Marketing Metrics and Data-Driven Decision Making

January 20, 2023

Being successful in business requires being successful in marketing and selling. And the two departments must act as one united front with the end goal being to generate enough revenue for the company to be successful and profitable. “Marketing and sales need to work together as one unified team with a singular goal: driving revenue growth.” – Mark Roberge, Chief Revenue Officer at Hubspot.

Marketing plays a crucial role in driving sales for a business. The main function of marketing is to generate leads and create awareness about a product or service, which in turn leads to increased sales. The function helps to identify and target the right audience for a product or service. By understanding the customer’s needs, wants, and pain points, marketing campaigns can be tailored to attract and engage the right people. This helps to generate leads that are more likely to convert into sales. Marketing also helps to establish a brand and create a positive image for a business. A strong brand and reputation can help to attract new customers and retain existing ones. It also helps to differentiate a business from its competitors and establish a competitive advantage. The marketing department also helps to educate and inform customers about a product or service. By providing relevant and useful information, marketing campaigns can help to build trust and credibility with the target audience, which can make them more likely to make a purchase.

Phil Kotler, Marketing Professor at the Kellogg School of Management, Northwestern University defined marketing as, “The science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures, and quantifies the size of the identified market and the profit potential”.

In order to know if what you are doing is working you have to be able to set specific goals and then properly measure them on a regular basis. Eric Ries, author of “The Lean Startup” emphasizes the importance of using data and metrics to validate business ideas, track progress and make data-driven decisions. “Without data, you’re just another person with an opinion”, says Reis.

The following is a list of metrics one should have at their fingertips when reviewing marketing investments. While this list is not exhaustive it is a great starting point.

  1. Sales Pipeline: Marketers should never forget. The end game is always sales. Sales pipeline means the dollars associated with the potential future sales or revenue of a product or service. It is a measure of the potential revenue that a business can generate from its sales efforts, and it’s calculated by multiplying the number of potential customers by the average value of a sale. For example, a company runs a marketing campaign targeting new customers and generates 1000 leads, with an average sale value of $1000. The total value of the pipeline generated by this campaign would be $1,000,000 (1000 leads x $1000 per sale).
  2. Return on Investment (ROI): This measures the profitability of a marketing campaign by calculating the return on the investment made. A company spends $50,000 on a marketing campaign and generates $100,000 in revenue. The ROI would be 100% ($100,000 – $50,000) / $50,000.
  3. Cost per Acquisition (CPA): This measures the cost of acquiring a new customer or sale. A company spends $5,000 on a marketing campaign and acquires 100 new customers. The CPA would be $50 ($5,000 / 100).
  4. Customer Lifetime Value (CLV): This measures the total revenue generated by a customer over the lifetime of their relationship with a company. A company estimates that each customer will spend $1,000 over the course of their lifetime. If the company acquires 100 new customers, the CLV would be $100,000 ($1,000 x 100).
  5. Organic Traffic: This measures the number of visitors to a website from organic search results via search engines. Tracking this metric over time can give an indication of how well a website is performing in search engines. A company’s website receives 50,000 visitors in a month, and 20,000 of those visitors came from organic search results.
  6. Keyword Rankings: This measures the position of a website’s pages in search engine results for specific keywords. Tracking this metric can give an indication of how well a website is performing for specific keywords, and if there are any changes in rankings over time. For example, a company wants to track the rankings of its website for the keyword “organic supplements” At the beginning of the month, the company’s website is ranked at position #5 for the keyword “organic supplements” After a month of implementing SEO strategies, the company checks again the ranking for the same keyword, and now it’s website is ranked at position #2 for the keyword “organic supplements”.
  7. Backlinks: This measures the number of other websites that link to a website. Backlinks are considered a key factor in the ranking algorithm of search engines, so tracking the number and quality of backlinks to a website can give an indication of its SEO effectiveness. An example of measuring backlinks would be tracking the number and quality of other websites that link to a company’s website. This can be done by using a backlink analysis tool like Ahrefs or Majestic. For example, a company’s website has 50 backlinks at the beginning of the month. After a month of implementing link-building strategies, the company checks again the number of backlinks, and now its website has 100 backlinks. In this case, the company’s website has gained 50 backlinks in a month.
  8. Engagement: This measures the level of engagement with a brand, such as likes, shares, and comments on social media. A company’s social media post receives 100 likes, 50 shares, and 25 comments
  9. Brand awareness: This measures the level of familiarity and recall of a brand in the minds of customers. A company conducts a survey and finds that 60% of people recognize its brand name and can recall its slogan.

“Marketing without data is like driving with your eyes closed.” – Neil Patel, a digital marketing expert and entrepreneur, who is known for his work in SEO, PPC, and content marketing.

Without data, it’s difficult to measure the effectiveness of marketing campaigns and make adjustments to improve performance. By tracking data and analyzing it, companies can better understand their audience, identify areas for improvement and make data-driven decisions to optimize their marketing strategies and drive better results.

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