How to Measure Success of a Marketing Strategy

 

1. Return on Investment (ROI)

The first metric that is generally the most common among other tools is the Return on Investment (ROI). ROI helps a business to measure how much money has been invested and spent on marketing expenses and how much they earned back. Businesses aim to achieve a high ROI because the higher the ROI, the better it is.

 (Sales Growth – Marketing cost)/Marketing cost = Marketing ROI

For example, a handbag company sets up a social media campaign for handbags that costs $1000. In return, they generated $5000 worth of sales, which means the ROI is $4000 (400%).

2. Cost per win

Cost per win is a tool to measure the expense of each sale contrary to the overall marketing cost. Also, this tool can be used as a comparison to determine which campaign performs better. For example:

• A $1000 social media campaign for a skincare product produces five sales, which means the cost per win is $200.
• A $1000 newsletter campaign for the same product produces 20 sales, thus, the cost per win is $50.

3. Cost per lead

Cost per lead is used to measure marketing campaigns’ effectiveness from a financial point of view, with a focus on the number of leads instead of sales and wins. This tool can be a guideline for considering which area is worth the money and which is not.

For example, a $1000 campaign for a skincare product producing five sales from 10 leads would cost the company $100 for each lead.

4. Cost per conversion

Businesses working with online sales directly will find this metric particularly useful, especially when the customer can add items directly to their carts. It measures the cost of converting a website visitor into a customer.

5. Customer lifetime value

Customer lifetime value (CLV) is calculated by multiplying the customer's average sale amount by the number of times they buy each year by the average number of years they remain a customer.

"Average sale per customer" x "Average number of times a customer buys per year" x "Average settling time in years for a typical customer." = CLV

 For example, if a customer spends $100 on the average sale and buys four times a year, the expectancy of the average settling time of the customer is five years.

This means, 100 X 4 X 5 = $2000 (CLV).

6. Cost per acquisition

This metric calculates the cost to gain new customers through marketing. It could be supported by knowing the overall CLV on determining the right amount.

7. Conversion rate

The conversion rate measures the number of website visitors that become leads or customers within a specific time period of a campaign. For example, 1000 people visit the business’ website within one week of a marketing campaign and produce 100 leads, this means the conversion rate is 10%.

8. Website Traffic

With website traffic, a business can determine the success rate of the website and compare the numbers to other time periods outside the campaign. It also helps businesses to distinguish which and when the campaigns are working. A bit of a tip here, the drop number of website visitors could be caused by a technical issue such as inactive or broken links.

Also, a few things to consider regarding the website traffic includes:

• Traffic by source: this could be used to assign more money to the source that attracts more visitors.
• New vs. returning customers shows the relevance of the website in the long run and whether the website is worth returning to
• Bounce rate: the number of visitors that leave the website after only viewing the landing page, this could indicate disinterest, lack of content match, loading duration, or errors.
• Exit rate: this could determine at which page the customer lost interest.
• Page views: to determine which website page gains traffic the most to place an advertisement.

9. Impressions, reach, and engagement

Impressions are the number of when a person views an ad, even if the same person views it more than once. Unlike impressions, social reach tells the number of people who saw content with only counts individual users. Meanwhile, engagement numbers are gained based on audience interactions with the content such as likes, comments, shares, clicks, and saves.

10. Email open rate

To determine the email engagement rate, the below metrics could be considered key points:

• The number of opened emails
• The number of unsubscribes
• The number of unopened emails.

11. Click-through rate (CTR) and Cost per click

The click-through rate measures the comparison between the number of people clicking on the content within an ad and the number of impressions the ad made. However, the cost per click is more into the budget area and how much amount of money spends every time a consumer clicks on the ad. Ideally, the lower the cost, the better.

When implementing your marketing strategy in a campaign, setting up an evaluation plan is crucial. Without evaluation, understanding the success or failure of your strategy is impossible. Using the steps mentioned above, marketers can measure the success of their strategy and implement changes to their next one.

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