1. What is your goal?
Are you directly advertising a product and want to increase sales? Do you want to create awareness? Are you trying to get new followers or engage your current audience? These goals are all different and will totally change your approach, not just how you measure success. When we talk about measuring a marketing campaign, we call reaching this goal a “conversion.” When a user completes the desired action (a sale, follow, signup, etc.)
2. How do you quantify it?
You need to pick a number: $1,000 in sales, 500 new followers, 1,000 new email addresses, etc. You also need to know the percent increase from where you are now. Going from 1,000 fans to 2,000 is a 100% increase, but it isn’t as big a jump as going from 10 to 1,000. You have to know how many conversions make your campaign successful.
3. What is the value of a conversion?
If you measure marketing success by sales dollars, then you have to know your average sale amount and customer lifetime value. If your lifetime value is much more than the average sales amount, then you need to measure with a more long-term goal in mind. Starbucks has an average lifetime customer value of about $14,000. This means they can spend a lot of money to make a new customer, because in the long-run, a single new customer is worth a lot of money. It may take $100 worth of advertising to get a new customer who’s first purchase is only $5, but Starbucks knows they are worth much more than $5.
4. Are you optimized for conversion?
This step is often forgotten, but is essential! We need to know your current conversion rate. What percent of people convert after they engage with your marketing message, website, etc. If 1 person out of 100 actually buys when they visit your website, then you have a 1% conversion rate. The problem may not be bad marketing, but poor conversion. Good traffic needs to turn into user action, and the website has to be optimized to do this. Your money may be better spent creating a professional landing page, speeding up your site, etc.
5. Can you put it all together?
How many people do we need to communicate with to reach your goal? If you the average customer is worth $100 and want $1,000 in sales, you need 10 customers. If your conversion rate is 1% (1 of 100 people buy), then we need 1,000 quality visits to your site.
6. What does it cost?
If you go with a CPC (cost per click) campaign, this is easy to figure out. If it costs $2.00 for a click, then it will be $2,000 to get to get 1,000 visits. So in this case, it will cost $2K to make $1K–not worth it. In that case, you need to optimize in order to improve the conversion rate, increase the average customer value, or lower marketing cost.
7. What is the budget?
If the cost to acquire a new customer is less than they are worth, you are in luck! In that case you need to define a budget and then begin. A successful marketing campaign is not “set it and forget it.” It requires constant attention and tweaking.
If we can help you with your advertising campaign, feel free to call or email.