you must learn how to increase conversions and the AOV from your distribution channels resulting in the most traffic to your site. You need to analyze the difference between your top performing content and the posts with lower engagement. Lower acquisition costs will result in a higher ROI for your marketing efforts and make it easier for your brand to grow exponentially over time. Take a look at how much businesses are spending on their influencer marketing programs: And 90% of these marketers say they use engagement metrics to determine the success of their influencer campaigns. What metrics are you using to track the success of your marketing campaigns?
How successful are your marketing campaigns?
Believe it or not, this seemingly simple question puzzles many marketers and business owners I work with.
You’re running ads, and customers are buying what you’re selling, so your marketing efforts must be working, right? Not necessarily.
Don’t get me wrong. I’m not saying this means your strategies have failed. In fact, some of your campaigns may be working great. But you can’t make any assumptions.
The only way to know for sure whether your campaigns are working is to measure the results.
By tracking certain metrics, you’ll also be able to save some money. You don’t want to dump money into campaigns that aren’t working.
Here’s the problem. Sometimes it’s difficult to directly tie one promotion to a sale.
That’s why you need to track several metrics and infer based on the results.
This statement holds true for all marketers, regardless of your industry or the size of your business. It doesn’t matter if you’re running expensive campaigns or using tactics to market your company on a budget. You need to track the results.
As I’m sure you know, there are dozens of business metrics you could be tracking. But not all of these will benefit your marketing strategy.
That was my inspiration for this guide. I narrowed down the top 11 metrics every marketing manager needs to track to be successful.
Use this guide as a reference to measure the success of your marketing campaigns moving forward. Based on the results, you’ll be able to tell what’s working and which strategies need improvement.
1. Average order value
The average order value, or AOV, is one of the first things you need to prioritize as a marketing manager.
This metric will help you figure out how to get your existing customers to spend more money each time they shop. It’s arguably the most important number to track when trying to understand consumer spending habits.
The average order value formula is quite simple:
You don’t need to look at it every day or after each campaign. AOV is a metric that you need to keep an eye on over time.
If it rises at certain times, you could potentially connect it to campaigns run during that time.
But if it falls, you’re obviously doing something you want to avoid. These issues need to be addressed.
In my consulting work, I see many businesses using only their number of transactions to gauge success. Is it great to make 100 sales in a day? It depends.
I’d rather make 50 sales for $2,500 than 100 sales for $1,000. Or even better, 100 sales for $6,000.
Do you see the difference? That’s where average order value comes into play.
You want to try to get as much money as possible from your existing customers. To do this, you’ll want to encourage them to add more items to their carts or buy other products of higher values.
Both of these will increase your AOV.
2. Customer lifetime value
The concept behind customer lifetime value is simple.
This metric will tell you the amount of money a customer will spend before leaving your business. Here is the formula to calculate it:
As a marketer, you need to make sure the lifetime value of your customers is as high as possible.
The best way to do this is by focusing on customer retention as opposed to customer acquisition, which I’ll talk about in greater detail shortly.
Yes, you want new customers. But it’s easier to market to people already familiar with your brand, products, and services.
Research shows that your existing customers will spend 67% more than new customers. This will also increase your average order value, which I just talked about.
Keep in mind customer lifetime value when thinking about your acquisition strategies as well. All too often I see businesses make the mistake of shying away from certain strategies because they don’t seem profitable.
But that’s only because they’re using the AOV to make this decision. If the AOV is less than the acquisition cost, they won’t use that acquisition strategy.
However, they’re not accounting for how much that customer will spend over time. That’s why this metric is so important to track.
Plus, you can also learn how to use lifetime value to create a Facebook audience that actually converts.
3. Sales conversions
This connects to a point I made earlier.
How can you tell if the number of sales you have each day, week, or month is sufficient?
To a certain extent, the number of transactions isn’t that important. What’s much more telling when measuring the success of your marketing efforts is your sales conversion rates.
To calculate this, divide the number of sales by the number of visitors to your website.
Here’s a look at the average sales conversion rates for ecommerce shops.
By regularly tracking your sales conversion rate, you’ll be able to determine how much of your traffic is actually converting.
Having low conversions does not mean your marketing efforts are at fault. If people are navigating to your site at a high rate, something else could be preventing them from converting.
That’s when you need to analyze your web design. Websites with simple designs have higher conversion rates.
You’ll never get a 100% sales conversion rate. But you should always try to increase this number.
These people are already on your website. Sometimes…
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