The most important thing about advertising strategy is the ability to measure its success, which can be done using Key performance indicators (KPI).
What Are Key Performance Indicators?
A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. KPI’s will help your marketing plan achieve the goals you have set and to do this you need to monitor the KPI and, if necessary, make any adjustments to the plan.
To help you to do this, we have 8 Key Performance Indicators for you to check in your marketing campaigns. By using these 8 Key Performance Indicators you will be able to see if your advertising has been successful.
8 Key Performance Indicators
Revenue is the favourite KPI to monitor how successful your campaigns are. If one of your campaigns does not produce the ROI you hoped for, you should examine the design, copy and style of your last leaflet and consider changes to the next one.
The primary object of leaflet campaigns is to obtain sales. However, very few leaflets will result in an immediate sale; they are more likely to come from an initial enquiry, a lead.
Leads can be broken down into various categories. If a prospective client responds to your leaflet by visiting your website or e-mails you but doesn’t take it further, this is considered a cold lead. However, if the prospect goes on to say, ask for a quote, this can be regarded as a warm lead.
The type of lead will depend on what marketing message you send them to finalise a sale.
3. Cost per Lead
Lead generation is all well and good, but you must know how much each lead generated costs you. To do this, you divide the amount you have spent on your campaign by the number of leads you gathered. This will give you your Cost per Lead (CPL)
4. Lifetime Customer Value
It is a well-accepted fact in business that holding on to good customers is more cost-effective than acquiring new ones, but it is important you identify the ones that are valuable to your business.
Once you have determined the Lifetime Customer Value (LVT) of your best customers create a marketing budget based on the customer’s average value to your company. Once the budget has been created you must develop a marketing plan designed to retain the loyalty of these valuable customers: remember keeping a valuable customer is cheaper in the long run than trying to win them back or find new ones.
How to calculate Customer Lifetime Value
To calculate the cost of retaining your customer’s loyalty, decide the total gross margin you would expect from each customer over the lifetime of the business relationship. Then decide what percentage of that margin you would want to spend to keep them.
5. Cost of Customer Acquisition
To get a reliable picture of how effective your future marketing budgets are going to be you should take a look at the total cost of customer acquisition. To do this, your future marketing budget should take in all the costs of sales and marketing, not just marketing.
To find your cost of customer acquisition, you divide the entire cost of your sale and marketing by the number of new customers you acquire over a set time frame.
6. Lead-to-Customer Ratio
Although the cost per lead and cost of acquisition are important calculations to be used in your marketing budget, you must keep track of how many leads end up being a sale. If the number is low, it could mean there is a breakdown between your marketing and sales. Alternatively, your marketing may not be sending out a strong enough message to draw potential clients far enough down the sales process where a sale can be made.
Your lead-to-Customer Ratio can be tracked by using performance tracking. By doing this, you will see very early if your lead conversions are failing and make the necessary adjustments to put them back on track.
7. Website Traffic
Your leaflet campaign may have several calls to action (CTA) for prospects to follow, and one of them will be to visit your website. However, just because people visit your site, it does not automatically mean you will make a sale.
If this is the case, you should take steps to have your landing page modified. The CTA on your website must be as strong as the one on the leaflet you have distributed in your campaign.
8. Sales Response Time
To turn leads into sales, it is essential that there is a very swift response to an enquiry. It has been shown that a positive outcome is seven times more likely if a lead is followed up within an hour of the initial request.
So, it is important your sales team respond quickly to enquiries and make sure you do not lose sales which in turn will have a negative impact on your marketing forecast and budget.
If you need any more information or help with your marketing, please get in touch with us today and let us give you the benefit of our years in this business.