A great way to boost a small business is a little bit of marketing. However, it can be tricky for someone without a marketing background to come up with good marketing ideas. One important way to know if your fun marketing ideas are paying off is by tracking key performance indicators, or KPIs. KPIs track how well a marketing campaign is translating into new customer awareness.
Track your cost per click
The first KPI to track is called cost per click. It tracks how much money you spend on your advertising per amount of times someone clicks on one of your ads. Cost per click is a good way to find out how well the money you spend on marketing ideas pays off in terms of getting customers onto the website. If you find that your cost per click is too high relative to other, similar businesses, like your direct competition, then you might be overpaying for advertising. Most online advertising packages from Google or other sources already measure cost per click. To get an analogous measure for offline ads, try running an ad with built-in confirmation that the customer saw it, like a promotion or coupon in a magazine. If they come in with the coupon, they must have seen the ad. Then calculate the cost of the coupon in terms of how much it cost to place it in the paper and how much money you lost based on the discount and divide by the number of people who walk in with the coupon. There’s a lot of ways to generalize the cost per click concept, but the key insight is to measure how much you have to spend to get a person in the door or on the website.
Track cost per attendee
Another good key performance indicator is cost per attendee. This is good for big events like major sales, holiday parties, sponsored appearances, and other fun marketing ideas. Cost per attendee explains how much it cost to bring in each person at the event, on average. A related metric is revenue per attendee. It’s important to track both, because there is no point in having a large event with a lot of attendees if the business loses a lot of money on everyone who shows up. They might walk away with a little more brand awareness, but that may or may not be enough to recuperate the costs of the event. It is better to try to make money on attendees who show up than to hope that they will become customers who bring in money later. Too many small business make the mistake of trying to spread customer awareness without following through and turning those aware customers into paying customers. Keep in mind that only a small percentage of people who know about a business are going to use its services, and keep cost per attendee low. Having a big summer party or sponsoring concerts might make people happy, but it is unlikely to make them buy your product.
Track cost per impression
A similar metric to cost per click is cost per impression. An impression is a viewing of an ad, such as the ad loading onto a user’s browser or a person seeing a billboard. Cost per impression is a good KPI to measure how well an ad campaign is actually reaching people. Paying too much for people to even see the ad, let alone act on it to start a relationship with the business. Similarly, a low cost per impression is a sign that the ad is reaching a lot of people and that the money was a good investment. It is harder to measure cost per impression for offline ads, but still possible for certain contexts, like newspaper or TV ads with known numbers of subscribers or viewers.
The click-through rate measures how many impressions turn into clicks. Rather than measuring costs, this metric tells you how well your ad is actually performing when it comes to converting views into interest. If the click-through rate is too low, that might be a sign that the ad is just not resonating with the audience- people are seeing the ad, but don’t feel any interest in the business. If this is dipping too low, consider revamping the ad to better appeal to the audience.
Don’t run away from the numbers — be curious
Key performance indicators are a perfect way to see how well marketing dollars are bringing in customers. It can be hard to tell sometimes if spending money on marketing is worth it. By tracking key performance indicators, you will learn how well you are doing. They are fairly easy to track for online ads- all of the data you need should be readily available through whatever package you use to place ads. For offline ads, it gets trickier. Use creative marketing ideas to figure out a good campaign, then a way to track its success.