7 Steps to Measure Marketing Performance and Not Mess Up
Many companies complain that they can't figure out if their marketing really works.
With numerous businesses boasting about their 10x ROI on every marketing campaign, it's hard not to get disappointed when you can't see clear proof that your campaigns deliver real value. However, unclear performance indicators are a more common problem than you would think.
Measuring marketing performance and ROI in financial terms is not as easy as it looks. A recent study by the Content Marketing Institute shows that in 2021, 87% of B2C content marketers measured surface-level metrics, such as page views, while only 40% of content marketers dived deeper into their metrics, such as the cost to acquire a lead.
However, the real question is how companies measure the ROI of each campaign and convert their marketing metrics into actionable numbers that represent revenue growth.
🚀Discover the best way to build your performance marketing dashboard.🚀
We're not going to teach you how to calculate ROMI, CPC, CPA, and other metrics in this post. What we're going to do is identify the challenges that prevent you from getting the full picture of your marketing efforts and review surefire solutions to these challenges.
Table of contents
7 steps to measure marketing performance
With a multitude of marketing channels and opportunities to promote products and services, marketers often become confused about what they need to track and how to understand if that particular effort pays off.
Let's go through the steps you can take to overcome the most common challenges that teams face when measuring their marketing performance.
The trouble with not having a goal is that you can spend your life running up and down the field and never score. – Bill Copeland
Defining the goal for each paid ad campaign, piece of content or email campaign is crucial. It'll help you understand whether you've reached your desired result or not and identify the points for improvement in the long term.
Let's take content marketing as an example.
Today, you can't drop a piece of content and pray that it's going to work.
There are just too many variables in the equation. Different companies use different marketing metrics to measure the success of each piece of content.
Here's a chart from HubSpot's "Not Another State of Marketing" report that shows the major marketing performance indicators to measure the success of a content strategy:
First of all, you have to create informative and valuable content to rank higher on Google. Users rarely go beyond the first search results page, so you have to aim as high as you can.
However, ranking higher on Google is only half the battle. Your content should resonate with readers to make them spend as much time as possible on your website. Otherwise, you'll get many visits, but potential customers will leave your website almost instantly, rendering all of your content creation efforts meaningless.
The bounce rate will tell you whether the page’s content is engaging enough for users to continue their journey on your website.
Finally, the content should be aimed at a particular audience. That's the main goal of your content: to bring quality leads and generate revenue. Without well-built buyer personas, marketers can't reach out to the relevant audience.
Even if your content attracts readers and they book calls or demos, they're not necessarily your clients. If your product is designed for enterprise-level companies but the main audience of your website is startups and small companies, then your current leads probably won’t convert to sales.
And that's where it all comes down to strategic planning and goal-setting.
On paper, your content attracts thousands of engaged visitors. But in reality, they generate zero revenue. No analytics tool can fix this issue.
Before making a blog post, launching paid ads, or creating email campaigns, you need to define the expected results.
If your main goal is to sell something, then you have to know your customer. Conduct detailed research, create multiple buyer personas, gather precise keywords, and create customer-oriented content. Metrics can help you understand that the content is irrelevant to users or that it's not engaging. But if the numbers exceed your expectations and your revenue doesn't grow, the problem lies in planning.
One of the most common approaches to setting up goals is the SMART framework.
Another common mistake when measuring marketing performance is setting unrealistic objectives.
As much as it hurts to say, the biggest driver of marketing campaigns' success is out of the marketers' control. According to research by Paul Dyson, the founder of data2decisions, the company's market share and the overall market size have an 18x advertising profit multiplier.
Put simply, the larger your brand, the higher the return on your marketing investment. Big brands drive bigger results as they are better known and customers trust them more.
That's why it's important to set realistic expectations and not set the bar too high.
As we have explained, large brands will get high ROIs even with poor ads, while small brands aren't likely to achieve the same numbers even with perfect execution of the marketing campaign. However, it doesn't mean that the ROI for small brands will be unprofitable. Smaller brands need to set achievable goals for their advertising and invest in growth to make their campaigns more profitable over time.
Share of Voice (SOV) is a marketing performance metric that shouldn't be overlooked when building a global advertising strategy.
Share of Voice is the share of the market that your company holds compared to other companies when advertising. With all other things being equal, the company that has a greater Share of Voice will obtain a larger share of the market in the long term.
When a brand's Share of Voice exceeds its share of market, it's called Excess Share of Voice (eSOV = SOV - SOM).
A study by Nielsen found that 10 points of eSOV result in 0.5% market share growth in a year. So, small companies seeking growth should invest more in marketing to expand their outreach, increase brand awareness, and build a strong brand image.
As stated earlier, each marketing dollar spent by a large company generates more revenue than the same budget invested by small brands. However, steady growth requires companies to invest more in marketing to be more recognizable.
Building Share of Voice becomes a significant challenge because a lot of companies focus on working with their current target audience and creating narrowly focused marketing campaigns. Even though these efforts pay off, their growth gradually slows down, while niche leaders begin to gain momentum.
If you want to track your growth efficiently, this set of dashboards will help you to visualize your data efficiently.
Eventually, a company’s marketing performance will deteriorate, leaving its analysts wondering how that could happen.
To increase the brand's Share of Voice, companies have to invest more in marketing. Especially the ones that have a small market share.
Let's consider a case study by Lidl, a German-based discount retailer chain.
When Lidl entered the British market, it faced huge competition with other brands. With a 3% market share, Lidl had a 5% Share of Voice, which was barely enough to maintain their existing percentage of market share. That's why their strategy was to increase their Share of Voice to attract more consumers to their brand.
In two years, Lidl increased and maintained their Share of Voice at 19%, giving them a 16% eSOV. By sticking to this strategy, Lidl was able to double its market share in five years, growing from 3% to 6%. Of course, marketers invested a lot of effort into TV and social media campaigns, but the results were spectacular. You can learn more about this case from Marketing Week's video.
As you can see, strengthening your brand's Share of Voice leads to impressive changes. That's why this metric is so important when measuring marketing performance.
Disparate data sources, siloed data across the organization, redundant analytics tools, and other factors may have a negative impact on the quality of your marketing insights and distort your marketing analytics results.
In a recent Forrester Consulting Thought Leadership Paper, 72% of surveyed companies claimed that managing CRM systems across technology silos is moderately or even extremely challenging.
With isolated data, it's hard to keep track of your prospect's interaction with the brand and keep an eye on all touchpoints.
That results in incorrect lead attribution and wrong strategic decisions. Here's an interesting insight by Chris Walker, CEO at Refine Labs, on how modern attribution is broken.
The majority of attribution models don't show the most effective marketing channels; thus, it becomes hard to understand where your clients come from and what makes them move toward the sales funnel.
To build a truly effective attribution model, you need to use a data-driven approach and attribute your users based on gathered insights from all channels.
To improve data accuracy and get a holistic view of your marketing performance, you need to:
- Consolidate all your marketing data into one place
- Remove the silos between marketing, sales, and customer service departments
- Normalize insights across different data sources
These milestones can be achieved by integrating a marketing ETL system into your current data infrastructure.
An ETL (extract, transform, load) platform aggregates data from multiple sources in a unified data warehouse. All departments can access this storage and use insights for their own purposes, such as analysis, research, reporting, and more.
When it comes to marketing data, it's better to use marketing-related ETL platforms due to the specific features they offer.
Marketing ETL platforms streamline and normalize all marketing metrics across different channels. For example, Improvado ensures automated data mapping for 300+ sources and unifies disparate naming conventions without human effort.
Additional features, such as saving retrospective marketing insights and creating custom extraction templates for new data sources, are features that marketers can't find in general-purpose ETL systems.
With ETL systems, such as Improvado, companies eliminate all data silos between marketing and sales departments and get a holistic picture of their revenue efforts with zero engineering and in the shortest time possible.
Kelsey Raymond, co-founder of Influence & Co., says the following about the prioritization of leads when measuring marketing performance:
"Many companies measure a marketing campaign's success off of leads. Our most successful campaigns produce a low number of leads but a high percentage of qualified leads. We have a team member who goes through leads that come through our website and determines if it is high quality or not. She then reaches out to those people individually instead of just leaving them on an email drip campaign."
That's the approach that all marketers should use.
Leads themselves don't bring you any value. Even if they fill in website forms, use the live chat, download gated content, or do something else, they're still just another email in your pipeline.
By researching and vetting MQLs, marketers can save time for sales reps. Sales teams will spend more time working with leads who are interested in purchasing your product.
As for marketing teams, SQL-based marketing performance measurement will help them understand whether they are aiming at the right audience and how they can improve their efforts to attract the most promising prospects.
Tracking your marketing metrics with a pencil, paper, and spreadsheets ain't gonna work if you want to see accurate results without wasting hundreds of hours. Manual reporting is long gone and replaced by business intelligence tools.
Marketers and data specialists who track their results in an old-fashioned way usually don’t have a holistic picture of their digital marketing efforts and draw up incorrect reports because of mistakes during manual data entry.
Besides, analysts who don't take visualization seriously may miss out on valuable insights that are hidden from their sight.
Anscombe’s quartet, developed by the famous statistician Francis Anscombe, is a clear example of how data visualization can help uncover new insights. If you plot the exact same dataset on the x/y coordinate plane, each dataset will tell you a completely different story.
Since visualized insights are easy to follow, they can be used in different marketing activities. Actionable charts can be reused in your research, blogs, and social media posts to back up your thoughts and make your message clearer to your audience by visualizing key takeaways.
Before diving into data visualization, your marketing team needs credible data that will be visualized. This can be achieved with the marketing ETL tools that we discussed earlier.
What's even better about ETL solutions is that some of them have a direct integration with business intelligence tools. For example, Improvado streamlines cleansed data to Tableau, Google Data Studio, Power BI, and other visualization platforms.
Here's an example of an email marketing dashboard that we created here, at Improvado:
The dashboard shows both high-level and advanced information about your email campaigns.
With BI tools, analysts can set up real-time dashboards to provide a bird's-eye view of the key metrics and KPIs related to your marketing initiatives.
The tool you're going to choose should have the following characteristics:
- Embeddability. Different departments across the organization might work with different tools, and the migration of reports may not always be smooth. With an ideal BI tool, you'll get the same report quality in every tool and the importing process won't be confusing.
- Ease of use. If each member of your marketing team will have access to the BI tool, you will need to keep in mind that most of them aren't data scientists. That's why the tool should have a gentle learning curve and be friendly to new users.
- Clear and concise dashboards. Your visualization tool should have an appealing interface and provide all of the required information in a single tab. Additionally, it needs to be easily customizable because, at some point, you'll definitely need to add new metrics or data sets.
Our recommendation is to use an ETL marketing platform in combination with the leading BI tools, like Tableau or Google Data Studio. In this way, you'll get a fully automated data ecosystem that allows you to track marketing performance with continuously updated insights from a single tab.
When companies track their digital marketing performance, they often focus on vanity metrics instead of actionable results.
💡Vanity marketing metrics are statistics that may look impressive on the surface, but in reality, they don't reflect real business results.💡
Some examples of vanity metrics in digital marketing include:
- Social media followers
- Number of website visitors
- Organic traffic
- Search rankings
- Social media campaigns impressions
- And more
While the numbers might seem impressive at first glance, these indicators don't show the organization's main revenue growth drivers (customer lifetime value, the number of sales-qualified leads, the cost of acquiring new customers, ROMI of marketing campaigns).
Here are the main characteristics that indicate you're following vanity metrics:
- Metrics ignore the context and nuances
- They are too simple to follow
- They don't help you improve business operations and accelerate the company's growth
For example, here's an example of a website traffic chart by Ahrefs:
Knowing the number of visitors to your website is undoubtedly important.
However, on a grander scale, this chart tells you nothing about the revenue generated by the website, the users' engagement rate, and other important indicators.
Now, let's take a look at another chart.
This chart tells us much more about the campaign's marketing effectiveness. Analysts can see the number of acquired customers and the cost of acquisition.
Both of these charts are helpful in different ways when building a picture of a company’s overall marketing performance. However, relying on charts like the website traffic one is a bad idea because they don't bring actionable insights to the table.
The only solution to this challenge is to shift the priority from vanity metrics to actionable metrics. Instead of chasing easy-to-track metrics, ask yourself several questions:
- What actionable insights does this chart provide me?
- How can I improve the performance of this marketing channel by following this chart?
- How does this specific metric influence the company's growth?
If you can't find the answer to these questions, most likely, you're tracking the wrong metrics.
We've gathered several indicators that can be replaced with truly important metrics.
User engagement rate ✅
The number of Facebook subscriptions and likes doesn't really influence the performance of your social media campaigns. Instead, focus on the user engagement rate.
With Audience Insights, you can check which posts generate the highest engagement rate based on the number of comments and shares. The engagement rank influences the ranking of your posts on Facebook (a kind of SEO for social media).
HootSuite has a great article covering the working principle behind the Facebook Algorithm.
Number of pages per session ✅
A large number of page views means that your content is valuable and search engines rank it high. However, this metric doesn't show where your readers come from, how long they stay on the website, and how they interact with on-page elements.
That's why Google Analytics provides a whole set of basic metrics, such as session duration, bounce rate, number of pages viewed per session, and more. Besides, with Google Analytics, you can understand where exactly your visitors come from and at what stage they leave your website.
If you're dealing with email marketing campaigns, the open rate is a metric that shows how effective your headline and subject are. However, the main goal of your email campaign is to make users go to your website, so click-through rate should be the main metric tracked by marketing teams. The higher the CTR of your emails, the more lead-gen power your email marketing campaigns have.
HubSpot shared some insights on email open rates in their blog post:
HubSpot's blog post on this topic highlights even more valuable metrics that will help you measure marketing performance.
Measure marketing performance like a pro with Improvado
As you can see, marketing performance measurement is not as easy as it looks. Analysts have to find the right tools and create crystal-clear dashboards. In turn, marketers have to set the right goals for their marketing strategies and create reports with actionable marketing performance metrics.
Marketing activities revolve around insights. Marketers pull data from tens of different sources to combine it in a single report and get a unified view of their efforts across all channels. The main issue is that all of the data should be cleansed, normalized, checked for errors, and unified in one place.
Improvado helps marketing teams automate all routine data operations and get a unified view of all insights in a single data warehouse. With Improvado's Marketing Common Data Model, businesses get analysis-ready data from 300+ sources that can be immediately loaded into any dashboard.
Schedule a call to learn how you can get a unified overview of all of your marketing metrics and measure marketing performance with zero human effort. 👇