15 Mar 5 ways marketers should be measuring success
When you stop and think about it, there are countless ways we measure to prove ROI and the value of marketing. But at the end of the day, all the c-suite is really interested in is revenue growth! They don’t lose sleep at night over how many website hits the brand is receiving, or how many social likes it’s gathering. No, they care about tangible results, and if you can give that to them then you’re much more likely to get their buy-in and more budget to invest.
Don’t get too focused on the metrics that don’t actually drive growth
The first one here that spring to mind is NPS, or CSAT – any form of satisfaction measurement. I’m not saying it’s not important to know, it’s just not a true growth indicator. These stats are more focused on what the customer might do, not what they did do.
Of course, each month we want to see an increase in the usual vanity metrics (myself included), but again, they are not $$ growth metrics. Don’t get confused with generic marketing KPIs and actual customer value growth.
What should you be measuring to track customer growth success?
1. Customer churn rate
There’s no point investing all of your $$ on fancy acquisition strategies if your customers never come back after they’ve made a purchase. We focus a lot of attention on the number of new customers we acquire, but less so on the ones we have lost. We discussed this in our recent article ‘how many of your customers walked away last year’. If you’re more aware of how many customers are leaving, you’re definitely going to focus more of your efforts on stopping them leaving. After all, lost customers = lost revenue.
2. Up-sell and cross-sell redemptions
Good marketers recognise that there’s no point offering products at a lower cost which your customers would have been happy paying full price for. It’s counter intuitive. Offering a promotion on a cross-sell product or service, however, is a completely different ball game. You’re encouraging and influencing new behaviours, behaviours which will generate more profit to the brand. But when you’re marketing up-sell and cross-sell, how well are you actually measuring the return? You should be tracking every customer, using unique and trackable codes/redemption vouchers. That’s the only way you will be able to accurately measure the return. The c-suite will love to hear about how you got existing customers to spend more on new products/services. Hopefully the customer will love it too – and continue to make repeat purchases.
This is a fantastic one to share with the c-suite – it’s next level NPS. A lot of brands fail to recognise the impact of referrals. They may offer a small incentive, but many don’t do enough research to find out what rewards their customers would value for referrals. Our recent report ‘The Unspoken Customer’ revealed that 63% of customers believe they should be rewarded for referrals. Stop and think about your cost per acquisition (CPA) which is basically your marketing spend divided by the number of new customers. Referrals come at a significantly lower cost in comparison. It’s also a measure of happy customers. Only happy customers would recommend their friends.
4. High value customer segmentation growth
It’s a known fact that 80% of your future profits will come from just 20% of your existing customers. So how well do you know your customers? How much they’re spending, their purchase frequency? Most (if not every) brand has superstar customers. (Customers who spend the highest amount and shop most frequently). Do the maths and learn what impact increasing this invaluable customer group by even 1 or 2% would have on the bottom line. This definitely should be one of your core growth objectives.
5. Return on your separate retention budget
Our research also revealed that 77% of customers believe new customers receive better incentives than loyal customers. This is crazy! So not only are brands paying more to acquire new customers, but they’re giving them a better deal too. We recommend dedicating at least 10% of your marketing budget to keep your existing customers happy and engaged. Keep it completely separate from the rest of your marketing budget. This budget is strictly for targeted programs which you can reward and recognise your customer for their loyalty and prevent them from churning. There are many benefits to this, the most important is that your loyal customers will feel genuinely valued, they will also spend more and become brand advocates, meaning they’ll tell even more of their friends.
I attended an event this week (in-person woohoo!) which our GM, Michael Barnard joined a panel to discuss customer loyalty and enhanced customer experiences. A lot of what’s covered in this article was shared, a member of the audience used the phrase ‘uncommon sense’. I loved that, there are so many ways you can increase customer growth. But it starts with your existing customers, measuring what they are doing and how they are behaving – recognising, valuing and respecting them. In doing so, you’ll have a much healthier report to share with your c-suite.
We’re here to help. If you would like to have a chat about how your brand can achieve customer growth success, using the recommendations above (and much more), we’d love to hear from you. Contact one of our customologists today on 1300 264 549.