Marketing is the lifeblood of your business, but it can also be overwhelming. With trends constantly shifting and new marketing channels popping up, it can be hard to know where to invest your time and money.
Marketing analytics can help provide an unbiased look at the results you’re getting from your marketing efforts, uncover areas that can be improved, and help you know when to double down on what’s working.
But before you can gain marketing insights from analytics, you have to know which types of data you need to track and what they measure.
What Is Marketing Analytics?
Marketing analytics refers to the collection and analysis of data related to a company’s marketing efforts. The two key components in this definition are “data” and “analysis.”
When it comes to data, customer data is the most valuable and tends to be the most predictive because it comes from actual customer experience with your product or service. It’s also referred to as “first-party data.”
It can be complemented by second-party data, which is data from companies that either share your audience or are in a similar business space. Third-party data is considered the least reliable of the three types of data, but it may still be helpful. It generally refers to data sold by third-party organizations.
What Metrics Are Used In Marketing Analytics?
With so many marketing platforms and tools businesses now have at their disposal, it’s easier than ever to collect massive amounts of data. Having a wealth of data is great, but you need to know how to use that data effectively in your marketing initiatives.
The metrics you use are going to depend on your business, your goals, the marketing activities you currently engage in and much more.
Here are some of the most common marketing analytics metrics and what they can tell you.
ROI: Short for “return on investment,” this metric is one of the most discussed in marketing analytics. The basic formula for ROI is
ROI = (Net Profit / Cost of Investment) x 100
That said, there are variations on this formula your business can use specifically for marketing ROI, but they all try to calculate one thing: how much you earn from your spending.
ROAS: Return on ad spend measures the effectiveness of ad campaigns, often digital marketing campaigns. The basic formula for ROAS is:
ROAS = (revenue from ads/ cost of ads) x 100
Here you’re trying to drill into the return you get from the money you spend on advertising.
CAC: Measuring customer acquisition costs helps you understand how much it costs to get a new customer. This number shouldn’t be the sole measure you use; after all, lifetime customer value may make a high CAC worth it. But it is crucial you track this. Bring down CAC and decrease churn without sacrificing lead generation, and you have a golden formula for growth.
CLV: Customer lifetime value is important to measure as it looks beyond the initial cost to acquire a customer. Instead, it evaluates the total revenue earned during the time someone remains a customer.
There are multiple ways of calculating CLV, depending on the type of business and available data. However, it generally takes into account factors such as CAC, average revenue per customer, and average customer duration (churn).
CR: Conversion rate is another important metric to track. If you’re a digital marketer you likely don’t have to calculate this one yourself. If you set up goal completions in Google Analytics, for example, you’ll see the conversion rate right there. For social media marketing, most companies offer this metric in the platform’s dashboard once you set up and run a campaign.
Other metrics that are valuable to track, and are available through Google Analytics, include:
Unique page views
Percentage of new sessions
User age group
How To Analyze Marketing
Before you dive into marketing data analysis, you need to decide exactly what you want to track and measure. Review your goals and, if you use them, KPIs, along with the data you collect to determine what information is available for you to track and analyze information that’s important to your business.
If you discover key information you need is missing, you may need to hunt it down–either through other sources internally, or through external sources. Customer or visitor surveys (pop-up surveys or exit surveys for example), or third-party data may help you fill in gaps, but you’ll need to weigh the cost of acquiring that data against the benefit.
Once you’ve decided what to track, you can create an Excel spreadsheet to record what the metrics you want to measure and their formulas. You may need several spreadsheets for social media, your website/e-commerce store, your newsletter and email, and any other types of offline or digital marketing you use.
If your budget allows for it, there are also numerous analytics solution platforms that can automate these processes for you. Tableau, Domo, SAP Analytics Cloud, Amazon QuickSight, Hubspot, and others may be worth considering.
If you are working from a spreadsheet, look at the notes of what you want to measure from your data sets. It is important to keep track of your marketing analytics over time to see what is improving and what isn’t. Trended data can help alert you to changes that require a change in your approach.
It can also be a good idea to record your marketing program goals, what is being spent where, and what actions are currently being taken at specific points in time so you can measure their impact.
If you use marketing analytics tools or software, many of the steps above still apply; you simply have to adjust for the tools the platform provides. Whether the software just provides automation to pull in data and do calculations for you, or makes graphs and charts for easier visualization, you’ll want to match your marketing actions to the data you see.
Why Marketing Analytics Is Important
If you’re still not sure why marketing analytics are important, think of two more words; “marketing” and “investment.”
Anything you put money into for your business is an investment, and marketing is no different. Your marketing efforts need to get results, and at a price that is sustainable for your business.
If you tend to “go by your gut,” it’s easy to see data that reinforces what your gut is telling you, but overlook other data that may be telling a different story.
The movie “Moneyball” illustrates this in a dramatic fashion. Seated around a conference room table, seasoned scouts defend their gut-thinking about potential major league ballplayers even when the data says otherwise.
And any seasoned (and honest) marketer will be able to share experiences where they were sure a campaign would work but didn’t, or where they discovered a new audience completely different from the target audience they expected to attract.
Marketing analytics will tell you what is actually happening versus what you think is happening.
At a basic level, data analytics allow you to analyze your marketing data to gain insights into your marketing performance across platforms, the demographics you are connecting with, the investment required to gain new customers, and more. Even basic insights from data analytics can help your marketing team refine their marketing strategy.
At a more advanced level, your team can use data analytics to predict results from a proposed marketing campaign performance, use machine learning to refine marketing strategies in real time, and ultimately transform the customer journey for more success.