Is your marketing working? Do you even know?

We often get caught up in lots of metrics, or go the other direction and not look at the metrics at all. If your data & analytics aren't clear, you could be losing money on every sale.

Why is it important?

A critical part of the marketing process is to know what's working and what's not. You cannot do effective marketing without knowing if it's working, and without effective marketing, you'll struggle to grow your business.

Analytics...

So we know we need to do effective marketing, and the only way to know if it's effective is to measure key things accurately. This is where your analytics come in.

Your analytics are made up of a variety of sources and metrics. These would include things like your website traffic, conversion rates, movement through your online funnels, etc. It also would include measuring any paid marketing campaigns, with metrics such as your cost per click (CPC), cost per lead (CPL), and your overall cost per acquisition (CAQ).

What do you measure?

Each business would have different metrics to measure, depending on how your business works and what marketing campaigns you run.

There are a lot of generic metrics to look at, some listed above. However, it's really important to take a look at your whole marketing campaign and sales process and identify the key metrics that can tell you if the process is effective for your campaign/business.

For instance, a lot of people focus very heavily on CPL (cost per lead). This is what it costs you from paid advertising to get someone to fill out a contact form or book a call. I.e. how much you pay to get a lead at the top of your sales process (your funnel).

The challenge is, this is only part of the puzzle. You need to look at this number in context. You could get a ton of really cheap leads, but how much you pay for a lead could drastically affect how likely it is that one of those leads turns into a customer.

So work through your whole process and identify all the key things to measure.

And Attribution?

Here I'm talking about matching up a goal or conversion (sales, form submissions, meeting bookings, etc) to where it came from.

If you're running a really basic ad campaign with a single channel (like Facebook) and only one ad set, then it's easy because you could attribute all sales in that campaign to that one channel.

However, most effective marketing campaigns would consist of multiple channels and different ad sets. So attribution becomes a little more tricky, but even more crucial to measure.

The key point is that you need to know where your sales are coming from. The analytics and measurement data you're collecting should be able to match your conversions to the original marketing source (and other marketing touchpoints along the way).

Making Sense of the Data

Once you're accurately measuring everything, you need to start making sense of the data to make decisions.

Once you've got some data to work with, you can start to look at the whole process and match up, for example, how much a lead costs (your CPL), and track it all the way through to how much profit you make from that.

So now, you should be able to see across different marketing campaigns, channels, or target audiences, where it's working or isn't.

Example...

Take this example: you have a product for sale and are running a similar marketing campaign, but targeting different regions.

Let's say with Region A you have a CPL of $10. So every new lead costs you $10, and for every 100 leads, you make a sale of $1,000. This means you'd be breaking even.

Region A
100 leads x $10 per lead = $1,000 cost
1 sale per 100 leads @ $1,000 = $1,000 in sales

Now let's say for Region B, you have a CPL of $15. You may want to turn this off because it would be losing you money right? But let's say your conversion rate is much higher, and you are making 2 $1,000 sales for every 100 leads.

Region B
100 leads x $15 per lead = $750 cost
2 sales per 100 leads @ $1,000 = $2,000 in sales

So if you were to look at just CPL, you may have stopped your ads in Region B because it's more expensive, but now you should probably stop Region A ads instead because you're probably losing money on it.

It goes deeper...

So this is all great at a top level, and you should definitely keep optimizing to be profitable at the top level.

But now what happens when someone came in as a lead in the above example at $15 CPL. They don't immediately buy anything, but they stick around in your community or email list for a few months and spend an additional $5,000 with you. Whereas the person who came in at $10 CPL, comes from a region where they don't have the same buying power, and never buy anything else from you.

The above examples also only look at your ad cost and sales revenue. You need to factor in what it costs you to deliver the product, i.e. what is your margin on your sale.

If you're not watching your costs as well, your marketing campaign could look profitable, but you run the risk of losing money with every sale you make!

Make Data-Driven Decisions

So the key point of all of this, is that you need to accurately measure all components of your marketing and sales process, and then analyze the data.

This can really help you to find new opportunities, spend more on campaigns that are working and stop the ones that aren't.

There's certainly merit in trusting your gut, but get the data to back up any hypothesis, and know for sure what is actually going on.