Here at ReachForce, we know that SMEs can compete with big corporations in data marketing.
It’s a matter of choosing the right solutions and developing a strategy that reaches your target customers when and where they’re ready to do business. Digital marketing has leveled the playing field in a lot of ways — many SMEs simply need to know how to get started. But for all of the innovative things SMEs can do with account based marketing, predictive analytics, and developing great content at scale to compete with larger companies, there’s one glaring difference between how smaller marketing teams and global corporations operate:
Bigger companies can afford to fail.
Not all the time. And certainly not without consequence. But at the end of the day, larger corporations have more financial “wiggle room” when it comes to experiencing marketing failures. And that “wiggle room” often translates into more creative risks and innovative approaches to marketing that ultimately put bigger companies ahead of SMEs.
So how do SMEs compete when larger corporations have bigger budgets and can afford to fail?
That’s where setting KPIs, measuring performance, and calculating marketing ROI comes into play. Because SMEs can’t afford for campaigns to fall flat, the best way to compete is to meticulously track and adjust your marketing strategy with real-time data on campaign performance.
Doing so doesn’t prevent SMEs from failure, but it does set them up to make quick changes to your marketing plan in order to avoid major catastrophes and to make every failure a learning experience that can improve future campaign performance.
That’s why the ReachForce team put together these 5 metrics every SME needs to know for calculating marketing ROI and staying competitive in the digital marketing world. But before sharing those metrics, here’s a quick note on vanity metrics:
A Word of Warning to SMEs: Avoid Vanity Metrics
It’s easy for companies of any size to get swept up in the wrong kind of metrics. We’re talking about the metrics that make it look like your marketing efforts are paying off...but that don’t actually contribute any tangible returns. Your Twitter followers may have increased 10-fold, but have you seen any significant bump to your overall revenue?
Vanity metrics are a well-known term in marketing and the KPIs that fall into this category vary depending on who you ask. As a general rule, however, metrics that measure top-of-the-funnel activity — like follower growth or clicks to your website — matter a whole lot less than bottom-of-the-funnel metrics like conversion rates.
This is not to say that tracking your website traffic or followers on social media aren’t worthwhile activities. Website traffic can be a great indicator that you’re "fishing in the right pond” for new leads. And measuring brand exposure certainly tells you a lot about the reach of your campaigns and the impact they’re having on your target audience. But calling a campaign a success because you saw clicks to your website increase by 200 percent means nothing if no new sales came in as a result. Calculating marketing ROI means focusing on metrics that measure how your campaigns feed money back into your business. Here are the ones you need to know:
5 Metrics SMEs Need to Know for Calculating Marketing ROI
#1. Visitors-to-Leads Conversion Rate
One of the more frustrating situations marketing teams may face is when a campaign clearly generates interest — usually indicated by a sudden burst in site traffic — but people aren’t taking whatever action you’ve outlined that converts them into a new lead. It’s like being a sandwich shop that creates an amazing promotion and then runs out of bread ten minutes into service — you feel unprepared and like you squandered a great opportunity.
That’s why keeping a close eye on your visitors-to-leads conversion rate is an important step. Visitors themselves don’t equal new business (nor do leads, for that matter). But, if you know you’re getting a high-volume of traffic and the pipeline is bottling up at the lead conversion stage, it’s easy to take quick action. You could try:
- Reducing the number of fields in your lead capture form (SmartForms will pick up the slack by enriching your incoming customer information in real-time)
- Reworking the call-to-action so that it better incentivizes visitors
- Adding a pop-up to try and boost conversions from people who start to navigate away from your site
You need leads in your pipeline for nurture campaigns to add any value. That’s why focusing on this metric makes so much sense when calculating marketing ROI. Though of course, this next metric is the real indicator of campaign success...
#2. Leads-to-Customers Conversion Rate
Leads that convert to new customers equal more revenue for your business. Simple as that. And if it was your campaign that drove those leads to your business in the first place, then that is a clear-as-day indication of return on investment for your marketing efforts.
But the leads-to-customers conversion rate isn’t so much about volume as it is about ratio. In other words: it’s great if your campaigns quickly generate more money than you initially invested to get them going. But if the ratio is low of leads coming in to those converted into new customers, that means you’re leaving a lot of potential opportunity on the table. It’s not just about recouping costs — it’s about getting as many of those leads across the finish line as possible.
Conversion rates aren't just about volume of deals closed; it's about deals closed in proportion to the number of opportunities available.
Keep in mind, however, that crossing that finish line is just the first step. Many marketers make the mistake when first calculating marketing ROI of only tracking the initial sale. In reality, there’s a far better metric for understanding the value of your campaigns...
#3. Customer Lifetime Value
Customer lifetime value, otherwise known as CLV, measures the overall spend of a new customer throughout the entirety of their life cycle in your business. That means the initial sale that brought them on board, but it also means any subsequent upsells and contract renewals throughout the length of their partnership with your organization. It was your campaign that drove them toward the business to begin with and as result, the overall value of the contract should be your measurement of that campaign’s contribution to the business.
As a note: CLV plays a particularly important role in account based marketing. Often times, the accounts teams' targets with ABM aren’t necessarily the biggest spenders on an initial contract. Rather, they are clients perceived to be a perfect fit for your company and therefore likely to spend more over time than a bigger, less compatible company may on an initial contract and subsequent churn.
Speaking of churn...
#4. Customer Retention
In today’s digital marketing world, lead generation is just one piece of the puzzle for marketers. Yes, it’s the responsibility of marketing teams to drive new potential customers to the top of the sales funnel. But with the rise of demand generation as a focus for marketing teams, measuring customer retention should also be a metric used in calculating marketing ROI.
Marketing teams often host webinars, share case studies and whitepapers, or educate existing customers through blog posts, podcasts, and email newsletters. And the great thing about tracking and measuring client engagement with that content is that you can use behaviors to forecast future churn risks. If you know 25 percent of customers that re-up at the end of their contract click at least one link from your weekly newsletter, then you can begin to identify potential clients who may be at risk for not renewing a partnership agreement.
#5. Social Media Engagement
Social media marketing is a critical part of any SMEs marketing strategy. But measuring a return from social media is hard. Companies feel tempted to say social campaigns are “working” when they see an increase in followers, but here’s the truth: follower count doesn’t matter if you’re not getting engagement on the content you share. Much like the site visitors discussed earlier who never convert to leads, an audience of people following you on Twitter means nothing if they aren’t seeing or engaging with your content.
But as more companies recognize how vital social media marketing is to brand reputation and awareness, engagement rates are as a whole dropping. Facebook saw a drop of 20 percent on engagements with branded pages in 2017. Everyone is seeing engagement decline, which means the way you look at engagement needs to shift. It’s no longer about how many likes or retweets or shares you got in comparison to another brand. Instead, it’s about measuring engagement on your posts to determine the types of content your followers want to see the most. Even if you only average 10 likes per Facebook post, measuring engagement is valuable when you get that one post that pushes further and gets 15 or 20. You can then take a look at that post to determine what it is that got followers more engaged in your content and work to replicate that on future posts.
To learn more about how ReachForce SmartForms can help you optimize lead generation and improve your impact on revenue, sign up for a free trial and get a free demo today.