Are you spending too much time on marketing?
But what does that mean?
Figuring out which tactics are actually doing all the work — and getting rid of the rest.
Here’s how to do that.
Understanding Your Marketing’s Actual ROI to Refine Your Strategy
For most small and medium sized businesses, the money spent on marketing is considered to be doing it’s job so long as the business is getting customers. But most businesses don’t really know which things that they spend marketing dollars on are actually recouping that money (or earning more). If that sounds like you, don’t worry. It’s incredibly common. (Yes, even at companies that make tens of millions of dollars a year!). But it doesn’t have to be that way. Tracking your marketing dollars can help you determine which channels (or methods) are working best. Then you can choose to spend more money in those ways. It also helps you determine which are less effective — so you can spend less. But how do you measure that success?
The Danger of Vanity Metrics
When it comes to marketing, a lot of people focus on “vanity metrics.” These are numbers that look good, but really probably don’t mean a whole lot. It’s easy to feel good when a Facebook post gets dozens of likes. Or when your Instagram suddenly gets a ton of new followers.
Tracking those numbers can be really fun. But it’s important to remember that numbers only matter if at the end of the day you can point to how they helped you land new customers.
So, What Should You Track?
The metrics you actually want to track are often called Key Performance Indicators (KPIs). A healthy marketing strategy is one with tactics at each stage of the funnel. We’ll want KPIs for each stage of the funnel too. These will give you actual numbers to back up your decisions with — so you can refine your marketing strategy.
Start by determining where each of your marketing activities fall on the funnel. Then you can compare them against other marketing activities in that same stage of the funnel. Let’s look at PPC ads for a moment as an example. PPC stands for Pay Per Click. These might be ads on Facebook or on Google. In either case, they are called Pay Per Click because you pay a small amount every time someone clicks on your ad. Basic PPC ads usually fall into the “attract” stage of the funnel. So how do we decide of they are a good marketing investment or a waste of money?
A Basic Marketing Funnel Example
Let’s say we have a very simple marketing funnel for our ad. We’re offering puppy classes, and advertising on Google for people who search “Puppy Classes in Raleigh, North Carolina.” When people click on the ad, we take them to a page on our website all about our awesome puppy classes. On that page we have a form for them to sign up to get a puppy training guide. They also receive a call from one of our trainers to answer any questions they may have.
Our KPI for this particular “path to purchase” might be clicks on the ad that led people to visit our puppy page (attract). The next KPI is number of people who filled out the form on that puppy page and the percentage or ratio of people who visited to people who filled out the form (convince). Finally, our last KPI is the number of people who, after filling out that form, decided to sign up for the class (convert).
Find Your Cost Per Lead to Optimize Your Strategy
Once we know our KPIs for each stage of the funnel, we can figure out how many people we need to put into the top of the funnel to get the number we want out the bottom of the funnel. Then we can look at how much money the PPC ad is costing us per click. That calculation is our cost per lead (CPL). Multiplying that by the number of people we need to add to the top of the funnel to get 1 person at the bottom of the funnel gives us our customer acquisition cost (CAC).
Repeating this process for each channel will let you compare apples to apples, so you can decide which channels are the most effective to refine your marketing strategy!
Want to try this on your own tactics? Sign up for the newsletter, below, to get a freebie that’ll help you plan out your funnel strategy!