Key Performance Indicators: Program Cost-Effectiveness

Program Cost-Effectiveness Key Performance Indicators

Key performance indicators that address the cost-effectiveness of your marketing programs are as necessary as KPIs that address Customer Cost & Value.

KPIs on Program Cost-Effectiveness let you know exactly which programs are successful and which program channels are worth more investment. They can also tell you how many new leads are required to land a customer, which makes them invaluable for goal setting.

The essential metrics to calculate in this category are:

  1. Traffic to Lead Ratio
  2. Lead to Customer Ratio
  3. Total Revenue per Program or Channel
  4. Net Revenue per Program or Channel
  5. Return on Investment (ROI)

Pipeline Ratios

Two simple pipeline ratios can give you a lot of information on which marketing activities work best for your business. The first, Traffic to Lead Ratio, shows you how much of your traffic goes on to become a lead. You can define “lead” as MQL or SQL, as you prefer. The calculation, for a given time period, is:

    Total Traffic / Total Leads

So, if you have 1,000 website visitors and you generate 100 MQLs, your Traffic to Lead Ratio is 10. That means you need 10 site visitors to generate 1 lead. This is a very effective number to know when you are setting marketing goals.

Similarly, the Lead to Customer Ratio is also very informative, especially when setting marketing goals. Again, you can track MQLs or SQLs, as you see fit. The calculation, for a given time period, is:

    Total Leads / Total Customers

Total Revenue per Program or Channel

Two more very straightforward KPIs are Total Revenue per Program and Total Revenue per Channel. These are exactly what they say: how much money you brought in for the given program or channel. They require less arithmetic and more solid data collection.

Get blog updates delivered right to your email!

Net Revenue per Program or Channel

To be really useful, you need to know more than just how much money was brought in per program or channel; you also need to know how much those programs or channels cost. Your Net Revenue per Program or Channel is a simple way to see real value – the only tricky part is to know exactly what your revenue and costs were. The calculation, figured by program or channel, is:

    Total Revenue – Total Costs

Return on Investment

A more precise calculation of program value is Return on Investment. It uses Gross Profit instead of Total Revenue, which really hones in on bottom line value. The ROI is calculated like this:

    ((Gross Profit – Marketing Costs) / Marketing Costs) x 100

Be Certain Your Marketing Programs Are Effective

Use your data to know how well your marketing programs are doing. KPIs on Program Cost-Effectiveness are critical to determining the success of your programs and knowing which channels are worth continued investment. These KPIs give you the data you need to make sound decisions when setting marketing strategy and goals.

Michelle Marketing Strategies provides expert consulting services in digital marketing, marketing automation and content development. Email or phone for more information.