Digital marketing can make anybody feel like expert economists and statisticians. Page views through the roof? You’re going to hit that revenue number in no time! Wait, what?!
Truth be told, most marketers are tracking all of the wrong things. Forbes found that 41% of marketing KPIs reported were vanity metrics. Translation: close to half of your data probably isn’t tied to revenue in any way.
Let’s cut to the chase…
If it doesn’t relate back to acquiring customers or boosting revenue, it’s probably not that important. At the end of the day your business has bills to pay, so your metrics need to help you do just that.
In this guide, we’ll cover:
- What Are Vanity Metrics?
- Why Revenue Driven Marketing Outperforms Vanity Metrics
- Important Metrics to Track
- Creating a Data-Driven Marketing Strategy
What Are Vanity Metrics?
You know the numbers. Your team prides themselves on crazy-high Instagram follows or web traffic, but where are those customers at? Vanity metrics can look great on paper, but if you aren’t reaching your revenue goals, they aren’t doing you any good.
Essentially, vanity metrics tell you how popular your marketing might be, but don’t connect your efforts to revenue.
Examples of Vanity Metrics include:
- Page views
- Followers/subscribers
- Website traffic
- Social media engagement
Real fans and followers who become customers are great, but if your team’s celebrating high pageviews without any conversions, those eyes aren’t spending money. That’s called window shopping.
Metrics that matter aren’t about how many eyes you can get on your content. They’re about how your content can help grow your business.
Why Does Revenue Driven Marketing Outperform Vanity Metrics?
Metrics that focus on revenue connect your marketing efforts to the numbers that matter. It’s about showing your team (and bosses) how your campaigns and programmes help grow the business.
Any business looking for increased leads and sales needs to optimize their marketing strategy around data that matters.
Let’s be honest…
It’s hard to make a strong case to management about how your social media efforts played a huge role in hitting your revenue goal when you’re tracking followers and not conversions.
Metrics that are tied to revenue help your team see:
- How your campaigns affect sales.
- What channels are actually driving customers.
- Where to allocate more of your budget.
- How to build trust with company leadership.
Companies who use analytics to guide their marketing decisions experience 28% faster revenue growth. While your competition is making decisions based on guesswork and what felt right in the moment, your team will be putting your money where it works.
Metrics That Actually Matter
Alright, let’s talk about the good stuff.
Below are the valuable metrics you should spend your time analyzing.
Customer Acquisition Cost (CAC)
Customer acquisition cost is how much you spend on acquiring a customer. It accounts for every marketing and sales cost you spend to gain a new customer within a specific time frame.
Here’s why you should care…
If your team can lower your CAC while acquiring more customers, you’ve got yourself a winning marketing formula.
Customer Lifetime Value (CLTV or CLV)
Customer Lifetime Value is how much revenue your business can reasonably expect from one customer during their relationship with your brand.
Rule of thumb…
Your CLV should always be higher than your CAC. If your customer lifetime value isn’t at least double your CAC you have some work to do.
Conversion Rate
This one pretty self-explanatory. What percentage of your leads are converting into paying customers?
You can have 10,000 visitors a day on your website but if your conversion rate is low, you’re going to lose to the business who only pulls in 1,000 visitors with a solid conversion rate.
Marketing-Sourced Revenue
Knowing how much of your sales pipeline is coming from marketing helps paint a clearer picture of your team’s efforts. How much of your pipeline is coming from paid ads? Content marketing? Email marketing?
Ideally, you want as much of your sales pipeline coming from marketing as possible. Having tons of leads isn’t good if they aren’t converting to opportunities.
Return On Investment
ROIs shows you how profitable your campaigns are at earning back their costs. For example, if your campaign brings in $100 and cost you $20, that’s an ROI of $80.
Of course you want this number to be as high as possible. That means you’re making more money from your campaigns than you’re spending.
How To Create A Data-Driven Marketing Strategy
Need help making the switch to driving metrics? Here are a few tips to follow.
Start with the end goal.
Reframe your campaigns to support your company revenue goals. Working backwards will help you create marketing programmes that help your team focus on generating revenue.
Use proper attribution.
You should know which of your channels are driving revenue along the customer’s journey. First and last touch closed deals doesn’t paint the whole picture. Use a multi-touch attribution model to see what’s really driving sales.
Quality over quantity.
Do you have 10,000 leads? Great! Now how many of those are actually going to buy from you? By tracking conversions and revenue rather than lead volume, you’ll be able to focus on generating quality leads.
Embrace real-time data.
Last week’s marketing report isn’t going to help you make decisions in the present. Real-time data helps you identify areas for improvement and opportunities as they happen.
Make sure your tools talk to each other.
Having a bunch of great marketing tools is useless if they can’t communicate with each other. Using marketing technology that integrates with your CRM, sales, and analytics platforms can help you identify more useful insights.
Key Takeaways
Marketing teams have enough on their plate. Stop stressing about numbers that don’t actually help you grow your business.
Flip your strategy to focus on revenue-driven metrics and watch your team (and your bottom line) grow.
Business who leverage data-driven marketing are 6x more likely to be profitable year over year. Don’t be left in the dust by outdated ways of thinking.
Here’s your cliff-notes:
- Make sure your metrics measure impact, not just activity.
- Tie your marketing efforts to revenue.
- Prioritize gathering data on CAC, CLV, conversion rates, and ROI.
- Use real-time data and monitoring.
- Keep your goals in line with the company’s revenue goals.
Want to hear who really wins in the marketing world?
The team who can prove how their work creates revenue.
