I’m not a numbers girl. To hear my parents brag I took high school Algebra in 8th grade, would make me sound like a little prodigy. Me taking that class was a fluke. It was the last time I did well with numbers. I took Pre-Calc twice). I barely made it through Calculus. Even geometry gave me trouble. The extent of my math and number expertise is pretty lackluster. Needless to say, when I got into marketing, the analytics and metrics part of the job terrified me. I’m a grown woman that uses a calculator to do simple arithmetic, so using graphs and self-formulated statistics to show performance? Not my thing. At first I decided I would avoid that portion of marketing as long as I could. Well, being in Inbound, of course it didn’t last, maybe a week tops. So I took the numerical bull by the horns and took a Hubspot class, read a truckload of eBooks and I gained enough knowledge to, well, ‘dumb’ it down enough for the newbie marketer like me to understand. It’s important to note the difference between marketing metrics and analytics. I thought, at one time, the terms were interchangeable. They are not. Marketing analytics are the tools and data needed to produce marketing metrics, which are measures of performance. With that clarified we can proceed with the math.
If you, like me, aren’t a numbers person, here’s a list of the three most talked about marketing metrics examined for all the novice marketers and Calculus drop outs of the world.
Example: Maurice the Marketing Manager released a new eBook. To access this download, leads must fill out a form on a landing page. 45 people visited the landing page, but only 12 decided to fill out the form and download. What was the conversion rate of people that viewed that eBook landing page? What was the percentage of people that converted from page visitor to page lead (“buying” your eBook by filling out the form)?
Formula: # of ‘customers’ (aka leads)/ # of visitors x 100 = __% conversion rate
12 leads/ 45 visitors x100= 26% conversion rate
Application: While driving traffic to Maurice’s site is exciting and very important, those visitors mean nothing if they never become customers. Conversion is everything. Converting a visitor to a lead, a lead into a customer and finally a customer into a brand evangelist is the entire purpose of inbound marketing.
Cost per Lead
Example: Sally the Sales Girl launches a simple, organized Facebook advertising campaign over 4 weeks. She spends $100 per week on various ads, $400 for the whole campaign. From her marketing analytics platform she gathers in those 4 weeks Facebook referred many new visitors, resulting in 7 new contacts, or leads, for her to pursue. What did it cost Sally to acquire each new lead from that campaign?
Formula: $ spent/ # of leads acquired= cost per lead
$400/7= $57.14 per lead acquired
Application: Sally can use this metric to compare other marketing efforts to find the most cost effective marketing mode of acquiring leads.
Example: Alan in Advertising sends a lead nurturing e-mail through his marketing automation software. In this targeted e-mail, he includes the most popular blogs, this months free marketing offer, and the current ‘Refer a Friend’ customer contest. He takes about 1.5 hours to compile the info and design the email and contest landing page. Alan is paid a salary that works out to be about $25 per hour. The customer contest generates 35 new customers resulting in $470 in sales. What was the return on Alan’s 1.5 hour email marketing investment?
Formula: Part 1: 1.5 hrs x $25 per hour salary= $37 cost
Part 2: Gross revenue- costs = profit
$470 -$37= $433 profit
Part 3: Profit/ cost of investment x 100 = __% Return on investment
$433/$37 x100= 1170% return on investment (for more on truly amazing email marketing ROI check out this blog)
Application: Much like Cost per Lead, ROI helps monitor the cost efficiency of Alan’s marketing efforts.
I hope this eases some marketing fears and you feel a little less ‘dumb’ when it comes to marketing metrics. It’s really not all bad. And if you get stuck on the more advanced math required for some marketing metrics you can always Google it. Some math genius out there in the World Wide Web has a spreadsheet that will do the math for you! We all know effective marketing requires solid metrics that cannot be ignored. So release your fears of math failure, let go if the algebra trauma of days long ago and embrace marketing metrics!
For those who are a little more math savvy or who want to be more metric savvy, check out our new metrics eBook: 5 Metrics Your Boss Actually Cares About. The eBook highlights the numbers your executive team wants to hear and delves a little deeper into the fancy arithmetic of marketing metrics. Check it out.