Marketing analytics is the process of measuring and analysing your marketing performance to improve efficiency and maximise your marketing budget. Think about it for a moment, you can’t make sound financial decisions without accurate financial reporting. Similarly, you can’t make good marketing decisions without analytics, writes Ben Hirons founder of digital marketing agency Due North.
But despite this, if you ask business owners about their marketing analytics, most will give you a blank look – you might even be among them.
Why analytics are important
When you have access to the right information through analytics, you can make informed decisions based on how well each component of your marketing is working. This means you can do more of what is working well (and look to make it better), optimise what is borderline, and get rid of what isn’t, so you stop wasting your time and hard-earned money and start investing it wisely.
If that wasn’t enough to convince you of the importance of marketing analytics, here’s the kicker. Your competitors are using them. They are using their data – and possibly yours – to grow their business and leave you behind.
Here are the three key areas of your marketing that you need to know.
1. Lifetime Value (LTV) – The Holy Grail in Analytics
Lifetime Value, or LTV as it’s often referred to, is the most important marketing metric, and nearly every business should be able to report on it.
LTV is the average revenue a customer will generate throughout their lifetime as a customer. The LTV of a customer drives many important and business and marketing decisions and is often used to determine your marketing budget, resources, profitability, forecasting and acceptable metrics.
2. Cost Per Outcome
Forget Return in Investment (ROI) and focus on the Cost Per Outcome. ROI can be quite misleading as it doesn’t take into account all of your other business costs. Revenue is not return on investment; profit is.
The other aspect here is that marketing is a cost, not an investment. The only exception to that rule is your website, but you’ll never be able to quantify your return on it. With this in mind, you need to know what it costs to get an outcome in your business. These outcomes are:
- Cost per acquisition
- Cost per revenue
- Cost per lead
3. Campaign performance
This is about monitoring the marketing itself. You need to know how your campaigns are performing and get answers to key questions like those below.
How many people find out about our business through each strategy?
- Google AdWords?
- Content Marketing?
How engaged are they with our business and website?
- How long are they spending on our site?
- How many pages are they looking at?
- What parts of each campaign are producing outcomes, and which ones aren’t?
Words of warning
Data is useless, unless you are analysing and acting on it.
The most important part of marketing analytics is not collecting data but analysing it. Through the process, you will capture a lot of data, so it’s essential to bring it together in a useful way through reports and dashboards to access the data you need to act on easily.
This involves looking at the data and determining how you can improve your efforts and spend. It’s the accumulation of lots of little informed improvements that make massive wins over time. It’s the 1% improvement here and the 2% there, that continuously compound over time.
Crawl, walk, then run
The key to doing analytics well (and preventing overwhelm) is to start simple. Then once you increase your knowledge, understanding and confidence, you can get more and more complex.
Don’t drown yourself in data
When it comes to analytics, you really can burrow into a rabbit hole and find yourself drowned in a sea of data. Stick to what you know and what is going to add the most value or gain to your business. You will find many interesting things, but not all will help you improve your marketing performance.
Find smart people to help you
While it pays to understand analytics, chances are you can add a lot more value to your business by doing what you’re good at. With this in mind, pay analytically minded people to do the analysis and optimisation for you (once you have the high level, most important numbers set up). Then you can check to make sure everything is on track.
Want more? Get our newsletter delivered straight to your inbox! Follow Kochie’s Business Builders on Facebook, Twitter, Instagram, and LinkedIn.
Now read this