In the world of marketing, there are literally hundreds of metrics that you can track, and there are people whose only job is to dig through all the analytics a business has to tell how well they’re performing.
However, for all businesses, there are a handful of marketing metrics that matter more than all the others. If you track these, you’ll have a really good high-level view of how well your marketing is performing.
Here’s what you need to be tracking.
Overall ROI (Return on Investment)
Your overall ROI for your marketing is probably more important than any other metric you can track. If you’re not getting a return — or the return you expect — then it tells you that you might need to revamp your entire marketing plan.
To calculate ROI, you need to divide the return from your marketing by your investment — usually done monthly, but you can do this by any time period you choose.
The difficulty is that every type of marketing has different potential or expected ROIs — and this varies by industry. To make the most out of this number, you need to do some research and learn what good ROIs are for what you’re trying to accomplish.
Cost Per Acquisition
Cost per Acquisition, or CPA, is the amount of money it takes to get a customer or user to take an action, such as making a purchase or signing up for a service.
CPA helps you understand your return on investment. By measuring how much a customer is worth and how much it takes to acquire them, you can change how you spend your marketing dollars to the forms of marketing that cost the least to get a new customer.
But not all customers are created equal — most businesses have many different products and services, which means you have different types of customers. A customer who is just buying websites has a different lifetime value compared to someone who is buying social media management.
Understanding how much your different types of customers cost to acquire can help you determine how much they’re worth spending on. If CPA is very high for a low-value client, maybe you don’t want to spend many marketing dollars on them.
In fact, you might even consider pulling a product/service if you see that the CPA is too low in comparison to how much they’re worth.
CPA also helps you see the value of keeping customers around. If you have a high CPA, you might want to focus on retention programs to keep existing customers from leaving.
Repeat Purchase Rate
Repeat purchase rate, also known as repeat customer rate, helps you measure customer loyalty and satisfaction.
It’s the percentage of clients who have placed multiple orders with you over a certain period of time. A high repeat purchase rate is a sign that customers are happy with their purchases and are likely to come back for more.
It’s also an indication that you’re on the right track in terms of providing good customer service and offering products that suit your customers’ needs.
Companies with a high repeat purchase rate tend to have a better brand image and higher customer loyalty than those with a low rate, which means you ultimately have to spend less on your marketing.
Remember, this depends a lot on your sales cycle. If you’re in an industry where people only make a new purchase every few years, then this is going to necessarily be low — and the opposite is true for a product people need regularly.
Make sure you understand what this metric looks like in your industry for your products/services so you can understand whether yours is good or not.
Upsell and Resell for Alternative Revenue
Upselling and reselling are two essential strategies for any business, especially now that online shopping is so huge.
Upselling is when you encourage a customer to purchase a more expensive version of a product they’re already interested in.
For example, you could upsell a customer from a basic laptop to a laptop with a bigger hard drive.
Reselling is when you encourage your customer to buy more of something they’ve already purchased.
For example, if a customer buys a laptop, you could encourage them to buy a new laptop two years from the purchase date.
Both upselling and reselling can be effective ways to increase revenue and customer loyalty at the same time. The larger the investment a customer makes with you, and the more of your product they buy, the more likely they are to keep buying from you.
Remember that the sales cycle for some industries can be quite long and cost quite a bit. If you can find ways to shorten that sales cycle or take advantage of the fact that a customer is already in the sales funnel and is ready to purchase (and get them to make a bigger purchase), you’ve saved your business money and increased your profits.
Customer Lifetime Value
Customer Lifetime Value (CLV) is a powerful metric that measures the value of a customer over the entire duration of their relationship with your business.
By understanding a customer’s CLV, you can create more effective marketing and sales strategies that accurately calculate the expected return on investment.
You can better understand the true value of each type of customer you have, which you can then compare to the cost per acquisition — and adjust your marketing dollars accordingly.
CLV provides a more accurate picture of your customer base because it takes into account how long customers keep buying from you, how much they spend, and how often they make purchases.
By analyzing customer data and comparing it to other customers, you can identify which customers are most likely to stay with you in the long term (and which customers might be in danger of leaving).
You can also use CLV to make decisions on how much to invest in customer loyalty programs. When used properly, CLV can provide invaluable insight into your customer base and help you make informed decisions that drive long-term growth.
Ready to Start Tracking the Metrics That Matter?
Schedule a call today and we’ll help you determine which metrics matter most to your business and build a dashboard where you can track them all in once place.