A long long time ago there was a creative revolution to expand the behavioral positioning of the consumer products and the way the ad agencies targeted the audiences. Then followed the utilization of computers, changing the way ad agencies did their operations such as billings, reporting, and research. Scholars and executives found themselves asking when and why personalization of advertising and experiences matter (and not matter) to consumers, depending on answers from their wizards of data – enter the magical marketers.

This blog summarizes the marketing metric streams to illustrate how digital, traditional, and social media efforts impact the entire business now. Additionally, presents how the marketing and sales metrics could be interpreted correctly and be analyzed compared to business and organizational goals. If you do not have time to read this blog, bookmark it now to read later so that you could gain a new perspective on the way to compare cross-functional metrics.

Out of the gate let’s take a look at social media metrics for Facebook as a channel that may be positioned in the funnel for the brand awareness stage. What would a marketer focus on? On top of your head, you need to be able to say “friend/fan count”, “page or post impressions”, “reach power”, and “post link clicks”. Where is the return on investment on this channel? Yes, at the end of a campaign, these metrics will not show anyone the return on investment (ROI) especially on barely there marketing budget campaigns. The magic starts with knowing the Customer Acquisition Cost (CAC) and for Facebook it is the Fan/Friend Acquisition Cost (FAC) and comparing this metric to the Customer Lifetime Value (CLV) aka Fan/Friend Lifetime Value. The friend/fan count an account has and the growth before and after campaigns becomes necessary metric to track for this or other similar channels. These numbers will help marketers understand whether it’s too expensive to acquire new fans/friends and how many loyalists the brand has gathered from the campaign run on Facebook. 

FCPA = Campaign Cost on Facebook/Number of conversions on Facebook

To measure this, marketers can compare their Friend Acquisition Cost (FAC) with Friend Lifetime Value (FLV).  If you find that your FAC is inflated while FLV is low, it’s time to change your marketing strategy. Fans/Friends you can retain are valuable for the algorithm of Facebook. They may follow your posts and could suggest their companies about your business. They can also become unofficial brand ambassadors- not to be confused with influencers. For example, sending cold quotes to many customers can be expensive, especially if almost none become loyalists. Instead, the strategy for this channel could be retention, not acquisition.

Companies can digitize the entire customer journey, while seamlessly managing an integrated information flow from engagement through to insight, to gain a better understanding of the customer, partner, or business process. What metrics help us read that story?

Next on Facebook is the conversion rate. To calculate CR, divide conversions on your website’s/subdomain’s landing page from the Facebook ads by the total number of link clicks it received on Facebook, then multiply by 100%. CR measures how many people visited your website and took a desired action coming from Facebook. A successful conversion is when, for example, a Facebook fan/friend follows a post link to sign up for a demo of the products. When paid, a successful conversion is when anyone on Facebook saw your ad and clicked on the link and filled a form on your website. They have responded to your outreach, understood your call to action (CTA) and acted on it, increasing the CR. Measuring the CR helps marketers understand how to tailor social media strategy so it caters to the most important stakeholder: the customer. 

Let’s use “3% web user acquisition on Facebook in the next 3 months in East Coast states using organic and paid advertising” as an example goal. For marketers focused on this goal, they’d want to pay close attention to the website analytics for Facebook referrals.

One last metric for Facebook is the average order value (AOV) which refers to the average amount spent by customers on an individual sale. It’s your total revenue in a given period divided by the number of orders received. When considering metrics on Facebook, the marketeers would look at the average amount spent by a Facebook friend on an individual purchase when they become a client whether they were a direct Facebook-to-website friend or an indirect Facebook-xyz platform-website friend. A marketer would place ‘How did you hear about us?’ on a website form. 

Average order value is a necessary metric to help marketers see how valuable each Facebook friend/client is. If the AOV is small, consider expanding the target friend audience to find friend+ clients who are willing to spend more.

Promotions, product bundles, cross-sells and upsells can be used to increase AOV. While AOV helps marketers understand the value of each Facebook friend for a single purchase, the marketers need to look at the entire lifetime value of these friends as mentioned above. 

Connections

Before you can acquire new customers, you have to bring in new leads. Cost per lead measures the dollar amount of each new lead by campaign, channel, or overall spending. This sales and marketing metric helps marketers create better goals, track ROI, and adjust budgets accordingly. Budgets related to CPL include items such as paid ad placements and social media monitoring platforms. 

This metric is calculated as the total amount spent divided by leads that occurred within the same time period. In some cases where purchases cannot be measured directly due to partial or missing data, statistical modeling may be used to account for some events.

• The number of leads
• The amount spent

Cost per lead (or CPL) is the total cost of generating one lead. This is in contrast to cost per acquisition (CPA), which is the total cost of generating one paying new customer or a closed deal. If your CPL is more than the lifetime value of that customer, you’re essentially wasting money within an acquisition channel that this lead came from. The company is paying more to acquire them than the revenue this client will generate in return. Along with comparing cost per lead to your customer lifetime value, you can judge the success on the average CPL for a Facebook ad, which falls between $0-$25 in North America.

Facebook traffic is a broad marketing funnel metric, but it gives an insight into how well the brand awareness campaigns are doing—helpful when putting marketing budget against general awareness as opposed to directly impacting your conversion rate. Comparing the number of visitors over time can reveal which marketing activities have high conversion rates and which need to change to increase customer lifetime value. Once you know the Facebook origin of the traffic that converts, the marketing and sales teams know that Facebook as a marketing channel is likely to bring in the most traffic and potential customers. You can easily segment metrics according to the acquisition channel. You can also measure returning vs new visitors to understand if you’re doing an excellent job during the awareness stage. Measuring return traffic lets you know if the marketing efforts are strong enough to get a prospect who left the company’s website or shopping cart to come back.

What should you do first if the company chose a marketing insights/analytics technology software without a framework in place?

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