Tips for Measuring Marketing Effectiveness


The following is a guest post by Raul Harman. Raul is editor in chief at Technivorz blog. I have a lot to say about innovations in all aspects of digital technology and online marketing. You can reach me out on Twitter.

Marketing isn’t a static aspect of a business. That’s why marketers follow it constantly and make endless adjustments to optimize for better performance.

Without measuring the effects marketing has on overall business, there is no way of knowing its results. If left unchecked, this can cause pointless spending that leaves people questioning its value to the company.

However, marketing is very much capable of delivering results, and this can be proven. All you need to do is measure it.

Take a look at these tips and metrics for measuring marketing effectiveness. Use them to evaluate your own marketing efforts, and they will help you understand how important it actually is for your business.

Determine KPIs (Key Performance Indicators)

KPIs are metrics used to measure how effective a business is at achieving its key goals. It also helps determine whether your ROI is positive or negative.

When talking about marketing, this translates into metrics the track and measure performance across multiple channels. By setting up KPIs to measure the relevant features of marketing, you have an accurate, data-based overview of what tactics work for your business.

While KPIs include multiple types of metrics, from conversion to engagement, deciding what to follow can be a difficult task. That’s why you need to focus most of your attention on actionable metrics, such as retention, which calculates the revenue from repeated business.

This also makes you stop measuring vanity metrics that don’t drive the business forward, and concentrate on actually measuring marketing for performance.

Track Conversion Rates

Conversion rates are used to determine how effective your marketing efforts are at driving leads along the sales funnel. Tracking them across multiple channels allows you to check how much the leads are converting into customers during the buyer’s journey.

You can also use the conversion rates to measure the effectiveness of your content. This will help you make adjustments to increase content performance, especially when using A/B tests to double the conversion. So, while you may think that another CTA button on your landing page is too insignificant, it might boost the clickthrough rate and turn a couple of leads into buyers.

Generate Relevant Data

While marketing relies heavily on analytical tools to generate data, sales and customer support don’t. They interact with real people on a daily basis, which allows them to gather more accurate information and know why, for example, the company saw a spike in sales during the last month.

Staying oblivious to this kind of data prevents marketing from knowing how to act and react in certain situations.

One way of getting around this problem is through performing paid surveys online. It allows marketers to receive relevant feedback from customers and align campaigns according to first-hand information, as well as analytics.

To generate the most authentic results, remember to target a large test group, and stay focused on one piece of information at a time.

Calculate Customer Acquisition Cost (CAC)

The cost of acquiring new customers is a key marketing metric for determining how much a business needs to spend in order to earn. It also has the potential of being used to establish the marketing budget, and prove the spending is warranted.

It’s also fairly simple to calculate. Add up all the spending on marketing for one month (including payroll) – that’s your monthly marketing budget. Now, divide it with the total number of customers acquired for that same period. So, for example, if you spend $5,000 per month on marketing and receive 50 new customers, your CAC is $100.

Regularly calculating this number gives you an overview of how productive your marketing efforts are, and how much you will need to spend to move it forward.

Work Out Customer Lifetime Value (LTV)

After knowing how much it costs to acquire a customer, you will need to calculate how much that customer is worth to your company. This is their LTV. To calculate a customer’s LTV, multiply the standard amount the customer spends with the number of repeated purchases and the average retention time.

Say your customer has an LTV of $75, and your CAC remains $100 - that’s not good for business. However, if your customer annually spends $75 over four years, your business makes $600, so the cost of $100 for their acquisition is reasonable.

Since no customer is the same, comparing CAC with LTV lets you figure out the effectiveness of your marketing when it comes to delivering the right kind of customer to your business.


Use these performance metrics to see how much business is being driven solely by marketing. This will not only measure the effectiveness of your marketing efforts across all channels, but also their quality.

Remember to use multiple metrics over a longer period of time. In doing so, you will have a blueprint of how, where, and when to invest money into marketing in order to achieve quick results and long-term goals.