By Chantel Hall, Marketing Content Specialist
Successful marketing requires data-driven insights built around the metrics that matter. “Vanity” metrics such as social media likes, views, and website visits can be exciting to see climb, but they don’t provide insight into whether your campaigns are driving the outcomes you want — qualified lead generation and closed deals. Because these kinds of interactions don’t necessarily demonstrate interest or intent, focusing on those metrics won’t give you insight into your buyer’s journey that can be used to improve your marketing strategies.
Here, we’ll get into the formulas behind some of the most important marketing metrics to track and discuss how to improve on their current performance.
Lead conversions is a basic, top-of-the-funnel metric that tells you how many people coming to your website are converting to leads.
At a high level, this metric tells you whether your marketing campaigns are attracting the right audience. Understanding your lead conversion rate also helps you fine-tune your audience targeting. When lead conversions are low, you’re not attracting the right people with your messaging. Even with research, discovery work, and understanding your target audience and their pain points, it takes time to hone in on messaging that encourages website visitors to become leads.
Your lead conversion rate can also be calculated for individual channels so you can address or eliminate low-performing channels and direct your attention to high-performing ones.
The qualified leads metric tells you what percentage of leads you’re bringing in are qualified as defined by your team’s profile of a qualified lead.
This metric builds on your lead conversion rate by calculating what percentage of leads generated are likely to become customers. If this metric is too low, it could be a sign that your points of conversion are attracting and converting people who don’t fit your ideal customer profile (ICP). Additionally, if your lead conversion rate is climbing, but your qualified leads are staying the same, there is a disconnect leading to an increase in leads who aren’t interested in your products.
Cost per lead (CPL) shows you how much marketing spend it costs to generate each lead.
This metric tells you how efficient and effective any given marketing campaign is. It’s especially useful for evaluating the targeting and messaging of individual campaigns. As you fine-tune your target audience and the messages you’re reaching out to them with, your CPL should ideally decrease; if it doesn’t, you can use that data to continue improving.
Customer acquisition cost (CAC) measures how much each customer costs to acquire and takes into account both marketing and sales spend.
CAC gives you a complete picture of how efficient your marketing and sales efforts are in achieving goals like successfully nurturing leads and closing deals. While other metrics help with specific campaigns, this one can help you evaluate the performance and relationship between your marketing and sales teams.
Your marketing return on investment (ROI) might be the most important metric you measure. It’s used to evaluate your growth compared to your investment.
Your marketing ROI gets to the heart of your marketing efforts’ success. It’s not affected by impressions, views, or clicks — it’s determined by how many leads want an initial offer and then move through the process to a closed deal. It’s a key marketing metric you need to consistently monitor.
Your churn rate measures the percentage of customers you are losing over a given period of time (e.g., month, quarter, year, etc.).
For businesses that rely on monthly recurring revenue (MRR), it’s critical to understand how many customers you’re losing each month and where in their lifecycle customers are dropping off. Your churn rate helps you understand how many customers are turning over and, over time, whether your customer retention efforts are working.
At its core, customer churn is really about customer satisfaction: how happy are customers with your product? How long are they staying with you? Where in their lifecycle are they dropping off, and, critically, why are they dropping off?
The ratio between your customer lifetime value (CLV) and CAC shows you how the cost of acquiring a customer compares to how much they spend with your business during their time as a client. This is especially important for subscription models, but it can be useful for one-time purchase clients as well.
Your CLV/CAC ratio calculates how much continuing revenue you’re bringing in and whether your CAC balances out with the value of deals you’re closing. This metric is closely tied to your churn rate; if you are only closing deals with customers who are expensive to acquire and churn quickly, you need to address it.
While the old management adage, “You can’t improve what you don’t measure” has stuck around for a reason, it’s missing a critical piece: measuring and improving the wrong metrics won’t help you achieve the goals that matter.
The key marketing metrics discussed here will help you evaluate your marketing campaigns’ effectiveness at different stages of the funnel and help you address the parts of your campaigns and strategies that aren’t performing as well as you’d like them to.
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