Marketing Metrics you should Care about

Illustrate your Team’s Contribution with Focused Metrics

From the water cooler to the boardroom, marketing professionals everywhere are talking about how to measure their efforts more effectively. Studying the metrics of digital marketing campaigns can be challenging, especially if you’re not sure what data should take center-stage. A few key metrics can make the difference between run-of-the-mill analytics reports and impressing your CEO.

To make the best case for your team, consider the goal of your marketing campaigns, revisit the budget and spending for digital marketing, and delve into the numbers to show a good return on investment. You can even account for the total cost of marketing – taking program spending, salaries and overhead into account – as it compares to new revenue and new customers.

New customers for Every campaign

To illustrate the impact marketing efforts have on your company overall, you can paint a clear picture of how many customers are brought in, relative to the amount of marketing your company produces. There are several ways to measure this, including the Customer Acquisition Cost (CAC) and the marketing percentage of customer acquisition.

To determine your Customer Acquisition Cost, combine the ad and marketing spend amounts with the salaries of your team and overhead for a certain time period. Then, divide this number by the number of new customers you obtained in the same time period. This will show you how the costs of marketing stack up, in relation to the number of customers gained in a certain quarter. The marketing percentage of CAC can also be computed as a portion of the CAC, compared to the overall Customer Acquisition Cost. This is another way to determine how effective marketing efforts are at a given time.

Compare the Value Customers bring to the Costs

When there is a constant revenue stream from customers, companies can also take a look at the value their customers bring to the company over time as it compares to the cost of recruiting new customers. This can be measure by the ratio of Customer Lifetime Value (LTV) to CAC, and it can also be qualified through the time it takes to earn back the money spent to acquire new customers.

To compute the first number, take the revenue the customer pays into the company during a specific time period, subtract the gross margin, and divide by the estimated cancellation rate for that customer. That will give you the Customer Lifetime Value. Now, look at the LTV as a ratio with the CAC, and see how it divides out. A higher ratio of LTV to CAC usually means the sales and marketing teams for a company are achieving a higher return on investment. If the ratio climbs too high, it may be a sign that it’s time to invest in your sales and marketing teams. You can also look at the time it takes to pay back CAC. Divide the CAC by margin-adjusted revenue per month for the average new customer, and consider the resulting number. This shows how many months it takes to earn back to cost of recruiting that customer.

Give Credit where Credit is Due

Though it may be harder to track, a simpler way to show how much marketing is making an impact for a company is to look at the work they do every day, especially as it relates to bringing in new customers. Find out what percentage of new business is the direct result of marketing, meaning a marketing staff member introduced a lead to the company.

Determine the percentage of these customers that originated in the marketing office, then compare the percentage against the rest of the company. You can also look at the percentage of new customers that were influenced by marketing at some point along the way – whether the marketing team helped to convert a lead or whether they guided the customer on their buying journey. This data can show how valuable marketing efforts are in the big picture.

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