For the investment industry, which thrives on quantitative measurement to demonstrate its effectiveness for its investors, you would think advisors would prefer digital marketing over traditional methods to reach new clients and grow their business. Why? You can literally watch in real time, for example, as e-mails in a campaign are sent out, opened, clicked on and shared with your prospects’ family and friends.  It’s like watching stocks trade on the stock market.

But while the marketing world has become more analytical in recent years, most advisors don’t know which key performance indicators (KPIs) to study to better understand if their marketing is working.  A recent study by MIT Sloan Management Review and Capgemini Consulting revealed only 26 percent of respondents said their company had set KPIs to measure return on investment, 57 percent had not, and 17 percent simply did not know.

Simply stated, most non-marketing professionals don’t know which KPIs would be useful to them and their business, and as a result, either do not depend on marketing to grow their business or do it without knowing if it works.  To help de-mystify digital marketing, I have outlined the KPIs which matter most so you can begin understanding what’s working and fix what isn’t.

Return On Investment

The Return on Investment (ROI) KPI measures how much revenue a marketing campaign is generating compared to the cost of running that campaign. In other words, ROI answers the questions, "Are we recouping what we spend on marketing in new business?" ROI is the single most important KPI for any business to monitor and is the first KPI to understand when assessing your marketing performance.

To calculate ROI, you will need to track the number of leads generated through each of your marketing campaigns, such as a request for meetings through your website or AdWords campaign. Next, you will need to determine the opportunity value of each lead. To calculate this, take the fees you earn on your average new client and divide that value by your average lead-to-win ratio. For example, if you know that the average value of a win is $5,000 per year in fees, and your lead to win ratio is 10:1, then you can say that the average value of a lead is $500. This number will provide an approximate value to help you assess the performance of your campaign as you bring in each new lead.

Despite ROI being the quintessential marketing KPI, it can be quite difficult to come up with a definitive ROI figure. One of the main difficulties facing advisors is that lead conversion is typically attributed to the last interaction or click associated with completing a goal, such as downloading a PDF on a website. The problem is that someone may have read your online newsletter but didn't click on any of the links that would have taken them to your website, instead returning to your site weeks later to convert. That conversion may be attributed to another channel like social media or organic search, while the newsletter played a key role in that conversion process. Despite this problem, you will need to have a firm grasp of the value of leads and wins that can be directly attributed to each marketing campaign.

Traffic Sources

The Traffic Sources metric measures which traffic sources are driving visitors to your website, and provides a comparison of each of those sources. The three main traffic sources are direct, referral and search, although your website may also have traffic from campaigns such as banner ads or paid search. In addition to measuring the number of visitors from each traffic source, consider analyzing the number of goal completions from each source.

Each traffic source can be analyzed to provide more granular information about your web traffic. Search traffic, for instance, can be analyzed according to the landing page and associated keyword rankings; referral traffic can be broken down into categories such as social referrals, blog mentions or service listings. Each source is also an indicator of the health of your website. For instance, a high volume of referral traffic shows that your brand or website is being talked about frequently by third party websites or on social media sites.

Goal Completion

The Goal Completion Rate measures the number of people that complete a specified marketing goal, such as signing up for a newsletter, downloading a whitepaper or subscribing to a mailing list. Marketing metrics like GCR are an important part of the new client funnel as it typically demonstrates your conversion rates from the awareness stage to the consideration stage. Similarly, GCR should be paired with sales KPIs such as your lead to win rate to provide an indicator as to the quality of leads your marketing efforts are attracting.

The GCR metric is used extensively in website optimization and A/B testing (also called split tests), since GCR is a leading indicator of how well your website resonates with your target audience. Content strategist and website analysts will use your site-wide GCR as a baseline value to compare all the pages on your website. Pages below the threshold require optimization, while pages above the threshold should be analyzed so you can repeat your success elsewhere.

Keyword Performance

The Keyword Performance metric measures your keyword rankings to understand how effective your SEO efforts are at driving organic traffic to your website. Keyword rankings are a leading indicator which provides valuable information about your ability to improve on existing rankings or rank on new keywords. That said, SEO efforts need to account for the "big" marketing picture and analyze other factors such as goal completion rates and return on investment.

The search engine marketing landscape has been transformed in recent years as Google continues to release key updates. The net result of these updates is to counter so-called "black hat" tactics, such as questionable link building tactics and keyword stuffing, in favor of "white hat" tactics, such as social sharing and creating high-quality content. As search engine marketing matures, the importance placed on keyword rankings will diminish (but not disappear), while the importance of other key metrics surrounding keyword performance will increase.

Cost Per Lead

The Cost per Lead metric measures how cost-effective your marketing campaigns are when it comes to generating new leads for your sales team. This metric is closely related to other key business metrics such as the cost to acquire new customers. The purpose of this metric is to provide your marketing team with a tangible dollar figure so they understand how much money is appropriate to spend on acquiring new leads.

The cost per lead metric also provides important data to use in your return on investment calculations. In fact, each stage of the purchase funnel should have similar metrics associated with it, such as cost per visitor and cost per win. Likewise, these metrics can be used to monitor individual campaigns such as AdWords, banner ads, or social ads, or the sum of your marketing efforts.

Email Marketing Engagement

The Email Marketing Engagement Score measures how effective your campaigns are at engaging your audience by tracking key metrics like open and click rates. Each of these metrics represents a different type of engagement which will help you assess the performance of your campaign. Open rates are linked to subject line performance, the credibility of the sender, and the time the campaign was sent; click rates, on the other hand, are indicative of how well the content resonates with the audience and the relevance of the message.

Successful e-mail marketers extensively A/B test subject lines, “call out” text in an e-mail, and the time e-mails are sent. The result is an e-mail marketing program that is fine-tuned to your subscriber list with campaigns capable of generating a high level of engagement. As with any marketing activity, e-mail campaigns are designed to generate leads for your business. Therefore, engagement scores should be tracked alongside goal conversion rates and social interactions to demonstrate marketing ROI.

Social Interactions

The Social Interaction KPI measures the effectiveness of your social media campaigns at fostering positive engagement. Key interactions can play a pivotal role in a post or story going viral, so it is very important to ensure that you are nourishing the right types of interactions. As well, a strong social media measurement strategy will map these interactions to other marketing goals, such as website conversions or new client wins.

When measuring social interactions, remember that not all social interactions are equally valuable. For example, one could argue that a "retweet" is more valuable than a "favorite" on Twitter because a retweet ensures the content stays in circulation longer. Similarly, different social media sites will have varying importance to your brand. One advisor may find that Facebook is a hotbed of positive engagement, while another advisor really does well on LinkedIn. As you can see, each social platform allows you to interact with your audience in a number of different ways.

The Bottom Line

Despite how popular and powerful digital marketing has become, especially in the world of financial services, the majority of advisors still don’t – or know how to -- use it.  They either don’t do anything or they use more traditional tactics which have served them well in the past.  As the more technically savvy investors come of age – and advisors prepared to serve them – digital marketing will become a must for all advisors lest their clients be slowly but surely lured away by very convincing tactics.  Use these KPIs to develop a strategic campaign which pays for itself instead of one that feels cutting edge but no one can figure out if it is making your money.

Craig M. Kaminer, partner of Evolutionize LLC, is a career marketing professional specializing in digitally integrated marketing programs for investment professionals.