Which of My Marketing Channels are Working?

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I often get questions from clients about their various marketing methods, wondering if they’re really working.  A big one, for instance, is Yellow Pages.  Their sales people are pretty slick at sales, but can crumble quickly under any sort of questioning related to their claims.  Instead of just believing their hype, use your data to back up their claims or call their bluff.

Setting the Scene

First, set up a goal in Analytics that’s specifically for tracking what you consider to be a conversion.  Typically this means someone filled out a form on your website and ended up on a Thank You Page.  If that’s the case, then simply tracking how many people end up on that page would give you your amount of conversions/leads.

Second, track those leads all the way to purchase.  Were you able to close that lead, or did they get away?

Third, do this for other marketing channels, if you can.  Attribute each lead to a specific ‘marketing channel’ so you can differentiate how the customer found you.  If you currently aren’t doing this, start today.

The Two Numbers You Should Really Know

There really are just two numbers you should know to calculate if each marketing channel is worth investing into:

1. Average lifetime value of a customer (ALV)
2. Your average closing rate as a percentage (ACR)

Armed with these, we could easily take the numbers he’s given you (or any form of advertising, including SEO, PPC, etc) and plug them into a simple formula.

Leads x (ACR) = Actual leads that converted (AL)

(AL) x (ALV) = total amount of potential money you’ll make over the lifetime of those leads

If your spend for that marketing channel is less than the potential revenue, keep buying.


So for instance, if your average lifetime value of a customer is $2000 and you close 35% of your leads…

58 leads from YP x .35 = 20.3 valid leads

20.3 closed leads x $2000 average value – $40,600 potential income

If your YellowPages ad costs you $5000 / year, and you can make $40k, why not continue to do it?  If, on the other hand, they’re making you only $1000, then it’s time to put that money to use elsewhere!

Traffic Value

There is one ‘trick’ to this entire exercise: it really depends on how ‘good’ the traffic is that’s coming to your site. If YP’s leads are crappy, you may only have a 10% closing rate because there are a lot of window shoppers. SEO/organic traffic, however, would be a lot higher because they people are genuinely interested in the product or they wouldn’t stay on your site, and definitely wouldn’t fill out a lead form. Each lead source will be different and could have dramatically different close rates.

Get These Numbers in Your Head

These numbers are so important to me that I’ve created a simple Excel worksheet that you can download for free to help you figure out which of your marketing channels are bringing in the best customers.

Related Video: Understanding Your Content Performance

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