Measure the Impact of Marketing (7 KPIs Included)
No matter how new or trendy the product or service of your tech startup is, if it is not marketed right, it is not worth it in the eyes of the customer. When a tech startup enters the industry not only does it have to carve a space for itself, but it also must convince its customer segment that its product or service is worth it. Especially if there is a similar or competitive product in the market from a well-established company, then the marketing efforts needed to reach your audience grow by folds.
A well-thought-out marketing strategy based on tangible market intelligence is critical for any tech startup’s success. It doesn’t matter whether you are operating in the B2B or the B2C sector, the need for marketing efforts is mandatory. Through marketing efforts, you will not only enter the market but will also reach out to your segment. From there on you would want to convince your audience with meaningful content regarding the value proposition of your product and how well it caters to their needs. Without marketing, you won’t be able to achieve any of these milestones and eventually, your product might have to be withdrawn from the market.
What is Meant by Marketing Impact?
Marketing efforts are crucial to helping in getting businesses new customers, increased sales, and of course greater profits. To determine the success of a marketing effort or marketing campaign we move towards its marketing impact. By marketing impact, we mean the effect and outcome of a marketing campaign that a tech startup or any other business might have executed in line with their product or service. To measure this effect of marketing or as we call it marketing impact, several quantitative and qualitative metrics are used. We will now look at some of the most important metrics that you can use as a tech startup business to understand and measure your marketing impact.
ROI (Return on Investment)
The return on investment or commonly known as ROI is a metric that is used very commonly throughout the marketing industry. It measures the revenue that you have earned in comparison to how much you have spent on a relevant marketing campaign or plan to drive that revenue. For example, if you have invested $500 in an online marketing campaign for software and have generated $2500 in sales then your ROI comes out to be 400% or four times the initial investment in marketing.
ROI = Revenue – Cost of Campaign/ Cost of Campaign x 100%
Cost Per Win
Cost per win analyzes the cost incurred per sale versus the amount that you have invested in marketing and advertising efforts. This metric helps you in identifying the more effective and result-oriented marketing tool amongst the ones that you are using for your tech-based business. Let us understand the concept with an example.
When a $2000 marketing campaign for a cloud service generates five sales, the cost per win is $500. On the other hand, when a $1500 marketing campaign for the same service generates the same number of sales that is five, the cost per win is $300. This analysis using cost per win reveals the more effective marketing campaign and therefore helps you in investing in the right marketing plan.
Cost Per Win = Total Marketing Cost / No. of Sales Generated
Cost Per Lead
Cost per lead uses a similar approach as cost per win but instead of measuring the number of sales generated or deals closed, it analyzes the financial perspective from the basis of the number of leads generated. For example, you have spent $1000 on a marketing campaign, which generated a total of 10 leads out of which, five of the leads closed into final sales. So, the cost per lead comes out to be $100.
Cost Per Lead = Total Marketing Cost/ No. of Leads Generated
Cost Per Conversion
Cost per conversion is usually used by tech-based businesses or startups especially those who have an online presence and provide online sales. This metric can be used in two different ways. In the example of an online shop, cost per conversion refers to the cost incurred in converting a visitor to the website into a customer. Whereas the second perspective implies the cost a business takes on to turn a lead into a client or customer. Based on the industry you’re operating in and the dynamics of your business, you can choose to opt for any of these perspectives for cost per conversion.
In relevance to cost per conversion, conversion rate refers to the ratio of individuals that you have converted into customers from the total number of leads generated or as in the example of an e-commerce platform the total number of website visitors. If you had 1000 visitors on your website in a month out of which 100 became your customers, then your conversion rate comes out to be 10%.
Conversion Rate = Customers brought onboard /Total No. of Leads x 100%
Cost Per Acquisition
This marketing impact metric relates to new customers and the cost that is spent in acquiring new customers using marketing campaigns and advertising efforts. This metric is very useful in analyzing the cost of bringing on a new customer on board versus the cost of nurturing a current customer as well as comparing that customer from which market segment or buyer group is less expensive to acquire while ensuring results.
Customer Lifetime Value (CLV)
This metric measures the number of sales or revenue a customer will bring to your business across their duration with you as a customer. For example, your product sells for $20, and a customer purchases it at least five times a year and you are predicting that this particular customer will remain with you for at least five years. Using these numbers, the customer lifetime value comes out to be $500. Customer lifetime value along with cost per acquisition help you in determining which customer segments to target and bring on board as well as which segments to nurture further to enhance sales.
CLV = Revenue per sales transaction x No. of transactions per year x No. of years
7 Ways Marketing Could Impact the Growth of a Technology Business
Let us now explore the various ways in which marketing efforts can impact the growth of a technology business, especially that of a tech startup in a positive manner.
Marketing helps businesses by increasing brand awareness for their product or service. With the use of different and wholesome marketing efforts not only does your product’s market repute establish itself but your brand awareness also increases, and your customer becomes aware of the product offering and its value proposition.
Marketing efforts are also very fruitful when it comes to generating leads for your business. As we know the process of lead generation is what eventually leads to sales and deals being closed. For the growth of your technology business, you need marketing efforts to help you in generating quality leads that show a higher conversion rate. This higher conversion rate will result in increased revenue and sustainable growth.
Marketing efforts also help your business grow by enhancing the number of sales generated from a particular segment. Using a content-based market strategy you can deploy upselling, as well as increase the customer lifetime value of your target segment.
Customer Nurturing and Retention
The right mix of marketing efforts also helps you in nurturing your customer and increasing their retention rate. As research has proven that the rate of acquiring a new customer is higher than retaining an old one. Therefore, customer retention and reduction of churn rate have become important objectives to achieve in the marketing sphere.
Another major way in which marketing impacts the growth of technology business is its role in strategy formation. As marketing and the efforts that you put in under the realm of marketing are exposed to the industry and the market dynamics one on one, therefore you can get market insights and first-hand information to use as part of a business strategy. This knowledge can then be used to guide your strategy formulation process in the right direction to match your company’s strengths, in relevance to the market’s trajectory.
Marketing efforts also help in growing your technology-based business or startup by aiding in entering new segments and areas of the market. An effective marketing strategy can help you explore new avenues when it comes to customers, therefore experiencing increased sales and brand value.
A marketing campaign based on thorough market research will help you in increasing your penetration and presence in the current segment as well as newer segments. Research has proven that within a segment that you are targeting for your product’s value proposition, there are still some tiers that are unserved. But with the right strategy, you can tap into these tiers as well and gain a profitable customer stream.
The impact of marketing especially in relevance to tech-based startups and businesses cannot be ignored in today’s ever-evolving times. Marketing has come out to be a major pillar in any company’s strategic business direction as well as strategy formulation. This is majorly because of the impact that marketing can have on your business and customer segment. Therefore, when developing a marketing strategy for your business, always keep in mind how you would want to benefit from it in the form of marketing impact and what are the end objectives that you need to achieve.