Marketing is often referred to as a soft science, but a science, no less. Like other scientific disciplines, measurement in marketing is paramount to understanding efficacy and impact. Too often, businesses without marketing leadership in their C-suite find it challenging to accurately measure a return on marketing investment (ROMI). What they do measure is often misguided or informed by key performance indicators (KPIs) that are irrelevant to fiscal goals.
For businesses that find themselves in similar scenarios, employing a fractional chief marketing officer (CMO) model can clear the fog around marketing initiatives and ensure that KPIs track and promote sales success into the future.
Understanding to Establish Relevant Marketing KPIs
Efficacy and impact are two essential areas of measurement for marketers. However, with every innovation in digital and traditional marketing, there’s a new corresponding suite of metrics to track those areas.
How do you know which KPIs are right for your business? How do you avoid going down the path of self-congratulatory KPIs that do little to bolster confidence outside the boardroom?
First, you need to understand the nuances of KPIs.
What Are KPIs?
Key performance indicators are the mileposts along your marketing journey. They serve to measure the value against specific marketing and sales objectives, so you can quantifiably track whether the strategy delivers on goal expectations. Here are a few examples of common KPIs:
- Cost per lead: How much you’re spending to acquire new business.
- Conversion rate: Percentage of users who executed a targeted action like clicking an ad.
- Session duration: Amount of time a user spent engaging with an ad or webpage.
- Cost per click: The amount it costs per click on paid ads in a campaign.
- SEO ranking: After optimizing your online content so that a search engine will show it as a top result, you can measure your brand’s position and findability.
What To Measure?
With many KPIs out there, it’s important to pick ones relevant to your business. If social media isn’t a significant pillar in your overall strategy for lead generation or sales, measuring engagement rates is useless. If email marketing is essential, you’ll want to track the exact click-through rate on a campaign. The point is, you need not track things that are not indicators of success for your business.
Avoid Vanity KPIs
Everyone likes to feel good about their work — especially the person delivering results-oriented marketing reports. Be wary of KPI reports that only offer positive numbers in categories that mean little to your business or marketing metrics that are inherently easy to pad. If actionable metrics aren’t included, the report is of the vanity variety. These can be:
- Total social media followers: Cumulative total of followers on platforms like Twitter, Instagram or Facebook (these could be personal friends and competitors but not necessarily prospects).
- Pageviews: The total number of people who view your webpage (unique users or time-on-page are more telling).
- Impressions: Can be a padded stat that does little to illustrate value or user engagement. Impressions are useful if they drive people to your call-to-action (CTA).
Understanding KPIs will help you feed a useful dashboard so you can continue to scale, pivot, or grow your business. Before you dive too deeply into creating the dashboard, be sure you know where you’re going.
Know Where You’re Going & How You’re Getting There
Do you have a well-structured strategic plan that guides your leaders toward the same destination? Regardless of your business model, this is a critical tool to drive and measure success.
While two-thirds of employers report increased productivity in the new world of increased remote workers, there is risk of losing alignment without a strategic plan. This is true even for the smallest start-up that relies on contractors and vendors to act as partners in their business. Importantly, a strategic plan is also a guiding force behind your marketing plan.
While there are multiple steps to creating a marketing roadmap that works for you, the first of six marketing fundamentals is the most important in any business journey: know where you’re going. Defining this step illuminates vision and focus, which leads to intimately understanding your business and better determines where marketing should be concentrated.
Consider this: Measuring miles traveled on a road trip is an important metric but meaningless if not applied to a road map with a destination. That is, it’s crucial to know where you’re going before establishing relevant KPIs. Analogous to this example, your marketing must have a purpose in order to measure it correctly. Depending on your company’s strategic goals (for both the short and long term), tracking your marketing metrics will look different than for another organization.
Better Understand Your Consumer
An executive team certainly knows their product, but their customers? That’s not always the case. A great example of this comes from a previous client, where an audit of market pricing and product positioning inspired a business model change.
We interviewed buyers and distributors, finding that a product in question wasn’t advantageous to distributors or end-users. This led to a complete rethink in the model, and in the end, proved a fresh perspective was necessary to optimize business and establish new revenue streams.
Often, a fresh set of eyes from an experienced marketing leader can identify new avenues of consideration, and in turn, help define new metrics a business should measure.
Set Goals and Track Often
It’s easy to get overwhelmed by everything that goes into effective marketing and measurement. While end-goals are essential, obsession with a destination can muddy thinking when it comes to immediate needs. This is best described by the rocks, pebbles and sand approach.
Visualize this: To arrive at sand, first you need to whittle down the rocks that represent your immediate, big-issue needs. As you chip away at the large rocks, pebbles begin to emerge, which are smaller issues that need to be addressed along the way. As you’re further chipping away at the issues, you’ll eventually arrive at sand.
When thinking about your KPIs, it’s undoubtedly important to keep the end goal in mind and focus on quarterly goals (a.k.a. rocks) that you’d like to track, measure and adjust. Tracking activities like mobile entrances and pageviews can lead to more overarching goals to follow, like customer lifetime value and pipeline contribution.
Further, the things you need to measure today may be different as your company grows and you discover how you can translate these into generated revenue. This is how you know your marketing is successful.
Way Better Marketing
So how do you create these rocks and manage your marketing strategy? Understanding how your rocks turn into sand leads to measurement tactics that showcase your vital progress.
If your executive suite doesn’t have the time, energy, or know-how to undertake that mission, consider hiring a Fractional CMO. Turning this corner with your marketing and measurement alleviates burden and drives results for the short term while planning for the long run. A Fractional CMO’s fiduciary responsibility and industry experience will ensure your marketing efforts drive success and deliver quantifiable results. If you want to know more, contact me today!