If you are engaged in any sort of digital marketing, you have access to analytics data. From Google Analytics to Facebook insights – there are more data points available to you now as a small business, than ever before.
In theory, it should be easy to track your marketing ROI and adjust your efforts appropriately. However, the reality is that close to 40% of small and medium businesses are not sure of the ROI of their marketing, and an additional 21% believe their ROI is less than it should be.
Access to analytics means little if you are not able to extract actionable insights that can grow and improve your business. Let’s talk about a few ideas that will help you get a better grasp on marketing ROI.
Difference between Performance Indicators and Metrics
KPIs, or Key Performance Indicators, are what we use in digital strategic planning to get an idea of marketing effectiveness. Think about it as a vital sign of your marketing health.
Metrics, on the other hand, are the pure data supplied by software like Google Analytics, Facebook Insights or your e-mail marketing provider.
To put things into perspective, you may consider measuring how many Facebook followers you have (metric), but that doesn’t tell you much about inbound leads (KPI) coming into your business.
When putting together a marketing plan, focus on a few KPIs (5 – 7 is usually enough for a small business) that are easy to manage and pull from your analytics. For example: monthly incoming leads cost per conversion, monthly incoming traffic from social media.
Then, if you notice a rise or fall in one of them over time, you can dig into the metrics to find out the root cause.
Measure What Matters
One common issue I see with small businesses is a lack of focus and clarity. When you are spending time and money on social media, e-mail marketing, and search advertising – what are you actually trying to accomplish?
Having clear objectives for your digital marketing efforts will help tremendously in tracking and generating ROI / ROE (return on engagement).
Even asking a simple question like “What are we using e-mail marketing for?” will help create some clarity.
For example, Shaw uses Twitter for customer service, which reduces wait times and improves customer experience. It also likely creates a reduction in call centre costs (KPI), and improves customer retention (KPI). I can confirm this from a recent personal experience.
Being clear on what your objectives are makes it much easier to select and track KPIs (and the return on your investment). Going with the Shaw example, we might select “new activations via Twitter” as a KPI, or something like a Net Promoter Score (how likely are customer to tell friends about your business), usually sent as a survey after a service chat.
Leading and Lagging Indicators
Now, let’s throw a monkey wrench into things!
Everything we talked about so far is about RESULTS of marketing efforts – the data that is collected after you have performed some marketing.
Now… I would like to consider the inputs. For example, in order to generate a sale from an e-mail marketing campaign (result), you would have to create a marketing e-mail, or an e-mail sequence (input).
In order to improve customer retention over Twitter (result), you would have to reply to customer questions in a timely and professional manner (input).
Successful marketers know that in order to create sustainable marketing growth, they track both inputs and results with the same rigor. In order words, leading and lagging KPIs.
Some ideas for leading KPIs may include: number of articles written for your blog, number of comments left on customers’ Instagram posts, or number of customer service conversations on Twitter.
Putting these three concepts into action will help you get clarity on what’s working, and how well your marketing is contributing to your business success.
Ernest Barbaric is a Certified Executive Coach and Senior Digital Marketing Strategist helping organizations make an impact. With 15 years of experience of working with brands like Yamaha, United Way, and Parks Canada, his unique blend of experience helps clients focus on organic, sustainable growth and purpose-driven leadership both inside and outside the organization.