I'm a huge fan of metrics.
Without metrics, it's impossible to know how a marketing initiative is performing. Establishing certain key performance indicators gives team members goals to work toward.
KPIs enable production monitoring, provide accountability, and quantify marketing efforts.
As it's a question I'm often asked, I put together this list of nine key metrics that can be used to quantify the effects of your marketing initiatives.
Some of these stats are available through web analytics, while others are calculated in CMS suites like Salesforce. Each should be monitored daily, weekly, monthly, and annually to provide a comprehensive view of marketing costs and ROIs.
1. Cost of Customer Acquisition
One of the most important numbers a startup needs to know about their business is the cost of acquiring a new customer.
It's also a rather simple number to calculate. By dividing the marketing department's monthly budget with the amount of new customers acquired that month, you'll understand how much you need to spend to convince a visitor to become a paying customer.
If you spend $10,000 in marketing for the month and gain 100 customers, your customer acquisition cost is $100. If you plan to grow your customer base by 5,000 customers by the end of the year, you'll need to spend $500,000.
2. Customer Lifetime Value
Once you understand how much it costs to acquire a customer, you need to know how much that customer is worth.
If it costs $100 to acquire a customer who only spends a lifetime value of $50, there's a clear problem in your business model that needs to be addressed.
To calculate a customer's lifetime value, multiply the average transaction amount by the number of repeat sales and the average retention time.
Using this formula, if an average customer spends $50 per transaction and makes three purchases a year over a span of five years, their LTV is $750, so it's ok to spend $100 acquiring a customer for multiple purchases of a lower value item.
3. Web Traffic
You have to know your web traffic in order to calculate the effectiveness of digital marketing efforts.
Web traffic can be found (along with corresponding demographics) in Google Analytics, and increasing traffic inevitably increases sales and revenues.
Sessions, duration, pageviews, bounce rate, and users are all valuable web traffic metrics to know, and all are available through Analytics reports.
Check out my definitive guide to generating traffic to learn more about how to optimize your website through SEO, content marketing, social media, and more.
4. Social Media Reach
Social media continues to be one of the most important digital marketing statistics as conversion rates are high and over 1.8 billion people use these platforms globally.
Platforms like Twitter, Facebook, LinkedIn, and Pinterest track post reach within the application. These numbers should be monitored in order to gauge the effective contribution of social media to online conversions.
I've laid out detailed instructions for creating an effective social media strategy on my website, and Kissmetrics has an in-depth guide on which social media accounts are best for B2B and B2C businesses to focus on.
5. Landing Page Conversion Rate
To fully optimize your website for conversions, it's important to know which landing pages are performing well and which need improvement. One page may appear less often but have a higher clickthrough rate while another may generate traffic with low conversions.
Using Google Analytics, you can check your website's keyword and landing page traffic, as well as follow user interactions from there.
A landing page is the first impression your brand makes on a new visitor, so it's important that the format and layout be intuitive and easy to view.
Check out this guide to optimizing landing pages for conversions.
6. Website Leads
The entire point of having an online presence and content marketing strategy is for lead generation. Because of this, marketing departments often lean on lead generation as an important metric to validate ROI.
Website leads often come back more than once, so tracking return visitors all the way through new customer acquisitions is necessary to provide a full picture of website lead generation. The next few metrics I'll discuss are part of the full lead monitoring process.
7. Website Lead to Marketing Qualified Lead (MQL) Conversion Rate
An MQL is a lead that is likely to become a customer based on their reception to marketing initiatives. This could include filling out a web form, signing up for an account, downloading an app or otherwise showing increased interest and engagement.
Lead generation software can make tracking this information easier, and Salesforce provides a few compatible solutions in its guide to generating MQLs.
8. MQL to Sales Qualified Lead (SQL) Conversion Rate
An MQL is a customer at the beginning of a sales funnel, while an SQL is a person at the end. These are customers who are very likely to make an immediate purchasing decision and should be contacted by the sales team right away.
Like MQL, SQL can be easily tracked with proprietary lead-generation software.
9. Email Conversion Rate
Email is still an effective method of targeted marketing, and personalized emails with a backlink CTA can effectively increase customer engagement.
Whenever you are creating an email marketing campaign through marketing automation software like Constant Contact, be sure to track how many people the email was sent to, how many clicked the link, and how many converted.
By dividing the amount of recipients by the amount of respondents, you can measure the effectiveness of email campaigns.
Marketing metrics help businesses quantify the effective return of their marketing efforts. By tracking the amount of people who respond to a message, how many become customers, and how much each customer is worth, you'll have the foundation for an effective marketing strategy.
Be sure to proactively track these statistics as it's difficult to go back and track them after the fact. Doing so will provide the confidence necessary to steer your business to the next level as you move forward.
What are some KPIs that you track in your organization?