Implementing the right metrics and reporting to determine acquisition cost and RIO
After I published last month’s blog about measuring the results of your marketing investment, I received a number of questions specifically about how to measure those results. Everyone understood the importance of tracking but didn’t necessarily have the right tracking mechanisms in place to actually measure the success of marketing campaigns and programs. Few received regular results reporting, and those who did had to piece details together from multiple vendors.
Here are some of the core marketing metrics we measure for PracticeProfs clients. They may not all apply to your business, which is why our monthly reporting varies by client.
- Search engine exposure. Assuming you own your website, Google, (and other search engines), provide reporting on how many times a link to your website appeared in search results. This is a better metric than keyword rankings, as it represents the results of all searches.
- Local listing exposure. The power of your 5-star reviews can only be experienced when someone sees them. Fortunately, Google also provides similar exposure reporting for Google Business listings. Another use of these listings is for mobile directions, so keep your information current.
- Website visitors. Look at unique visitors and organic (search engine) traffic to get the best indicator of how your marketing efforts are faring. Direct traffic and referral traffic can also give you an idea of non-search engine interest in your firm.
- Phone calls. Unless you’re spending millions of dollars to market your phone number as part of your brand, (e.g. Call Ken, 1-800 Flowers), consider using phone tracking numbers to quantify calls from specific marketing efforts. Inexpensive providers, like Atlanta-based CallRail, offer technology to swap out phone numbers on your website based on call source.
- Leads. A lot of contacts (phone calls, emails, web forms) are from clients, sales reps, and other parties. Track prospective clients, (new interest in your services), as a separate metric. Even if you’re asking about the source of each lead, the phone tracking technology mentioned above allows you to match phone numbers for more accurate reporting.
- Consultations, meetings, or other introductory events. Since it’s rare to sign a client based on the initial contact, keep track of basic “sales pipeline” activities like introductory meetings, communications, and proposals as applicable.
- Clients. The ultimate indicator of your marketing program success is the number of clients, (and related revenue), generated from those efforts. Tracking the interim metrics listed above makes it easier to link clients to specific marketing activities.
Understanding new client acquisition cost
If you spend $10,000 on a marketing campaign and generate 20 clients, each client essentially costs you $500. That’s your acquisition cost. If each of those clients bills about $2,000, your return on that investment is $40,000, or an ROI of 4.0 – $4 of revenue for every $1 spent. With a reasonable understanding of acquisition cost and ROI, marketing evolves from a budgeted expense into a business investment. If those two metrics are acceptable, you’ll want to invest more. If one or both metrics aren’t acceptable, it’s time to adjust (or dump) those marketing activities.
Do you have the level of tracking and reporting in place to understand your acquisition costs and ROI? If not, give us a call.
If you can’t measure it, don’t do it℠