You know what they say: if you can’t measure it, you can’t improve it. But measuring things is not always straightforward, especially in a marketing team. For this reason, we’ve compiled a guide on the top metrics for a marketing team, and how to go about measuring them.
The metrics you measure differ according to the maturity of your organization. If there’s only one employee in your marketing team, you’ll be measuring different metrics than when you have a 40 people team. As you grow, you’ll be caring about different numbers. We’ve tried to take this into account in our analysis.
1. Customer Acquisition Cost
2. Organic Traffic
3. Social Media Traffic
4. Traffic to Lead Ratio
5. Customer Lifetime Value
6. Marketing ROI
7. Customer Satisfaction
8. Cost Per Lead
9. Return on Ad Spend
10. Churn Rate
💡 The Customer Acquisition Cost is the amount of money it costs your company to acquire a new customer.
This is one of the first metrics you’ll want to measure. Measuring this metric allows you to make important decisions for keeping your company afloat. For example, you don’t want to be spending too much money on customer acquisition if it doesn't yield a profit. This metric helps you decide how much money should be spent on attracting customers while keeping your company profitable.
CAC is calculated by adding the costs associated with converting prospects into customers (marketing, advertising, sales personnel, and more) and dividing that amount by the number of customers acquired. This is typically figured for a specific time range, such as a year or a fiscal quarter.
Example: If an organization spent $1,000 on marketing in a year, and it was able to acquire 1,000 new customers, the CAC would be $1 because $1,000 divided by 1,000 customers equals $1 per customer.
Disclaimer: This is a pretty simple formula, yet identifying total expenditure can be pretty tricky because it usually takes a lot of factors into account.
According to the US Small Business Administration, companies that make less than $5 million a year should allocate between 7% and 8% of their revenues to marketing.
When looking at Customer Acquisition Costs, looking at a number at a specific point in time won’t get you far. It should be displayed:
💡 Organic Traffic refers to the number of customers attracted to your website solely from organic search.
The aim of any organization using inbound marketing is to have the majority of its website traffic come from organic search. High organic traffic means people are finding your website on their own by clicking on results in search engines. It’s not traffic you paid for, so it’s extremely valuable. This number is directly correlated to your SEO strategy. That’s why measuring it allows you to understand how your SEO efforts are working and how you could be improving them.
This is usually one of the first metrics you start measuring. In fact, it’s not too much to say that your existence as a company is mostly determined by your internet presence. And your internet presence is determined by organic traffic. In a small marketing team, this metric is thus amongst the first ones you look at.
You usually won’t calculate Organic Traffic yourself. Instead, you can find this number in dedicated Analytics tools, such as Google Analytics. You need to be paying specific attention to the top pages driving traffic to your website. You need to ensure these pages are regularly updated and optimized for conversions. This is especially true if your website visitors could be landing on content that was published over a year ago.
You should be optimizing your content to not only generate leads but to also increase the number of pages your visitors are reading. The more pages they’re reading, the more educated they’ll be, and this is likely to reduce the amount of time it will take sales to close a deal.
Your organic traffic should be displayed as a trend, allowing you to see its evolution. What is relevant is to understand whether your organic traffic is increasing or decreasing, so as to allow you to re-calibrate your SEO strategy accordingly. It is also interesting to use tools like Semrush to compare your organic traffic with other companies and especially your competitors to understand how you fare compared to them.
The Traffic to Lead Ratio is the percentage of website visitors turning into actual leads in any given time period. This is also known as the Lead Conversion Rate.
Regardless of how people reach your website (Blog, External Referral etc..), you need to ensure that it generates real, valuable leads. No matter how great your site looks or how much traffic you’re getting, something is wrong if you are not converting visitors into leads.
This is a very useful KPI because it tells you about the quality of your website traffic. Don’t be fooled by the growing popularity of your website if it’s not leading to substantial financial. changes.
To calculate this metric, you need to divide the number of visits by the number of leads generated over the same timeframe.
Example: If you have 1,000 website visits and 100 new leads in a month, that means your website traffic to lead ratio is 10:1 (or, in other words, you have a 10% conversion rate)
Your Traffic To Lead Ratio should be displayed as a number. You just to keep in mind that if the ratio is no less than 2-4%, then your content strategy is working to attract potential customers instead of simply driving people to your website thanks to the viral content without any other perspectives.
💡 Customer Lifetime Value is a metric indicating the total value a business can reasonably expect from a single customer account throughout the business relationship.
Measuring Customer Lifetime Value is key, as it allows you to recoup the investment required to earn a new customer. It allows you to predict future revenue and measure long-term business success. This metric is key for acquiring and retaining highly valuable customers. It is also a great metric to compare with Customer Acquisition cost. In fact, you better ensure Customer Lifetime Value is higher than Customer Acquisition costs. Otherwise, you might well be wasting your resources.
You should be displaying the Customer Lifetime Value as a trend. In fact, observing how this trend evolves reveals a lot about your ability to retain customers and exploit existing customer relationships. As mentioned above, it is also interesting to compare the Customer Lifetime Value with other numbers, such as the Customer Acquisition Cost to gauge your profitability.
💡 Marketing ROI is the practice of attributing profit and revenue growth to the impact of marketing initiatives.
Evaluate the performance, impact, and profit generated by marketing initiatives so that it can be determined whether your marketing efforts are actually helping the organizations. It basically helps you measure the degree to which marketing campaigns contribute to revenue growth. The insights gained through the process of ROI calculation can be used to drive future strategies for smarter decision-making.
Typically, marketing ROI is used to justify marketing spending and budget allocation for ongoing and future campaigns and initiatives.
We make a key assumption in this formula: all sales growth is tied to marketing efforts. In order to generate a more realistic view of marketing impact and ROI, marketers should account for organic sales.
You can simply display your marketing ROI as a number. The rule of thumb for marketing ROI is typically a 5:1 ratio, with exceptional ROI being considered at around a 10:1 ratio. Anything below a 2:1 ratio is considered unprofitable. You can simply compare your current ROI to this general benchmark to draw conclusions about the success of your marketing investments.
💡 Social Media Traffic refers to the amount of traffic referred to your website from social channels.
Social media has become the most influential and important virtual space where the platform is not only used for social networking but is also a great way of digitally advertising your brandand products. These platforms act as a key tool for generating and nurturing leads. If none of your traffic comes from social media platforms, this means you’re underinvesting in channels that could prove extremely valuable.
This one is pretty easy. You can track the amount of traffic referred to your website through social channels using Google Analytics. All you have to do is select the “Social” channel under “All Traffic.” Taa-da.
Social Media Traffic is usually displayed as a trend. This way, you can understand its evolution and identify better the type of social media content driving the most traffic to your website.
💡 Return On Ad Spend measures the revenue that's generated from your advertising campaigns.
Measuring return on Ad Spend allows you to determine the success of your ad campaigns. This metric measures the revenue generated compared to every dollar that has been invested in an advertising campaign. It’s basically the ROI for your ad campaigns. This metric is especially interesting as it provides a look at the bigger picture for your marketing team. It offers greater insight into not solely what’s leading to conversions, but also the amount of revenue conversions actions are generating. If your ad message connects with your audience, your ROAS will be higher, it’s as simple as that.
You usually measure this metric once your marketing team is rather mature. In fact, you won’t engage in large marketing campaigns with a small team. Having a small team usually means that you have a small marketing budget, meaning you won’t engage in this kind of campaigns.
ROAS formula is quite simple. ROAS equals your total conversion value divided by your advertising costs. Conversion value, or advertising income, measures the amount of revenue your business earns from a given conversion.
Example: if you spend $20 in an ad campaign to sell a unit of a $100 product, your ROAS is 5. That is, for each dollar spent in advertising, you earn 5 back. The key difference between ROAS and ROI is that the only cost considered in a ROAS calculation is the cost of advertising. On the other hand, the cost of an entire project or campaign will be considered in an ROI calculation.
The tricky part of this formula is calculating the cost of an ad, which is not always an easy endeavor. You need to take into account the cost of the ad bid, the labor cost for the time it took to create the creative assets, vendor costs, affiliate commissions, etc..
Return on Ad Spend can be displayed as a number. You should be able to easily compare ROAS numbers from different Ad Campaigns, which will allow you to identify the most prosperous campaigns.
💡 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 shows how much money it takes to bring in new leads. Let’s figure out how a cost-per-lead model works. First, you ask a third-party platform to place your advertising on their site. When users click on it, they’re redirected to your site where they need to perform a particular action, for example, sign up for a newsletter, register for a webinar, or buy a discounted item. After they opt-in, they become your leads, and the publisher gets a commission.
This metric is key, as it allows you to learn whether you’re allocating your advertising budget wisely. Hence, you’ll be able to discover the channels that bring you the most leads and reduce investments on less profitable channels. It also allows you to know when it’s time to give up an advertising channel.
To calculate the Cost Per Lead, you need to know the number of leads generated (both marketing and sales qualified leads) and the amount of money you’ve spent on this particular campaign.
Example: you’ve spent $600 on an AdWords campaign. It brought you 45 leads, so your cost per lead is $13 (600/45).
The Cost Per Lead should be displayed as a number. You should be able to easily compare Cost per Lead numbers from different marketing campaigns to identify the most prosperous channels. You should also compare this price to the price of your average product to discover whether it’s expensive for your business or just appropriate.
💡 Customer Satisfaction refers to your customers’ level of content and enthusiasm with your brand.
This metric sounds off, yet understanding customer experience should be at the center of your marketing efforts. In fact, it’s estimated that there’s a 5–20% probability that you’ll sell your product or service to a new consumer, whereas the chance of selling it to an existing customer is about 60–70%. For this reason, customer satisfaction can and should in fact be considered a Marketing Metric.
There are various ways of measuring your customers’ happiness. The most popular and trusted one is to calculate CSAT. CSAT is a customer satisfaction metric that is used to measure the overall performance of a product based on the customer’s experience every time they interact with a business, service, or product. Customers basically express their satisfaction on a 5 or 10 point scale, which is then converted to a percentage with 100% meaning that customers are perfectly happy with their experience. To calculate this metric, you do need your customers to answer satisfaction surveys.
You can calculate your CSAT score by dividing the positive responses (satisfied customers) by the total number of responses and multiplying by 100, which is then expressed as a percentage.
For example, if you have 50 responses total and 45 are positive, your CSAT would be 90%.
It is often a good idea to display your customer satisfaction number as a trend. In fact, looking at the evolution of this number will allow you to pinpoint issues with the Customer Experience. You can then fine-tune your strategy accordingly.
💡 Customer Churn, or customer turnover, is the number of customers you’re losing in a predetermined time period.
Churn rate is a dreadful, but super important metric. It allows you to know how many customers are deciding to leave the business and helps you understand how this is impacting revenue. More importantly, it enables you to elaborate strategies to retain your customers.
To calculate churn rate, you need to choose a time period, such as monthly or annual. You’ll have to know the number of customers you had at the beginning of the time period and the number you lost over this same time period. You then divide the number of lost customers by the number of total customers at the start of the time period. Finally, multiply this number by 100.
Example: if your business had 250 customers at the beginning of the month and lost 10 customers by the end, you divide 10 by 250. The answer is 0.04. You then multiply 0.04 by 100, resulting in a 4% monthly churn rate.
Your churn rate should be displayed as a trend. In fact, you need to be able to compare the churn rate across different time periods. This allows noticing when there is a spike in the churn rate so that you can act quickly upon it.
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