It’s a bedrock truth that marketers must measure their efforts. Without tracking what works and what doesn’t, it’s impossible to refine and improve what you do.

And yet the concept “measure what works” is deceptively simple. Marketing efforts occur across many channels at once, and each channel carries a different cost. The question is how to compare them.

In any given month your company may be sending out emails, placing paid advertisements, attending trade shows, and buying Google AdWords pay per click advertising all at the same time. Your marketing program has a finite budget of both time and money, so you need to know where to concentrate your efforts. What you want to measure is return on investment (ROI) across your different lead generation channels.

ROI per channel is a composite of three metrics: contacts and leads generated per channel, conversion rates at each stage per channel, and the average lifetime-spend of the customer. Let’s take a moment to look at each one.

Contact and leads generated per channel:

The first step to gauging the efficacy of your marketing is to measure how many new contacts and leads each effort is capturing.

In digital marketing, this means directing viewers of each effort to a different landing page and/or tracking URL and using dynamic phone number tracking. By tracking visitors by a unique LinkedIn or Google landing page or tracking code and phone number you can count the number of new contacts and ultimately leads generated by each digital channel when you count the captured contact information of its page.

Measuring new contacts and leads from in-person events like trade shows can be as simple as directing leads to an on-site signup sheet.

Measuring interest generated by physical marketing materials like direct mailings and magazine advertisements often involves using a unique URL, phone number or having the publisher assign a code to the material that needs to be referenced during an inquiry back to your business. Offering a discount can also help, “mention this ad to receive 10 percent off your first month.” It’s always important for your receptionist or sales team to ask inbound leads, “How did you hear about us?” to make sure you’re tracking the efficacy of these materials.

Conversion rate per channel:

Whenever your sales team converts a contact to a lead and then into a customer, note which marketing channel generated the lead. The number of converted leads divided by total leads generated is the conversion rate for that channel. Suppose your email campaign landing page captured 50 leads last month and your sales team closed sales with 10 of those leads. The conversion rate of your email campaign is 10 divided by 50 — a 20 percent conversion rate.

Average lifetime spend per channel:

Different channels speak to different market segments. Prospects from a trade magazine ad placement might have a bigger appetite for your services than respondents to your Twitter efforts. Measure the average total lifetime sales volume per customer from each channel. If a converted trade magazine lead tends to buy $10,000 dollars from your company when a LinkedIn lead tends to buy $5,000, you need to know about it.

Return on investment

With those three metrics in place, you can calculate your ROI per channel.

A channel’s cost divided by its leads generated is its cost per lead. If you spent $1,000 on AdWords last month to bring in 100 leads, your cost per AdWords lead was $100.00

A channel’s conversion rate times its cost per lead is that channel’s cost per new customer. If you spent $100 per lead from AdWords and closed 25 percent of those leads, each new customer cost you $400.

A channel’s ROI is the average lifetime spend of its customers divided by its cost per customer. If your AdWords-generated-customers tend to spend $5,000 and it cost $400 to acquire them, your return on investment is 12.5: each dollar spent on AdWords advertising brought in $12.50

If you knew for every $500 you invested on marketing, you would get $1000 or $2500 per spend, how many times would you do it? Answer: as many times as you could!

When you understand what goes into each channel’s ROI, you are empowered to refine your efforts. Perhaps your trade show presence had a great ROI despite the high upfront cost. You know it’s time to research more in-person events. Is your direct mailing ROI low because of a lack of leads generated, or a low conversion rate of a high number of leads? Knowing the ROI per channel, as well as the constituent metrics that contribute to it, let’s you prioritize your time, making sure you refine your efforts where they will do the most good for your company.


Sheila Kloefkorn is CEO of KEO Marketing Inc. She can be reached at