How to Measure Sourcing Channel Effectiveness: A Data-Driven Guide

In the current job market, sourcing channel effectiveness plays a pivotal role in determining recruitment success. With applications increasing by almost 50% globally compared to two years ago, we need to be smarter about where we invest our recruiting resources. The COVID-19 pandemic has further complicated matters, making it challenging for recruiters and sourcers to find qualified candidates for many unfilled positions.

Finding talent through different recruiting channels can cost companies significant money, but not all channels deliver equal results. For instance, job boards typically require 74 applications to make just one hire. By understanding which recruitment channels are most effective, we can allocate our resources more efficiently and optimize our hiring strategies. 

Additionally, sourcing channel effectiveness helps answer critical questions about our main sourcing channels, where most applicants and hires come from, and the cost per channel. In this guide, we’ll walk through what you will need to calculate sourcing channel effectiveness, explain the sourcing channel effectiveness formula, and show you exactly how to measure sourcing channel effectiveness across various platforms to make data-driven recruitment decisions.

What is Sourcing Channel Effectiveness and Why It Matters

“A well-structured sourcing approach can lead to significant savings, improved supplier relationships, and better forecasting accuracy.” — KPI Depot, Leading KPI research and benchmarking organization

Sourcing channel effectiveness stands as a fundamental key performance indicator(KPI) that measures how successfully different recruitment channels attract and hire qualified candidates. Unlike simple application tracking, this metric provides a deeper understanding of each channel’s contribution to your talent acquisition strategy.

Definition of sourcing channel effectiveness

Sourcing channel effectiveness evaluates which sourcing methods- job boards, employee referrals, social media, recruitment agencies, or career fairs bring in candidates who best fit your organization and perform well in their roles.

Essentially, this metric helps answer critical questions about where your best candidates originate and which channels deliver the highest conversion rates.

There are two primary approaches to measuring sourcing channel effectiveness:

• Quantity measurement: Count the number of candidates generated from each channel during a specific timeframe and compare which produces the most candidates.
• Quality measurement: Focus on counting the number of ‘quality’ candidates generated from each channel, revealing which sources deliver not just volume but value.

Some recruitment professionals calculate this metric by dividing the total number of applications via a channel by the total number of hires via that same channel. For example, if LinkedIn generates 200 applications resulting in three hires, the sourcing channel effectiveness would be 1.5%.

Impact on recruitment channel ROI

Measuring sourcing channel effectiveness directly impacts your recruitment ROI by enabling more strategic resource allocation. Without tracking source performance, you might waste significant portions of your hiring budget without ever knowing it.

Sourcing channel effectiveness proves to be a valuable investment by optimizing several aspects of the recruitment process:

1. Cost efficiency: External agencies with specialized tools can identify potential candidates more efficiently than in-house teams spending extensive hours on candidate sourcing.
2. Resource optimization: Understanding which channels most effective helps are ensure that resources are spent on methods that produce the best results.
3. Strategic budget allocation: By analysing which channels yield the most hires at the lowest cost, you can redirect funds from underperforming channels to those with higher returns.

Moreover, this data empowers you to implement targeted improvements, such as creating incentive schemes for employee referrals if they demonstrate higher effectiveness than other channels.

Connection to quality of hire and cost per hire

Sourcing channel effectiveness directly connects to both quality of hire and cost per hiremetrics, creating a comprehensive view of recruitment performance.

When combined with quality of hire metrics (typically measured by performance ratings), sourcing channel effectiveness reveals which channels consistently deliver top performers. Low first-year performance ratings indicate potentially problematic hiring sources, while high ratings validate effective channels. 

A single bad hire can cost tens of thousands of dollars in both direct and indirect costs, making this connection particularly valuable.

Meanwhile, calculating cost per hire by recruitment channel allows you to compare recruitment costs across different candidate sourcing channels. This calculation follows a simple formula:

Cost per hire by recruitment channel = Total expenses for the recruitment channel / Total number of hires sourced from that channel

Pairing this cost data with quality metrics creates a powerful decision-making tool, enabling you to invest in channels that consistently deliver high-quality candidates at reasonable costs. This holistic approach ensures your recruitment strategy remains financially sound while maintaining hiring standards.

What You Will Need to Calculate Sourcing Channel Effectiveness

To effectively calculate sourcing channel effectiveness, specific data points must be collected and analyzed. Accurate measurement requires three fundamental components: tracking hires by source, evaluating quality metrics, and calculating costs. Let’s explore each requirement in detail.

Number of hires from each recruitment channel

Tracking where your best hires originate forms the foundation of sourcing channel effectiveness calculations. Start by mapping all active channels generating candidate applications, including:

• Internal candidates
• Employee referrals
• Careers site
• Talent pools
• Social media platforms (separated by LinkedIn, Facebook, etc.)
• Job boards (divided by specific sites like Indeed, Monster)

Your Applicant Tracking System (ATS) plays a crucial role in this process. As applications arrive, tag them with their originating source. Subsequently, when candidates are hired, this tagging allows you to determine precisely how many successful hires came from each channel. Indeed, despite making up only 1.10% and 5.98% of applicants respectively, internal candidates have a 45% success rate, while 25% of referred candidates are hired.

Quality of hire metrics: retention and performance

Beyond simply counting hires, measuring the quality of those hires reveals which channels deliver long-term value. According to recent data, 66% of companies measure job performance, 60% track retention/turnover rates, and 44% assess skills match when evaluating hiring quality.

Retention rates serve as excellent indicators of hire quality, typically measured in time blocks (six months, one year). High retention suggests your candidate attraction strategy and selection process are working effectively. Conversely, poor retention might indicate issues with candidate selection, insufficient onboarding, or unsatisfactory working conditions.

Performance metrics likewise offer valuable insights. These often include:

• First-year performance ratings
• Success ratio (number of satisfactory hires divided by total hires)
• Time to productivity (days from hire date to full productivity)

Though industry benchmarks vary significantly, organizations generally aim for over 80% retention within the first year. Notably, high-turnover industries like hospitality might have lower benchmarks around 60-70%.

Cost per hire per channel

The final piece requires calculating exactly how much each sourcing channel costs per successful hire. This metric divides channel-specific expenses by the number of hires from that channel. The standard formula is:

Sourcing channel cost = Ad spend per platform / Number of successful applicants per platform

A comprehensive cost calculation should include:

• Advertising spends on sourcing
• Job board payments
• ATS and sourcing tool costs
• LinkedIn premium accounts
• Employee referral program expenses
• External agency fees

According to SHRM data, the average cost per hire in the US is approximately INR 396,588.12. However, this varies widely by industry and position level. Executive roles can cost approximately INR 2,570,819.19 per hire, while entry-level positions typically require just INR 181,417.97 to INR 272,211.33.

Consequently, by analysing both quantity (number of hires) and quality (performance and retention) against costs, you gain a complete picture of which channels deliver the best return on investment. Organizations that track these metrics can optimize recruitment strategies accordingly—like Ericsson, which reduced their cost per hire by 70% through targeted social media initiatives.

Sourcing Channel Effectiveness Formula and Calculation Steps

Now that we understand what sourcing channel effectiveness is and what data we need, let’s examine the systematic calculation process. Following these four steps will help you accurately measure and compare the performance of your recruitment channels.

Step 1: Identify and categorize sourcing channels

First of all, create a comprehensive list of all recruitment channels currently in use. This typically includes:

• Job boards (Indeed, Monster, AngelList)
• Social media platforms (LinkedIn, Facebook, Instagram)
• Employee referral programs
• Internal candidates
• Career site applications
• Professional networking events
• Recruitment agencies

Each channel should be clearly defined and categorized to ensure consistent tracking. Initially, this step might seem simple, yet proper categorization forms the foundation for accurate measurement.

Step 2: Track hires and applications per channel

Once identified, establish a tracking system within your ATS to tag applications with their originating source. Many modern applicant tracking systems offer automated source attribution functionality that tracks each candidate’s journey from application to hire.

For each channel, record:

• Total number of applications received
• Number of candidates who progressed to interviews
• Number of successful hires

This data collection should occur consistently over a defined period to ensure statistical relevance.

Step 3: Calculate conversion and cost-efficiency ratios

After gathering sufficient data, calculate two critical metrics for each channel:

Conversion Rate: Divide the number of hires from a channel by the total number of applicants from that channel, then multiply by 100.

Conversion Rate = (Number of hires from channel / Number of applicants from channel) × 100

Cost Efficiency: Divide your ad spend on a platform by the number of successful applicants from that platform.

Sourcing Channel Cost = Ad spend per platform / Number of successful applicants per platform

Step 4: Apply sourcing channel effectiveness formula

Finally, evaluate each channel’s effectiveness using the standard formula:

Sourcing Channel Effectiveness = (Number of hires from one source channel / Number of applicants from this channel) × 100

For example:

• Number of hires from LinkedIn: 14
• Number of applicants from LinkedIn: 162
• Sourcing channel effectiveness = (14/162) × 100 = 8.64%

Altogether, channels with higher percentages are considered more effective at converting applicants into hires. Combine this with quality metrics from the previous section to identify which channels not only deliver quantity but also quality.

For comprehensive evaluation, some organizations enhance this basic formula by incorporating quality of hire metrics and cost considerations, creating a weighted formula that reflects both efficiency and effectiveness.

How to Measure Sourcing Channel Effectiveness Across Platforms

After establishing your formula for sourcing channel effectiveness, implementing measurement across various recruitment platforms becomes your next challenge. Measuring effectiveness across both online and offline channels requires different tracking methods and tools.

Tracking online channels using ATS and analytics tools

Modern applicant tracking systems (ATS) offer built-in functionality to track candidate sources effectively. These systems can significantly reduce time spent on manual screening, scheduling interviews, and candidate communication—cutting time-to-hire by up to 75%. Leading sourcing channel performance analytics platforms like MokaHR, Greenhouse, Phenom, and Smart Recruiters excel at multi-touch attribution, conversion analytics, and predictive insights.

Specifically, these platforms attribute conversions to channels, benchmark ROI, and surface predictive insights so talent teams can shift budget to what works. Their typical capabilities include:

• Pipeline and conversion analytics
• Channel quality scoring
• Forecasting and predictive modeling
• Integration with job boards and marketing tools

Organizations using these platforms have reported substantial improvements, with some reducing time-to-hire by up to 63% through automated workflows.

Manual tracking for offline channels like print and radio

Offline recruitment channels still play an important role in many industries. Since these channels lack digital footprints, recruitment teams must implement manual tracking systems. This typically involves:

1. Creating unique application codes for each offline channel
2. Setting up dedicated landing pages for different print advertisements
3. Establishing channel-specific contact methods (dedicated email addresses or phone numbers)

First, assign distinct tracking codes to each offline source. Second, train your team to consistently ask and record how candidates discovered your opportunity. Third, incorporate this data into your overall sourcing analytics.

Using UTM parameters and CRM for social media sourcing

Urchin Tracking Module (UTM) parameters serve as an industry standard for digital marketing and are especially valuable for recruitment professionals seeking to enhance campaign effectiveness. These parameters use five distinct tags to identify campaigns referring traffic to your careers page.

Each UTM parameter identifies key information:

• Source – Which site the traffic comes from
• Medium – Where an ad is displayed
• Campaign – The broader strategic initiative
• Term – Which search term leads to the ad traffic
• Content – What type of content makes up the ad

UTM parameters allow you to test variations in job titles, descriptions, and CTA buttons. For optimal results, integrate your UTM tracking with your CRM and ATS systems. This combination creates a comprehensive view of your sourcing channels’ performance, from initial click to final hire.

Interpreting Results and Optimizing Recruitment Strategy

“Channels that yield a high number of quality hires at a lower cost are considered highly effective. These channels should be prioritized in future recruitment efforts.” — Umbrex, HR performance metrics and recruitment strategy expert

After gathering your sourcing channel data, your next priority becomes making strategic decisions based on what you’ve discovered. The metrics you’ve collected serve as a roadmap for recruitment optimization.

Identifying high-performing vs low-performing channels

First and foremost, classify your channels based on effectiveness. High-performing channels yield quality hires at lower costs, whereas low-performing ones produce fewer quality hires or carry higher costs. Create a sourcing dashboard (available in most ATS tools) to review weekly, as data should drive every sourcing decision. Beyond basic metrics, segment analysis by role type or location often reveals that certain channels excel for specific positions. Regular quarterly audits ensure your data remains accurate.

Adjusting budget allocation based on effectiveness

Given these points, reallocate your recruitment budget by:

• Directing more resources toward channels with proven results
• Reducing investment in underperforming channels
• Implementing the 70-20-10 framework: 70% for proven channels, 20% for promising channels, and 10% for experimental opportunities

Document each budget adjustment with clear reasoning. Approach sourcing like marketing—run small experiments, measure outcomes, then reinvest in what works best.

Improving underperforming channels with better targeting

Rather than immediately abandoning weak channels, investigate why they underperform. In practice, enhancement options include refining job postings, improving targeting, or enhancing candidate experience. Furthermore, collect feedback directly from candidates about their channel experience. Skills testing tools can dramatically improve channel performance by automatically screening unqualified candidates, letting your team focus exclusively on promising applicants.

Conclusion

Measuring sourcing channel effectiveness stands as a critical component of modern recruitment strategy. Throughout this guide, we explored how data-driven approaches help recruitment teams allocate resources efficiently while optimizing hiring outcomes. The current job market demands smarter investments in recruitment channels, especially considering how different platforms yield vastly different results.

Effective measurement requires three fundamental elements: tracking the number of hires from each channel, evaluating quality metrics like retention and performance, and calculating the cost per hire for each platform. Armed with this data, recruiters can apply the sourcing channel effectiveness formula to determine which channels deliver the best candidates at reasonable costs.

Technology certainly plays a crucial role in this measurement process. Modern ATS systems, analytics tools, UTM parameters, and even manual tracking methods for offline channels allow comprehensive performance monitoring across your entire recruitment ecosystem. This systematic approach reveals not just which channels generate the most applications, but which ones consistently deliver quality hires who stay longer and perform better.

Data should drive every sourcing decision. Regular analysis helps identify high-performing channels deserving increased investment and underperforming ones requiring optimization or reduced funding. The 70-20-10 framework offers a practical budget allocation strategy: 70% toward proven channels, 20% for promising channels, and 10% for experimental opportunities.

Rather than completely abandoning underperforming channels, consider refining job postings, improving targeting parameters, or enhancing the candidate experience first. Small experiments, careful measurement, and strategic reinvestment create a continuous improvement cycle for your recruitment strategy.

Ultimately, sourcing channel effectiveness transforms recruitment from guesswork into science. Organizations that embrace this analytical approach gain significant competitive advantages: reduced hiring costs, shorter time-to-fill, and better-quality candidates who contribute more effectively to organizational success.

Key Takeaways

Understanding which recruitment channels deliver the best candidates at the lowest cost is essential for optimizing your hiring strategy and maximizing ROI.

• Track three core metrics: Number of hires per channel, quality indicators (retention/performance), and cost per hire to calculate sourcing channel effectiveness accurately.

• Use the formula: (Number of hires from channel ÷ Number of applicants from channel) × 100 to measure each channel’s conversion rate and effectiveness.

• Apply the 70-20-10 budget rule: Allocate 70% to proven high-performing channels, 20% to promising channels, and 10% to experimental opportunities.

• Leverage technology for tracking: Use ATS systems, UTM parameters, and analytics tools to automatically track candidate sources from application to hire across all platforms.

• Focus on quality over quantity: Employee referrals have a 25% hire rate while job boards typically require 74 applications per hire, highlighting the importance of channel quality.

The key to recruitment success lies in making data-driven decisions rather than relying on guesswork. Regular analysis and strategic budget reallocation based on channel performance can reduce hiring costs while improving candidate quality and retention rates.

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