Is My Marketing Working? Measuring Marketing Effectiveness




Measuring marketing effectiveness is a challenge for businesses large and small. In fact, it's not uncommon for a business owner to have no idea what their marketing ROI actually is.

According to the 2019 Small Business Marketing Trends Report by Infusionsoft, 45% of small businesses don't know if their marketing efforts are effective.

Marketing Effectiveness Question

What do these numbers mean? Well, for one, many business owners are probably wasting a lot of money on their marketing efforts.

The same report also revealed the top challenge small business owners face in their marketing efforts is FINDING TIME AND RESOURCES. It has been the top challenge for 3 consecutive years.

Marketing Challenges for Small Businesses

This isn't surprising. The demands on most small business owners' time is massive. On top of that, the constant changes in marketing make it very difficult to maintain an adequate level of knowledge to do it effectively.

In order to leverage your time, outsourcing your marketing can be a great way to go.

Whether you choose to work with a marketing consultant/agency or handle your marketing in-house, measuring marketing effectiveness will be critical either way.

In this article, I am going to help you understand the importance of measuring marketing effectiveness, knowing your marketing ROI, and how to do it.

Let's get to it...

The Importance of Measuring Marketing Effectiveness

Have you tried driving a car blindfolded? I bet you drive hands-free from time to time, but never with a blindfold on. You'd end up crashing your car or hurting someone very quickly.

Do you use GPS, Google Maps, or Waze to get directions when driving? Me too!

Measuring the effectiveness of your marketing is just like driving...

If you don't know your marketing ROI and the effectiveness of your marketing you are simply going through the "marketing motions" blindly. By understanding the effectiveness of your marketing, you can make corrections when necessary so you can reach your goals...

Just like using GPS to make sure you get to your destination.

Here are the top reasons why it's super important to measure the effectiveness of your marketing:

  • For ROI analysis: Should I double down on my investments or cut them off altogether?
  • For future business decisions: Is your marketing working well enough to open a new location or expand into other product lines? 
  • For SWOT Analysis: What are the Strengths, Weaknesses, Opportunities, and Threats in my marketing plan?

Now that we have established the importance of measuring marketing effectiveness, let's talk about...

How to Measure Marketing Effectiveness

There is no one tried and true way to measure marketing effectiveness. How you measure it will depend on a number of factors.

Your measurements may also change over time. It really depends on your marketing campaign and marketing channels. From there you can determine the appropriate key performance indicators (KPIs) you will need to track.

Your KPI's are the numbers that will tell you how effective your marketing is and what your marketing ROI looks like.

Volume PR put together an interesting article where experts revealed their tops ways to measure marketing effectiveness. You'll get all kinds of ideas from the article.

I prefer to keep things as simple as possible. If you can track the following KPI's for your marketing efforts you will have a solid measure of how you are doing.

1. Customer Acquisition Cost (CAC)

Customer acquisition cost is a really important number to know. If your cost to acquire a new customer is too high, it will make profitability and long-term success almost impossible.

Your cost to acquire a new customer includes advertising, marketing, and sales costs divided by your number of sales in a given period.

If you see your CAC trending down over time it can signify that your marketing is continually improving.

2. Customer Lifetime Value (CLV)

Customer lifetime value (CLV) will tell you how much a new customer is worth to your business...which tells you how much you can actually spend to acquire a new customer.

These 2 numbers will give you a ton of insight into how your marketing is performing for you.

For example, if your CAC is $500 and your CLV is $10,000 I'd say your marketing is performing pretty well. On the other hand, if your CAC if $500 and your CLV is $250 then you've got a real BIG problem.

Tracking these two numbers will give you a very high-level overview of how effective your marketing is. However, you may also want to track more detailed metrics on specific marketing campaigns.

Let's look at some of the more common metrics people track...


We'll show you how to create a simple, effective marketing plan in minutes!

This is the exact same marketing plan we use for our business  and our clients.

It's simple and easy to use. Isn't it time you started seeing consistent, repetable results with your marketing? It all starts with the RIGHT plan...

Metrics to Track Marketing Effectiveness

1. Return on Investment (ROI)

Return on investment is the reason why a business is wildly successful or why a business declares bankruptcy. It is the measurement of the gain or loss on an investment relative to the amount of money invested.

ROI = (Gain from Investment - Cost of Investment) / Cost of Investment

For example, John Smith buys $1000 worth of concert tickets and later resells for $1200. To calculate his return on his investment, he would divide his profits ($1,200 - $1,000 = $200) by the investment cost ($1,000), for a ROI of $200/$1,000, or 20%.

An effective marketing campaign reflects a high return on investment or at least higher than the invested amount.

2. Cost per Sale

Cost per Sale measures the cost of each sale based on your marketing spend. Let's say that John's campaign resulted in 10 sales with a total marketing cost of $1000. That is a cost per sale of $100 ($1000 divided by 10).

This can be a great way to compare multiple marketing campaigns against one another. It can also give you a good idea of the quality of leads generated by a particular campaign. Higher quality leads will result in more sales and bring your cost per sale down.

3. Cost per Lead

Cost per Lead is similar to number 2 above, but it focuses entirely on the leads generated by a campaign.

Since Cost per Lead factors out the sales process, it doesn't measure the quality of leads. Using the example from above, let's say the ten sales resulted from 20 leads. With the same $1,000 budget, that is a cost of $50 per lead.

4. Conversion Rate

A conversion rate is the percentage of visitors who take a specific desired action like email sign-ups.

For example, if a campaign brought in 1,000 visitors, from which John got 20 leads, that is a 2% conversion rate. 

If your conversion rate is low it usually signifies your messaging is off or the visitors you are attracting aren't the proper type of visitors. Either way, you can modify your campaigns to try to boost your conversion rate.

5. Engagement

Are people engaging with your marketing efforts? Engagement is very relevant when you look at social media marketing and content marketing.

Tracking your engagement will tell you whether people are responding to the information you are publishing and whether you need to keep doing more of the same or go in a different direction.

Engagement can be a great metric to track if you are trying to build brand awareness.

6. Other Common Metrics

Depending on the campaign people might also track metrics like:

  • Website visitors
  • Leads generated
  • Sales
  • Phone calls generated
  • Appointments set
  • Follower growth (for social media)
  • Email list growth

Tools to Help Track Marketing Effectiveness

These are 3 of the best and most commonly used tools to help you track your marketing ROI and the effectiveness of your marketing.

1. Google Analytics

Google Analytics is a go-to tool for all your web analytics needs. You can choose between the free basic package or the premium one.

Google Analytics' awesome dashboard lets you monitor and analyze all kinds of metrics like bounce rates, conversions, page views, visitor acquisition, traffic sources, and demographics.

2. Social Media Management Tools

There are a number of great social media management tools on the market to help you measure your marketing effectiveness.

The metrics you want to track will probably determine the tools you settle on. You can track metrics like engagement, follower growth, reach, and much more.

3. Customer Relationship Management (CRM) Software

There are all kinds of CRM options out there. The best one is the one you will actually use.

When configured correctly your CRM should be able to provide you metrics like leads generated, sales generated, and appointments set.

4. Bonus - Marketing Analytics Dashboard Tools

If you are looking for all your metrics in one place, then you might want to consider using a marketing analytics dashboard tool.

These types of tools will take your metrics from multiple sources and combine them into one, easy to use dashboard so you don't have to go multiple places to gather your data.

And that's a wrap! Measuring marketing effectiveness requires time, skills, and the right tools to be successful. Don't get caught in analysis paralysis!

Keep it simple and track your most important metrics to help measure your marketing effectiveness.

Let me ask you, is your marketing working? What are your secrets in measuring it?

Let's discuss in the comments section and feel free to share this if someone you know might benefit from it.

Creating a solid marketing strategy is a must for effective marketing? Check out our Ultimate Guide to Marketing Strategy to learn more.


We'll show you how to create a simple, effective marketing plan in minutes!

This is the exact same marketing plan we use for our business  and our clients.

It's simple and easy to use. Isn't it time you started seeing consistent, repetable results with your marketing? It all starts with the RIGHT plan...

Header image courtesy of Jumpstory.

About the author, Tim Fitzpatrick

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