Measuring Marketing Efficiency Is Only the Beginning
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If you’re not measuring your marketing efficiency, your marketing is going to suffer, but marketing efficiency is only the beginning — what matters most is identifying the pieces of data that can make a difference in driving your marketing strategy.
It’s not exactly a secret that marketing is expensive — especially digital marketing. It’s important not only to get as high an ROI on your marketing investment as possible, but to also ensure that marketing is both efficient and effective…
As long as it’s the right type of marketing in the first place…
We know that measuring the efficiency of marketing is as critical to the success of the modern marketer as is measuring the ROI of their marketing efforts. The fact is this and nothing less: Marketers who measure what they do get more leads and sales for less time and effort.
Consider these statistics:
- Companies that don’t put data at the center of their marketing and sales decisions are missing out on a 15-20% increase in marketing ROI (Source)
- 72% of organizations that calculate ROI say their marketing strategy is effective (Source)
- Marketers that calculate ROI are 1.6 times more likely to receive higher budgets (Source)
- 91% of senior marketers believe successful brands use customer data to drive marketing decisions (Source)
- 63% of CMOs say ROI will be the standard for their performance (Source)
- B2B CMOs say demonstrating ROI is their No. 1 concern (Source)
But while it certainly is important to know just how well your marketing is performing compared to how much you’re investing into it, it’s more important to determine other pieces of data that can really influence your strategy.
It’s nice to know that one piece of marketing is efficient and effective, but what if there’s a far better solution that you’re missing? For instance, suppose someone is spending all their money on radio ads, and the radio ads are hitting an ROI of 20%. They’re getting 100 leads a week from these ads, and for them, that’s pretty good.
ROI and efficiency aren’t going to tell them that they could be getting 1,000 leads a month if they invested in digital marketing.
So while it’s good to know they’re not wasting their money completely on radio ads, in a way they are — and measuring ROI or the efficiency of their marketing ain’t gonna tell them that.
Measuring the Efficiency of Your Marketing and ROI Is Just the Beginning
I’m not going to walk you through how to measure ROI or the efficiency of your marketing here — you can easily look up the calculation for ROI on your own, or you can just grab our Marketing ROI Calculator, which will do it for you.
Instead, I want to pound this idea into your skull — measuring ROI, measuring the efficiency of your marketing, is all well and good, but it means nothing on its own.
ROI, efficiency — they’re just pieces of data that tell you how well a particular type of marketing is performing.
They can’t tell you that there’s a better option out there.
That being said, you can still use ROI and efficiency info to inform your current strategy and make the necessary changes to increase your returns, remove marketing tactics that aren’t working or worth the money you’re investing in them, and search for new tactics that can support the tactics that are working well… but you still won’t know if there’s a better option out there, a better marketing tactic that would blow all of this out of the water.
ROI is just a piece of data
ROI is a number that has no real meaning in and of itself, but if that number inspires you to drop your expensive radio ads and increase your budget on Google Adwords, and if that, in turn, reduces the cost of customer acquisition while also increasing sales/leads, then that number suddenly has significance. The importance of ROI is knowing where you stand, but you also have to translate that into action.
Beyond that, you have to look at other pieces of data that tell you what other types of marketing you should be doing along with (or instead of) what you’re doing currently — that is, other pieces of data that can inspire you to change your entire marketing strategy.
Therefore, it becomes important to recognize what works and what doesn’t — taking the time to understand, collect, and pick out the right pieces of data to further improve your marketing efforts (and ultimately the success of your business).
The Deeper You Examine Your Data, the Better, but Fuzzy Data Is Better Than Nothing
What are those other pieces of data that are so much more helpful than simple marketing efficiency or ROI? Here are just a few examples:
- Where are your most valuable customers coming from?
- How did they hear about you?
- Where are valuable potential customers hiding and why haven’t you been able to reach them?
- How valuable is each customer to you over their lifetime?
- What is the most valuable segment of your market?
- How many touches does it take to get someone to purchase or walk in the door?
- How much of your time and your employees’ time is spent with each lead/sale?
- How much this stuff is REALLY costing you (when you include manhours)?
Information like this can change your entire marketing strategy. You can pair the information above with other pieces of data, like the efficiency of your marketing and the ROI on each tactic, to determine what marketing efforts are working the hardest for you, which can go, and what entirely new types of marketing should be considered.
When calculating your ROI, you want to be accurate if possible, but it’s these other pieces of data that are probably more valuable to you (customer lifetime value is a perfect example).
A fuzzy understanding of customer lifetime value for a specific customer type that you’re targeting is probably more valuable than the knowledge that your Adwords spend has an ROI of 50%.
Why? Because if I know that one segment of my market is far more valuable than another, it could change my entire marketing strategy.
That number gives me an accurate idea of the action I need to take.
Determine the Pieces of Data That Mean the Most — Don’t Get Obsessed With Accuracy
We can get really accurate numbers on some pieces of data that are fairly useless. The goal is to go from determining simple stuff, like the efficiency of my marketing or my marketing ROI, to determining the more valuable pieces of data and doing my best to get accurate on those pieces.
What matters is taking the time to identify the pieces of data that matter the most to your success
Who cares if my Adword spending is driving X amount of traffic a month?
What matters is how many leads/sales that Adword investment is resulting in.
Who gives a hoot if my blogging has an ROI of 50% if all the sales that result are low and non-recurring?
What does it matter to learn that my outdoor advertising is extremely efficient for the cost if it turns out that none of my most valuable customers are seeing those ads?
See where I’m going with this?
What matters is taking the time to identify the pieces of data that matter the most to your success.
Even if some of these numbers are difficult to calculate, even if you can’t get super accurate information (for instance, who knows how long a person has been creepin’ on your website before they decided to click an ad, or how many times they walked by your store, or walked in and left without a purchase, before they actually bought something), it’s better to have fuzzy data that helps you understand how well your marketing efforts are working and how your marketing strategy should be adjusted than to have precise data (like traffic to your website) that’s not tied in a meaningful way to the success of your business.
But to get started, you have to have an understanding of some of those numbers. That’s why we built the Marketing ROI Calculator. It walks you through the process of calculating your ROI and your marketing efficiency (and it also helps with some more useful pieces of data, like lifetime value for your customers).
If you’re ready to get serious about your marketing, get the Marketing ROI Calculator — click to get started.
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