So, you’ve implemented a digital marketing strategy and you’re ready to take the internet by storm – nice work. Sit back, put your feet up, and wait for the sales to roll in…right? Not exactly.
Digital marketing isn’t a simple A to B journey. Instead, it’s going to require some stop-offs and re-routes along the way before reaching your destination. As such, checking in on the progress of your digital marketing strategies is key to ensuring your approach remains aligned with your end goal.
But how do you know what’s working and what’s not? Fear not – we’re here to save the day! In today’s post, we’ve compiled a handbook of key performance indicators (or KPIs) you can use to measure your performance and track your progress. Aren’t we good to you?
Customer acquisition cost (CAC)
CAC is exactly what it says on the tin: it measures the cost of converting a lead into a paying customer.
Why does that matter to your marketing strategy? Well, it’s an effective metric for informing your budgetary decisions, streamlining the efficiency and effectiveness of your strategy for the ultimate benefit of your profit margins.
Lifetime value (LTV)
Another insightful KPI to consider when performing budgetary assessments of your marketing strategy is LTV – what is the overall lifetime value of your customer? This metric is used to predict the total revenue a business can expect from a single customer.
You can also use LTV as a handy means of comparison when assessing your CAC. For example, if your CAC value is greater than that of your customer LTV, this suggests you’re spending too much in the initial acquisition stage – a signal that your strategy may need some readjustment.
Return on investment (ROI)
This one’s a biggie.
Your ROI is found by calculating your profit vs total marketing cost. How much profit has your digital marketing campaign generated?
To find your ROI, simply subtract your marketing expenses from your sales growth, and divide that number by your marketing cost to get the overall return on your investment.
Return on ad spend (ROAS)
Digital advertisers, this one’s for you.
ROAS is a KPI you can use to measure the success of your PPC campaigns (across Google search and Display Network, and any social media advertising activity). The metric calculates your return by presenting the total revenue generated in the form of a ratio against every pound spent.
For example, if you generated £5 in revenue for every £1 spent on advertising, your ROAS would be 5:1.
This one’s pretty self-explanatory.
Social media marketers will know how important follower growth is to the success of your social media strategies, but, rather than having a total follower count as your goal, it may be more effective for you to track your follower growth over time.
This will help you gain a more comprehensive picture of how well you’re performing. For example, rather than concluding you are simply X followers short of your goal, you can instead track your growth rate. Knowing your follower count is growing X% behind your goal is a more useful metric that allows you to gradually adjust your strategy as needed.
Conversion rate is an essential KPI to track the success of your digital marketing campaigns. Why? It tracks how many leads are actually converting into genuine customers.
The type of conversion this metric is based on depends entirely on your goals. From newsletter signups to product enquiries and from service trials to product purchases, track the conversion most appropriate for your campaign to measure your overall success.
Many digital marketing campaigns focus solely on that initial customer acquisition. But customer retention is an often overlooked metric that’s absolutely vital to consider.
Customer retention KPIs are important as they can provide valuable insight into your customers – who are they and what are their shopping habits and buying preferences?
This information can be a powerful weapon in any digital marketer’s arsenal. By understanding what proportion of your customers are being lost after that first sale, and identifying drop-off points and customer objections, you can tailor future campaigns to hold on to first-time customers and encourage them to convert again by personalising their experiences.
KPIs are vital to understanding the success of any given marketing campaign. While this list is by no means exhaustive, we hope this online ‘handbook’ helps you to measure performance for your business and drive the results you want to see.
Need a hand understanding what these KPIs mean for your current digital marketing strategy? Get in touch with the marketing experts at Land Digital today.