CU Employee CULytics Founder

Top KPIs for Measuring Marketing Effectiveness

Imagine waking up to a message from your company’s executive committee that invites you to present a report on your marketing efforts – first thing in the morning? What numbers would you provide them with? Any specific Key Performance Indicators (KPIs) you might have tracked?

These days, you need more than a clue as to what makes your credit union’s marketing successful. You need to understand what is working for you and what isn’t. Measuring the KPIs should be a part of your business strategy, because if you do not measure it – you cannot improve it.

It’s the 21st century and there is no reason, no excuse that is valid for not knowing what really makes your marketing effort tick. As of now, there are hundreds of marketing KPIs out there, almost all of them having some say towards your marketing initiatives.

Below is a list of the top 10 KPIs for successful marketing analytics.

1. Impacted Revenue

Let’s face it – no business likes to spend money on anything that isn’t generating money in return. At the end of the day, the total revenue generated by your credit union is a useful indicator of how good your marketing efforts really are.

It is vital that the sales revenue generated exceeds the expenses incurred while marketing. Calculating the Impacted Revenue is pretty simple:

IR = (Total sales for the year) - (Total revenue from customers acquired through inbound marketing)

Measuring this growth is very beneficial for the long term health of your company, by getting a positive cash flow. It’ll pave way for a better strategic growth and also set markers for growth trends, such as the revenue growth rate.

2. Top of the Marketing Funnel Leads

Measuring the total number of leads/opportunities your Union generates is a pretty important metric. The logic behind measuring this is simple. The more leads your marketing generates will lead to more sale opportunities, which in turn will lead to a better sales growth and positive cash flow.

Simple mathematics, really.

Leads are to sales what the engine is to a car. They drive forward the sales. However, not all leads are the same. You need to know about the Marketing Qualified Leads (MQLs) and the Sales Qualified Leads (SQLs).

Technically, MQLs are more likely to become members based on intelligence. They might have downloaded an eBook or a whitepaper, yet are not yet full opportunities. An SQL on the other hand, is someone that has been accepted by your sales team and has been vetted to almost make a decision.

 


3. Customer Retention

Basically, customer retention is your business’s (and in turn, your marketing’s) effectiveness in retaining its customers. In practical terms, it is a lot more expensive to get new customers than retaining old ones.

As an example, think of a new grocery store. You’d rather not go there, but always go to your regular vendor. However, should the new store give exciting offers – say a 50% discount, you will happy go over and give it a try. This 50% discount adds to the operating marketing cost of the new store.

The rate of customer retention can be calculated by the formula:

Customer Retention Rate = [1 - (Customers lost in the given time sample/Customers gained in the same time sample)]*100

A high customer retention rate implies that the customer is very happy with your service and will continue to come to your business. It also implies that you will have a greater Customer Life Time Value (see next section).

4. Life Time Value

It is wise to know what a customer’s value to your business is. A customer’s value to you is only as good as the time they spend as your customers (Therefore, you need a better retention rate!). This KPI is invaluable in planning future strategies and also to successfully gauge your company’s ROI. Calculating the LVT is pretty simple and is as follows:

LTV = (Revenue/Avg. of order value) * (Gross Margin) * (No. of Repeat Purchases)

Example: Let’s assume that your union lends Mr. A 2000. Your margin is 10% and Mr. A will borrow this, let’s assume, 5 times.

Therefore, Mr. A’s LTV = 2000 * 0.1 * 5 = $1000

5. Cost Per Lead

It is vital to know how much it costs your union to acquire new leads. Let us consider a company’s hypothetical breakdown of marketing costs, leads and value.

Campaign

Cost/year

Leads/year

Customers Converted/year

Value Generated/year

Value of Customer

Value of campaign

Trade Show

$30,000

400

10

$500,000

$50,000

$470,000

Website

$15,000

40,000

8,000

$2,000,000

$250

$1,985,000

Webinar

$20,000

200

20

$30,000

$1,500

$10,000

 

For this company, the Trade Show is the most expensive marketing campaign. However, it generated the best possible leads for them – though only $500,000 in value. The website generated the lowest quality leads but amounts for $2 million (!) in value. The Webinar though, lost the company money.

Do you notice how monitoring this KPI is vital? The company can now reinvest the money spent in webinars in more fruitful ventures.

Cost Per Lead = Total Cost/Total Leads

6. Marketing to Sales Conversion

We have already covered what MQL and SQL are. Once a lead has already fulfilled your marketing criteria, it need so be accepted by your sales team as an SQL.

M/S Conversion = Total no. of SQLs generated in time/Total no. of MQLs in the same time

In simple terms, we can say that SQL’s are just MQL’s that really have an intent to make a purchase. This KPI is very important to understand the level of cooperation between your Marketing team and your Sales team. A high MQL to SQL ratio indicates that both your teams are on the same page and are promoting the business effectively.

However, a low ratio would imply that lead nurturing and offers that your business markets are not reaching the target or that he wrong type of lead is being acquired at the awareness stage (See the funnel in section 2).

7. Net Promoter Score

Simply put in, Net Promoter Score is a measure of how happy your customers are with your business. A high score will lead to a high customer retention which in turn will lead to a high lifetime customer value. Everything is interlinked and correlated.


The diagram is self-explanatory. Promoters are loyal enthusiasts who will keep on buying from you, as they’re very happy with your company. A high NPS is a useful KPI to know how well your sales team is getting the message across to the potential customers, which leads to a positive cash flow.

8. Average Revenue per Member

This KPI is a useful indicator of your business’s efficiency. This is simply because it measures the number of leads that actually buy from you. It will also point you towards where your strategy is lacking, should the average revenue per new acquisition (member) be low.

Average Revenue per Member = Total Revenue/Total number of new members

9. Channel Effectiveness

How many people (read: potential customers) are getting to know about your union? How much traffic is your website(s) generating and how many leads are actually getting converted into actual sales?

All of these questions can be seen with the help of the channel effectiveness KPI.


A high effectiveness means high organic traffic, a high mobile and social media traffic and more profits for your business (as you’ll be getting more leads). It is also a measure of how effectively your marketing team is promoting the business.

10. Customer Profitability

It is important to know how many of your customers are profitable (read: contributing to a positive cash flow) to your union and how many are not. Simply put in, this KPI is a score that keeps track of the same.

CPS = Revenue earned through the customer – cost associated with the customer*

*All the costs, be it managing, service, retention etc

Customer profitability adds the notion of what pays and what doesn’t to a business. Customer profitability measurement is pretty hard to implement; it draws into question your team’s understanding as to who the customers really are and how the union will grow.

It adds powerful insights throughout your union. It also helps to focus decision making energies on doing the correct things for your members.

Measuring the key performance indicators for your business is imperative if you want successful marketing, as well as sales analytics. Not only will you be able to keep track of how your union is growing, you’ll also be able to iron out any flaws that exist within your team. Measuring potential flaws will lead to a better understanding and will pave way from improvement, increasing your cash flow and serving your members better.

 

Sources:

  1. https://vtldesign.com/digital-marketing/16-marketing-kpis-to-measure/

  2. http://blog.marketo.com/2013/11/prove-your-worth10-kpis-for-marketers.html

  3. https://www.impactbnd.com/the-10-marketing-kpis-you-should-be-tracking

  4. https://blog.hubspot.com/insiders/marketing-key-performance-indicators

  5. https://www.bedrockdata.com/blog/8-key-performance-indicators-to-improve-your-marketing-and-sales

  6. http://uhurunetwork.com/marketing-kpis-drive-performance/

  7. https://www.optimizesmart.com/understanding-key-performance-indicators-kpis-just-like-that/

  8. https://salespop.pipelinersales.com/sales-management/sales-pipeline-five-kpis-every-business-must-consider/

  9. https://www.netpromoter.com/know/

  10. http://www.the-cma.org/disciplines/analytics/archive/what-is-customer-profitability

 

Image Sources:

  1. https://d25qe19fo1nsn4.cloudfront.net/wp-content/uploads/2016/08/marketing-funnel-diagram.png

  2. https://www.netpromoter.com/wp-content/uploads/2015/09/NPS-Definition-copy-04-copy.jpg

  3. https://www.salesfusion.com/resource/7-tips-generating-top-funnel-leads/

 

 

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Comments

  • Vendor

    Love #7 - "Everything is interlinked and correlated." Agreed! Don't settle for an NPS vendor that can't clearly map out the value of their service. 

  • CU Employee CULytics Founder

    How are you measuring your marketing effectiveness?

This reply was deleted.

 

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