Increasing the success of any marketing campaign requires using a variety of metrics derived from different sources of data. However, not all metrics are helpful. In fact, focusing too much on popular metrics believed to be authoritative – like website traffic, email opens, and even ROAS and CPA – can actually hold you back.
In-platform metrics are short-sighted
You’re given access to data when you advertise on various platforms to run your marketing campaigns, like Facebook, Instagram, Twitter, and Google. These metrics are useful for fine-tuning your individual campaigns, but outside of their platform, they’re misleading and shouldn’t be used to guide your overall marketing strategy.
A good example of a misleading in-platform metric is Return on Ad Spend (ROAS). On the surface, it seems helpful because it tells you how much money a particular advertising campaign generates compared to the money you invested in running those ads.
For example, say your company spends $10,000 on Facebook ads this month. By the end of the month, you generate $50,000 in revenue. To calculate your ROAS, you’d divide your $50,000 in revenue by $10,000, which is $5. This means you generated $5 in revenue for every dollar you spent on your ads. That’s a 500% ROI, which seems great, but ROAS is only useful for optimizing specific campaigns. It’s not a metric that should guide your entire marketing strategy.
There are many reasons ROAS is a misleading metric, one of which is that it creates an incentive to focus on short-term results and ignore lifetime customer value. For example, a high ROAS on a particular campaign might encourage you to invest a larger portion of your marketing budget into more ads rather than your email marketing campaign.
Generating one-off sales from ads isn’t as profitable as nurturing leads long-term. If you neglect your existing funnels, you’ll spend more time, energy, and money in the long run to continually generate those one-off sales through ads and you’ll fail to build a list of loyal, high-value customers.
Traditional metrics don’t account for other touchpoints
You could run two different Facebook ad campaigns and get entirely different results if one of those campaigns is being supported through other channels and touchpoints. For example, if you’re using remarketing to show ads only to people who have already interacted with your brand, then Facebook ads can’t be credited with the full success of that campaign. In this case, your previous hard work would be the driving factor of your success.
Of course with remarketing, Facebook ads play a role, but if you mistakenly attribute all your success to Facebook ads, you’ll put too much stock (and marketing budget) into more ads at the expense of neglecting the other, more fundamental factors.
Not all success is about getting the sale
Your existing customers and leads are at various points in the customer journey, and not everyone is ready to buy. Traditional, popular metrics place a heavy focus on measuring sales, and if certain marketing efforts don’t generate sales, they’re seen as less effective. However, that’s short-sighted because it doesn’t account for how those ads and other interactions will impact your market long-term.
For example, if you’re selling a product or service that people need time to understand fully, like a health or beauty product, a large portion of your market will be in the research phase for some time. By running ads and marketing to people who are still collecting information, you won’t see many sales, but that doesn’t mean your ads aren’t effective. If the goal is to educate people about your product or service, you can’t measure the success in terms of sales. You can only measure this type of success over the long-term as it’s reflected in your overall profits.
Collecting data is helpful, but don’t lean too hard on the wrong metrics
Avoid getting caught in the trap of constantly measuring results by the wrong metrics. Instead of hyper-fixating on things like ROAS and CPA, start measuring meaningful data, like new customer acquisition cost (nCAC), media efficiency (MER), and lifetime value (LTV). For example, the cheapest leads are not always the most profitable customers. Instead of trying to get new customers or clients for the lowest possible cost, use nCAC to compare the cost of acquisition to your lifetime customer value.
If you feel overwhelmed by trying to sort out all of your marketing data, connect with a professional marketing agency that understands the value of business-centric metrics.
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