The business attempts to improve productivity in all functional parts of the business, but to achieve better marketing productivity remains especially important because it gives concrete results – increased sales. The company sets statistical data (also called key ratios or KPIs) to measure productivity in their marketing initiatives and success of their strategies.
Sales of products as well as services frequently require a number of stages in which a company always puts customers closer to purchasing prospects. This method is called nurturing. An entrepreneur measures productivity through his research efforts following the actions that users have taken to learn about the business and the products / services.
They can, for example, track number of prospects subscribed to their company newsletters, how to read their blog or attend their webinars, how to ask for more information via email, and visitors visit the site to explain the business value of their product and services . In order to achieve the sales goals it has established, the business must first increase customer options the company has. Measuring productivity also means monitoring where customers come.
For example, the print ad generates most leads and they come from word-of-mouth recommendations of satisfied customers, attendance at the exhibition, participation in social media or those that have visited the site.
When he knows what his main sources lead, he can use it for additional marketing tools for lead generation systems that work well and analyze why methods do not work, along with hope and align these strategies. The owner of the company wants to make the best use of marketing costs.
Calculating the cost of marketing by lead is the value for measuring the effectiveness of these costs. Assume you spent 5,000 marketing for an area, resulting in 200 potential customers. Your marketing price per lead now is 2.5. If you can reduce cost per line, your business can rise leads with 500 with the identical budget.
More potential customers mean higher revenue and maintain constant marketing costs, even greater profits. Conversion rate will measure and track -how many potential customers are paying customers.
The increased conversion rate points to success of marketing strategies – adding new users with same use on the market. Another way of measuring is to calculate average customer revenue. The company with 2,000 potential buyers and 100,000 revenue is average revenue for 50 leads.
By increasing conversion rates, total revenue will be higher because of the revenue / lead. The company can use statistics associated to the sector in which business operates.
As a conclusion – the major marketing metrics you absolutely have to track in any business are:
- total marketing cost
- number of leads
- cost per lead (this is the total marketing costs divided by the number of leads generated)
- conversion rate
- cost per customer acquisition (CPA) – how much you are paying to acquire a new customer
- customer lifetime value (how much a typical customer generates for your business – this is very important in order to manage the CPA targets)