How To Compare Your Marketing Numbers: Knowing Conversion Rates, Industry Benchmarks, and ROI
Having the right mix of marketing inputs matters in getting great ROI on your investment.
But knowing what to do with that mix—how to put those pieces together to create a powerful machine—matters even more. There are five clear signs that your marketing efforts can be improved:
- You don’t understand your conversion rates
- You’re not mixing the right marketing tactics to create efficiency
- You don’t know the lifetime value of a customer
- You don’t have an easy way to calculate marketing ROI
- You’re not investing in repeat business with reviews and referrals
When you can identify these signals, you can stop asking, “How much is this going to cost me?” because you’ll have clarity about what your marketing efforts should achieve. You’ll also quickly know when it’s working. Instead of being in the dark, you’ll be guided by real, transparent data.
We’re going to show you how to focus on the big digital marketing wins—the things that get you disproportionate results. It’ll be up to you to ask your “marketing partner” the hard questions.
Transparent Marketing Means Actually Seeing Results
It’s not uncommon that you wouldn’t know the total value of a customer. Or even your costs. That’s what you’ve hired others to do for you, right?
Many digital marketing agencies that tout their “partnerships” are the same ones who thrive on keeping you in the dark about your true costs and returns.
That’s not to imply that digital marketing agencies are out to get you or are scamming you in any way. They’re not. But it’s often to their advantage to bundle packages, create obscure reports, or roll costs together.
Your best defense against this?
Know Your Conversion Rates
For the purpose of this exercise, we’re going to define a conversion as a sale—signatures on paper, if you will (Your organization may define a conversion differently, but that’s okay).
Calculating your conversion rate, then, simply means you know how many sales you get from your total number of leads. Here is the simplest version of that idea:
If you close 10 out of every 100 leads, you have a conversation rate of 10%. You can use this simple math inversely, as well, to calculate how effective you need your marketing efforts to be. For instance, if you know your team closes 10% of all leads, your marketing efforts need to consistently generate 100 leads to maintain that close rate.
Now, that’s an obvious oversimplification, but you get the idea. You likely know your conversion rates at this point, so we won’t spend time walking you through how to figure those out right now.
Conversion Rates Are Only Part of the Equation: Industry Benchmarks and ROI
Once you know your conversation rates, you’re likely asking (or being asked) “is that good?” Again, that’s up to you and your business model. But industry benchmarks can help give you a better idea of how to answer that question.
There’s no way to know if your conversion rates are good or bad if you don’t, first, have some idea of what industry averages are. There can be nuances and variables that change, but at a minimum, you should know the average cost per lead, click-through rate, cost per click, and monthly spend for digital marketing in your industry. It’s a good starting place, if nothing else. Armed with this information, you can begin asking more specific questions about your agency’s marketing efforts.
Benchmark data like this helps reveal how efficient your spend actually is and how you stack up to your competitors. It lets you ask questions like:
- How much should we be spending on cost per click?
- Are we above or below average? And how can we improve?
- Are we bringing in new customers with our PPC ads or are we just showing ads to existing customers (i.e., wasting money)?
Your agency should be able to provide you with benchmark data like this in your industry. If you want to get really detailed, ask for a breakdown of your brand keyword performance and industry keyword performance too.
Want to learn more about creating the right marketing mix for measurable ROI?
This post is an excerpt from our ebook “Don’t Stop at the Top: How to Create the Right Marketing Mix for Measurable ROI.” You can get your copy here.
Create a Powerful Digital Marketing Machine
If your conversation rates are NOT regularly above 5-10% on average, you need to start looking for opportunities to improve them. Talk to a Socius representative and we’ll help you out.