What are ideal metrics in marketing?
We’ve all been there. Either asked these or been told to consider them.
Rhetorical Question Number 1: What is a good Click Through Rate for my industry?
Rhetorical Question Number 2: What about a good bounce rate?
You can continue this line of questioning through every metric, acronym or anything else in a marketers lexicon.
More so than questions, I’m provided directives:
- “Our bounce rate can’t exceed 20%!”
- “The CTR for our industry must be over a 1%!”
- “We’re only going to pay less than a $1 CPM!”
- “Anything more than $5 CPC is too much!”
Always punctuated with exclamation points. Always.
But, these metrics without being tied to meaning or further narrative do not provide a target of substance for a company or marketing campaign to hit. That is to say, these terms are meaningless without relative consideration.
“Our CTR has averaged a .07% over the last quarter, so I’m going to aim for a .10% next quarter.” And, then?
Focusing solely on these metrics, often leads to myopic optimization and a faulty sense of accomplishment.
For example, a Google Ads experiment with two control groups – A) targeted audience with CTR optimization and B) untargeted audience with CTR optimization. The latter, that was serving ads that were potentially completely irrelevant to the audience achieved a CTR of 3 times the targeted group – why? CTR optimization for the sake of CTR.
Again, if your vision is narrowed to solely just a paid search CPC reduction from $6 to $5 – what have you really accomplished? You’ve spent less per click, with no indication of quality or business metrics aside from just spending (no business model works off of only money out, even if it gets more efficient at it).
When just looking at expenditure, no matter what the pace, it still has the same endpoint – bottom.
A story in fragments:
All of those early metrics are great for Example A, but what does that tell you about downstream? How are conversions? Are you getting any leads? How are sales? What’s revenue?
Taking a look through a wider lens, the campaign that initially looked to be underperforming, is actually the better generator of positive business metrics, both in terms of efficiency and overall revenue – generated from fewer clicks and a higher CPC.
The End-Goal Perspective:
Mazes are more easily solved backwards. I have 0 statistical evidence or research to support this claim, just anecdotes and faith – my grandfather taught me this as a kid and I’ve taught my children. And, now you. It works.
Benchmark metrics and key performance indicators are more easily planned out in reverse, as they fit in the Conversion Path or Attribution Model towards the end goal.
A CTR can be a benchmark of efficiency (but really only sort of – see this other article on the value of clicks) but needs to be tied to a greater indicator.
Let’s start by looking at the overall indicator for most marketing concerns – sales, leads, sign ups, or recruitment metrics.
With a revenue figure you have to determine what went into getting that in terms of cost, marketing efforts and any other contributors. Simply put, “How did we get here?” With recruitment, a Return on Marketing Investment formula does need to be considered in terms of numbers and currency so talent acquisition does need to be translated monetarily based either on the value of that position or a cost-per-hire goal.
Did you spend $x in marketing to get $y in revenue (or $y in value for recruitment)? Great, so if I turn up the marketing spend then I should get more returns – or should we pump the breaks a moment and consider if there are any other inputs?
Was marketing the only tactic driving this or did a sales team have to come into play?
Considering what has the final attribution to your sales cycle is certainly important. The above question regarding, “Is marketing or sales your closer,” comes into play here. It is an important consideration because the marketing goal may not immediately be sales, but qualified leads. Sales gets the credit for the final sale, but marketing played a role in developing and cultivating that business and has a key place in the attribution model.
If a Sales Team has the final touchpoint before the physical conversion, you need to identify the hard figures around numbers of leads to sales vs. final sales. Say its a 20% close ratio. Marketing can get better by increasing either the number of sales leads or the quality of sales leads (or a combination or trade-off of those two), or by maintaining the same output with fewer inputs.
Take a step back
Taking one step back, the majority of your best, Qualified Leads come through Online Form-Fills for “Free Trials” (1 of 10 leads funnels through to a qualified lead) and you also get them through Online Short-Forms, Online Chats and Phone Calls (1 of 20 of these leads funnels through to a qualified lead). The Free Trial is your primary conversion, but the others have a value in conversion as well (though at a decreased value).
Through digital-only lead channels, you may have identified that only 5% of all website visitors make it to the “Free Trial” lead. Your search campaigns have an average CTR of 3% and the full-suite of stats on that campaign are as follows:
- 28547 Impressions
- 946 Clicks
- $2.74 CPC
- 48% Impression Share
From here, it is simple math:
Goal: 25 new sales
25 News Sales = 125 Qualified Leads = 1,250 “Free Trial” Form Fills = 25,000 website visitors = 833,333 Impressions (at current CTR). CTR as a benchmark in the is not a specific number, rather the desired CTR goal is consistency.
Supposing you are currently only getting about 12 sales from Paid Search, then you will have to manipulate your CTR in order to get to the 25 New Sales goal, because chances of getting a 100% impression share on a competitive keyword – unlikely. Your chances of doubling your CTR to 6% is much more likely, though potentially not easy. And if that’s the case, your CTR goal is a hard number – 6% goal, so long as it is supported by quality events taking shape down stream.
What’s a good <insert metric> for my campaign?
I had a professor at one point that had famously answered nearly every question (sometimes infuriatingly so) with, “It depends.”
At the time he was answering my questions like this, I was an eager student trying to narrow down my answers for future graded assignments so I was not too thrilled by this answer. However, it’s the best answer for nearly every situation in real-life. This is because answers on benchmarks need to continue into a further discussion and are not a singular one-size-fits-all stat.
So, the next time you’re asked:
“What’s a good CTR?”
“How much should I pay per thousand impressions?”
“What’s a good bounce rate?”
And, really every other benchmark related question – I’ve now equipped you with the best answer.
Cover Image Credits: Insight Venture Partners