Marketing Metrics – Measuring the success (or failure) of your Marketing efforts
When spending time and money marketing your business, it is important to be able to understand exactly what is working and what is not working. Top line… it’s the bottom line that counts. Use Marketing Metrics to help you better understand.
So, where and how do you start to understand all the data in a meaningful way that ensures that your marketing time and budget is well spent.
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The guide explains things simply and includes examples of marketing metrics calculations to make life really simple.
Marketing Metrics included are:
- Customer Acquisition Cost (CAC)
- Customer Lifetime Value (LTV)
- CAC (Customer Acquisition Cost) Payback Time
- Average Lead Close Rate
- Marketing Originated Customer Percentage
- Marketing Influenced Customer Percentage
Customer Acquisition Cost (CAC)
The Customer Acquisition Cost (CAC) is the average amount that you spend to acquire a new customer. This is important because the more you have to pay for a new customer, the lower your margins. As a marketing agency, we want to help you achieve a lower CAC in order to provide a higher return on investment.
Customer Lifetime Value (LTV)
In this metric we want to compare the lifetime value (LTV) of each customer to their cost to acquire that customer. Why does Lifetime Value matter? Many businesses fail to realise the actual amount of revenue a single customer generates for their business. Instead of only focusing only on a single sale, use the complete value of that customer over the lifetime of their engagement
CAC (Customer Acquisition Cost) Payback Time
You truly care about two things – revenue being brought in and how much it costs them to generate that revenue. The CAC payback time looks at how long it will take to payback the investment made to acquire a new customer. While it depends on the industry that you are in, in general the ideal Cost to Acquire a Customer Payback Time is under 12 months. High performing businesses may see payback time as low as 5-7 months. The sooner the payback, the sooner your clients are profitable with each customer.
Average Lead Close rate
It’s not good enough to just generate tons and tons of leads. A lead that never converts into a customer is essentially worthless. You want to show how qualified your leads are with this metric. The lead close rate will be highly dependent on the industry that you are in, but it can also show symptoms of internal issues within your organisation or within your marketing efforts.
Marketing Originated Customer Percentage
Here you’re really starting to see the value of everything that you’re doing. This metric directly ties your marketing efforts to your bottom line. Your Marketing Originated Customer percentage is a measure of how many new customers that you have generated that you would not have had without that marketing. It’s a much more concrete evaluation of your efforts than just number of leads and customers.
Marketing Influenced Customer Percentage
The previous metric was all about new customers that originated because of your marketing efforts. This metric is all about the number of customers that are closed after interacting with your marketing. Leads can come from anywhere: marketing, word-of-mouth, referrals, Google, networking, etc. Whether you generated that lead with your marketing efforts or not, you need to understand how many customers interacted with your marketing efforts in order to understand how effective they are.
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