Monitoring your marketing metrics is absolutely vital if you want to know what’s working and what’s not.
There are a number of different measurements that businesses can use to evaluate the effectiveness of their strategy, a campaign or even one specific advert. The best metric to use will vary depending on the situation and your stage in the marketing process.
CPA – cost per action (or acquisition) is worked out by dividing how much you’ve spent on an advert or campaign by how many actions it’s generated. An action might be a click-through, a sign-up, a web page impression or even a sale — decide what is most important to you. So if you’ve spent £200 on an advert and it’s generated 10 actions, that’s a CPA of £20.
Metrics like CPA, CPC (cost per click) and CPL (cost per lead) start working right away, giving you a real time view of how a particular ad or campaign is performing. You can judge one advert against another, or tweak your message.
ROI – return on investment gives a longer term view of the overall impact of your marketing (or other investments) on the health of your business. It’s calculated as a percentage: your net profit divided by the cost of your investment. So if you spent £2,000 on a campaign and generated £3,000 of sales as a result, your profit would be £1,000 and your ROI would be 50% (£2,000/ £1,000).
It takes time for clicks and page views to translate to income, so ROI won’t be available straight away. Over time, however, this offers the best way of evaluating the efficiency of your various marketing strategies.
There is a lot of additional data that will likely interest you and help you guide your model, and a number of sources to help you find this information. Give Lean Analytics a read — it’s a great start to understanding how to leverage data to build you company.