Marketing metrics provide valuable information you need to effectively forecast and budget for the future
Any small business knows that growth and sustainability are always at the top of mind. We recently wrote an article about marketing metrics for a business, but how can you use these metrics to then plan for your financial future as well?
Marketing isn’t just important for growing your client list. The information you gather can track performance to help you create realistic forecasts and budgets and show you the areas where you need to improve. For example, you can determine how much a lead or click is worth, which can help you decide what kind of marketing strategy to implement.
First, we’ll look at which marketing metrics are most important for financial considerations. Then, we’ll discuss how to use them.
Which marketing metrics are important?
In general, marketing metrics are any measures that you use to determine how effective your marketing efforts are. That means you could set a goal to generate a certain amount of leads from an outreach campaign, and metrics show you how close you are to reaching that goal.
They also show you which methods work, and which don’t. For instance, you may find that your social media posts get a lot more clicks and traction than your email marketing messages.
In the realm of finance, one of the best marketing metrics to use is return on investment (ROI). ROI lets you know how much you spent versus how much you profited. However, ROI in regard to marketing isn’t always a financial consideration alone; remember that your ROI goal for a marketing channel could be more about lead generation than funds. So, when using this data to plan for the future, keep in mind that a smaller profit is not necessarily a loss, depending on if you reached your other goals.
Another important metric for financial forecasting and budgeting is actual sales numbers and forecasts. And yes, sales and marketing are connected: sales influence marketing strategy, and marketing strategy influences sales. So, take a look at those sales numbers and figure out where the sale originated; i.e., where did the lead come from, and what led them to click the desired action? Looking at sales numbers alongside your current marketing strategy will help you forecast for the future and at the same time, create expense budgets and cash flow analyses that will keep you on track.
How to use marketing metrics in financial planning
It may help to start with a smaller forecast period. For instance, instead of an entire year, just a month. How many sales have been made historically in a month? How much ROI is being generated in one month based on the marketing metrics you’re tracking?
Using sales data, figure out which services bring in the most money and which aren’t. Alongside this process, determine which products and services are getting the most attention within your marketing strategies; i.e., what articles are people clicking on? What topics are included in the email marketing campaigns that do the best with your audience?
With these metrics as a guide, you can decide which products or services need the most attention and which marketing strategies should receive more financial backing.
Also, compare month-by-month revenue alongside new marketing efforts you tried or new product or service you released and advertised. Doing this will help you create a realistic forecast each month of what to expect in revenue when you have the same mix of outreach channels and service offerings. And once you have this monthly information established, you’ll be able to apply it to the entire next year.
Marketing metrics are a significant part of planning budgets and forecasts. Marketing strategy ROI and sales numbers help you determine whether or not you’re effectively putting your message in front of the right people who will turn into paying customers. Cash flow management is one of the most challenging aspects of owning a small business. In fact, 82% of small businesses that fail do so because of cash flow problems. So, you need all the actual data you can get to make smart financial decisions.
For more information about how to budget and forecast for your business, get in touch with our team at No Boundaries Advisors. We provide profitability services for small businesses, in addition to accounting services and business planning. We’ll help you determine which marketing metrics will provide you the most valuable information for planning for growth.