MaRS Library Use digital marketing analytics to manage how your digital marketing performs
Using digital marketing analytics will help your marketing team deliver a return on investment. Like any other process your startup implements, measure and quantify your digital marketing in order to create a baseline expectation of how well it performs.
One of the most important purposes of your startup’s marketing strategy is to create sales. Without a way of measuring the effectiveness of your marketing activities, you have no way of knowing whether you are spending your marketing budget wisely.
Measuring and managing how your digital marketing performs
The key to managing the performance of your digital marketing is to use digital marketing analytics. Measure, track, analyze and learn. This will help you improve. To start, create a baseline. Next, experiment with different marketing efforts and measure and analyze the results. Lastly, optimize your digital marketing campaign: determine what to stop, start or continue to do.
Learning from your digital marketing analytics will help you reach your goals
By analyzing your marketing metrics, you can see if your marketing strategy is achieving its objectives. The metrics you use need to actually be correlated with increased sales, rather than “vanity metrics”—numbers such as page views or total users—which can be very high but indicate very little about actual customer engagement.
Remember: don’t just record metrics, act on them.
How to think about digital marketing analytics
Many different metrics can be used in your digital marketing analytics, and no single metric is appropriate for all marketing strategies, products or brands. Entrepreneur and author Dave McClure has defined five “pirate metrics” (named for their acronym: AARRR) that digital marketers should use. They are listed in the order in which they take place, and are typical of online metrics. This sequence is similar to that seen in a sales funnel:
- Acquisition: The number of users who respond to your digital marketing by visiting your website
- Activation: The number of users who have a positive experience on their first visit to your website
- Retention: The number of users who return to your website after the first visit
- Revenue: The number of users who become customers by taking an action that results in revenue
- Referral: The number of users who recommend your startup to others (that is, who have a positive enough experience to do so)
These metrics are all important for achieving the goals of your marketing communications (MarCom) strategy.
Where can you find these metrics?
The pirate metrics are particularly useful for startup marketing, which often takes place online. Digital marketing campaigns have the distinct advantage of being relatively easily measurable.
Services like Google AdWords automatically track useful statistics such as click-through ratio, cost-per-click and conversion rate, allowing you to quickly react to new information by intensifying effective digital marketing activities and reducing or abandoning others.
If you plan to invest in offline marketing, keep in mind that it does not offer the two-way flow of data that characterizes digital advertising and, as a result, provides fewer metrics. When designing offline marketing campaigns, startups must take special care to understand how they can measure effectiveness of the campaign and how they can capture metrics. Often, this capture of metrics can occur by driving responses to the company’s online funnel or call centre.
Example: Measuring the performance of event marketing
If you were marketing an event for your startup, likely some of your marketing would take place through channels such as emails, newsletters, blogs, social media event listings and online ads. These types of channels all deliver metrics. For instance, with email marketing (through programs such as MailChimp), you are able to track how many emails you have sent, how were many opened, how many were forwarded, how many had links that got clicked, and so on. A/B split testing can also be used to test the success of email campaigns. (Keep in mind that the subject heading is a key variable in whether recipients open an email or not).
A large sample group may be needed for A/B testing in order to be effective—if roughly 10% of emails are opened, you may need to send a total of 10,000 emails in order to gain useful data. (See the article Getting started with advertising: Digital advertising for more on A/B split testing.)
Watch the online traffic to see what works and optimize your process for next time, and try new channels too.
Marketing analytics: Further resources
- Sales metrics and the sales process for early-stage tech startups
- Using sales metrics to assess your sales performance and competitiveness
Digital marketing analytics and stages of venture development
The Startup Genome model defines five stages of venture development:
This article relates to startups in the scaling stage.
Marketing Accountability Standards Board of the Marketing Accountability Foundation. (2014). Metrics Catalogue. Retrieved from http://www.themasb.org/mmap-metric-profiles/
McClure, D. (2007, August 8). Startup Metrics for Pirates: AARRR!!! Retrieved from http://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-version
Ellis, S. (2012). Lean Startup Marketing. Hyperink – Product Development Books.