METRICS, KPIs AND ROI: HOW AND WHEN TO MEASURE PERFORMANCE
November 4, 2020
The level of access to performance data we have available today has given companies the unique ability to easily evaluate the efficiency of its marketing efforts across a variety of channels. From impressions, ad clicks and web traffic to downloads, form submissions and leads generated – marketing teams are able to follow and track potential customers like never before.
These metrics are, of course, helpful – allowing teams to quickly adjust marketing efforts based on results shown and therefore spend precious budget dollars as effectively as possible. However, it is critical to know when to react and change versus when to wait and watch.
Record First, React Second – KPIs vs. ROIs
As exciting as seeing real-time metrics are, sometimes that high level of access can be dangerous because it leads to digital marketers measuring ROI too quickly.
The average length of a B2B sales cycle is 6 months. Despite that, trends show that only a mere 4% of marketers measure ROI on or after that 6-month mark. On the flip side, 77% measure within the first month of their campaign, potentially making reactive decisions too soon.
A good rule of thumb is to measure and observe initially using KPIs (key performance indicators), then measure ROIs once sales cycles have run through. If you think of the sales cycle as a book – KPIs are like the SparkNotes for each chapter, with ROI being the summary of the story at the end. Each “chapter” can vary, but should make up a comprehensive “story” as time goes on (hopefully a good one).
It’s always exciting when launching an ad campaign to the world, especially after such significant time and effort has been spent developing creative and honing in on the perfect messaging. You may have even decided to come up with multiple options for A/B testing – good for you! But knowing when to switch your campaign and/or take it down requires a level head and oftentimes some patience.
If the metrics aren’t where you want them to be right off the bat, that’s fine…be patient. Even some of the most successful ad campaigns don’t immediately start off with stellar metrics. That’s why KPIs are so important. Set a realistic goal a few weeks out and reassess once you hit that date.
Usually, unless you are getting significant negative feedback on the ad, you should wait to remove the ad until giving it enough time to show that it is consistently underperforming – you could miss out on impressions and leads by jumping the gun based exclusively on initial metrics.
Some Marketing is Better Than Nothing
Many companies these days are heavily focused on lead generation and therefore judge the success of a campaign solely based on the leads that were generated. Because of this, sometimes marketing teams pull ads that are underperforming in the lead category.
Our recommendation? Don’t stop marketing efforts unless you have a back-up method/campaign. You may not be getting the clicks, but you are still gaining the impressions – and brand awareness is important even though it may not have as much measurable effect on your company’s bottom-line. Simply put – if you don’t have any marketing at all you likely will not be found. With that in mind, it’s better to have something that potential customers can see from your company to keep you top of mind than nothing at all, because they WILL forget. Out of sight, out of mind.Great Expectations
Having access to so many metrics is beneficial for many reasons – flexibility, traceability and being able to set more realistic sales goals. But keep in mind – there can be a downside to such transparency in the form of unobtainable expectations.
We’ve all been there. The media outlet tells us that X number of people view their content for an “average” of X number of impressions/leads. Based on those figures, you tell your company that if we advertise through said media outlet, the ROI is X. Then the results come in…and sometimes they don’t meet the promised performance.
When marketing initiatives are only assessed based on their ROI and metrics, marketers feel immense pressure. This can lead to being forced to justify every single marketing dollar with the promise of high-level performance which, when potentially not met, may result in the loss of marketing funds. Our advice? Be cautious when putting together KPIs and ROI numbers. The last thing any marketer wants is to lose budget dollars, impressions and potential customers because their greater team is stuck on inflated performance expectations that may have not been entirely realistic to begin with.
The key takeaway is moderation. Use available metrics wisely – they are helpful but not the only factor when it comes to measuring campaign success. Be sure to consider the bigger picture when it comes to your overall company goals. Marketing is more than getting as many leads as possible at one time. It’s building a foundation to establish your brand presence and credibility in the industry.