Updated: Jan 22, 2021
Today’s organizations are collecting more data than you realize. But is more data always better?
You can only say more data is better when that data is valuable and provides insightful information.
Some data is misleading and can make marketers think you have answers and predictive information that you don’t.
Good data, on the other hand, enables businesses to uncover trends and relationships in order to make better decisions.
Too many marketers take a peek at the number of views or click-throughs a post receives and call it a day. They think they are properly leveraging their data. Not only are they mistaken, but they are missing out on a huge opportunity to make data-driven decisions.
Organizations that identify the right metrics make more effective decisions. They are better equipped to understand where new investments can be made and identify strategies that should be adjusted.
How to Identify the Best Metrics
What metrics do you use to measure the success of your content?
If you are like many people, you enjoy seeing how many views your content receives or how many likes and comments it gets.
Vanity metrics are like reassuring votes that you content was interesting enough to attract attention. They are certainly “feel good” metrics and there is nothing wrong with that.
But other than providing a bit of information about brand awareness, vanity metrics are not going to provide much help optimizing campaigns or troubleshooting marketing problems.
So why even use them?
Marketing departments are often under tremendous pressure to prove their worth.
Vanity metrics are easy to obtain and appear to demonstrate that marketing efforts are producing results. For example, vanity metrics can show that content is being viewed by your target audience within a specific channel.
But that will only get you so far.
Vanity metrics become hollow when the marketing department is asked to provide details about ROI of marketing dollars or customer lifetime value (CLTV). It’s hard to back up a vanity metric and prove that your marketing spend is turning a profit for the company.
The metrics that can help marketing departments make decisions, on the other hand, are called revenue metrics. With revenue metrics, you look at the data and you know what you need to do.
You are extracting actionable insights from quality data.
Whenever you are deciding about whether to utilize a metric, ask yourself this question: Will it help with making decisions and taking action?
If the answer is yes, proceed.
If not, keep looking.
At their core, actionable revenue metrics tell you where leads, customers and profits are coming from so that you can steer more of your marketing spend to those areas.
Revenue metrics are geared to answer these questions:
What is driving revenue?
How are you attracting customers?
Where are you losing them?
What are the critical benefits that you are providing for customers?
Marketing spend should be analyzed against revenue numbers so you’ll be looking at data that includes:
Total Revenue (Month, Quarter, Annual)
Average Order Value
Number of Transactions or Average Length of Subscription
Begin Leveraging the Data
Once you know how to identify meaningful data, the next step is knowing where to look.
Lead and Customer Data
Identify where qualified leads and customers are learning about you. This is not the same as website visitors. That would be a vanity metric because they aren’t showing you the money.
You want to know where the money is coming from.
Track the conversion rates from various traffic sources and marketing campaigns. Look for prospects that turn into leads and track that conversion rate. Then look for
leads that turn into customers and track that conversion rate as well.
Typically, site visitors go through a series of steps before they convert.
Maybe they signup to receive a whitepaper or attend a seminar but never open it.
Maybe they go through your e-commerce checkout process but don’t make a purchase.
Review data for each part of the funnel. Where are you losing potential business? Understanding at which point visitors are opting out can help narrow your focus to optimize business.
Take the first steps toward becoming a data-driven marketer today. Before you know it, you will be effectively analyzing data about your campaigns and the resulting revenue streams and be well on your way toward making better business decisions.