Marketing metrics are quantifiable values used to analyze the effectiveness of campaigns across different channels and get insights to maximize marketing efforts. Metrics give you a detailed picture of your customer journey and help you identify what content and channels are contributing to the growth of your company.
Different business goals can be measured using different metrics. However, measuring and tracking all possible metrics can be overwhelming and challenging. Therefore, it is important to be selective and focus on metrics that align with your business goals. Let us explore the basics of marketing metrics and learn about the 11 metrics that every startup should track!
1. Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) is the cost associated with getting a new customer for your business. This includes all marketing costs like advertising, campaigns, content, etc. CAC relates directly to your marketing campaigns and enables you to measure your ROI.
The formula for calculating CAC:
CAC = Marketing + sales costs / The number of customers acquired during that period
Minimizing your CAC:
As a business, you should always try to reduce your cost per acquisition. Low CAC means a higher profit margin equals higher revenue. Understanding your buyer’s process and optimizing it can help reduce your customer acquisition costs.
2. Customer Lifetime Value (CLTV)
Customer Lifetime Value is the average revenue a single customer is predicted to generate over the duration of their account.
The formula for calculating CLTV:
LTV = Avg. Monthly revenue per customer * Customer Lifetime in Months
Increasing your CLTV:
Reducing your churn rate will help you increase your customer lifetime value. You always want to keep an eye out for your competition and understand the changing needs of your customer. The only way to make sure your customers stick with you is by continuing to provide exceptional value to them.
3. Bounce Rate
The percentage of website visitors who leave your website without taking any action is called the bounce rate. A high bounce rate shows that your website content cannot hold people’s attention long enough or that your call to action isn’t effective.
The formula for calculating Bounce Rate:
Bounce Rate =Total number of one-page visits/ total number of entries to a website.
Keeping your bounce rate low:
To reduce your bounce rate, you must make sure your website CTAs are compelling and distinct enough for visitors to take a step toward a purchase. The only way to reduce your bounce rate is to work on your website content until you can see a decrease in bounce rate over time. A successful website has a bounce rate of 40% or under.
4. Lead To Customer Conversion Rate
The lead-to-customer conversion rate is the proportion of qualified leads of a company that results in actual sales. A qualified lead is a prospective customer who has expressed their interest in purchasing a company’s product and meets a certain set of qualifications. This metric is critical to evaluating the performance of your company’s sales funnel.
The formula for calculating Lead to customer conversion rate:
Lead to customer conversion rate = (Number of qualified leads that resulted in sales / Total number of qualified leads) x 100%
Improving your lead to customer conversion rate:
Your lead-to-customer conversion rate can increase by getting feedback from customers analyzing it and working on the results. Understanding your buyer’s journey and adding value at each stage also increases your chances of conversion.
5. Customer Engagement Score
A customer engagement score is a measure of how engaged your customers and free trial prospects are with your product. Each customer should have their own score, based on their activity and usage of your products and services. The higher the score, the healthier and happier the customer.
The formula for calculating customer engagement:
Customer Engagement Score = (w1*n1) + (w2 * n2) + … + (w# + n#)
Where w is the weight given to an event like product utilization, interaction with the products, etc and n is the number of times the event occurred.
Increasing your customer engagement: A good UI/UX design ensures a great customer experience and increases your engagement. Set up efficient customer support systems so that your customers get quick responses to their queries. Provide useful resources that customers find valuable to boost your engagement.
6. Marketing Qualified Leads To Sales Qualified Leads (MQL To SQL) Rate
A Marketing Qualified Lead (MQL) is a potential customer or lead that satisfies the necessary criteria set by your marketing team to be passed along to the sales team. A Sales Qualified Lead (SQL) is a prospective customer or lead who has gone through the sales funnel and indicated that they are interested in your product or service and can be converted into an active customer. MQL to SQL conversion rate is the percentage of marketing-qualified leads that are converted to sales-qualified leads. This metric helps in determining the quality of leads provided by your marketing team and is a great indicator of how well your team is qualifying and screening leads.
The formula for calculating MQL to SQL rate:
MQL to SQL Conversion Rate = Number of SQLs / Number of MQLs
Increasing your MQL to SQL rate: According to Salesforce, an average conversion rate for MQL to SQL is 13 percent with 6% of the opportunities converting to actual deals. For better MQL to SQL rates and conversions, having an effective buyer’s process is critical. Making sure marketing and sales work together to create the right qualification criteria can help you in better conversions.
7. Net Promoter Score (NPS)
Net Promoter Score is a customer satisfaction benchmark, that measures how likely your customers are to recommend your business to someone else.
The formula for calculating NPS:
NPS calculation is a three-step process-
- When asking for general feedback from your customers, also ask about how likely they are to recommend your solution to someone else.
- Categorize the respondents based on their score: Scores 0-6 are Detractors, scores 7-8 are Passives, and scores 9-10 are Promoters.
- NPS = % Promoters – % Detractors.
This score can range from -100 to 100.
Maintaining a high NPS:
You can maintain a high NPS by providing excellent customer service and support. Engaging with your customers often and working on your customer feedback can not just help elevate the score but can also help with understanding their needs.
8. Trial Conversion Rate
The trial Conversion Rate is the percentage of users who subscribed to a paid account after the trial period. This metric measures the number of users that find the product useful enough to pay for it.
The formula for calculating the trial conversion rate:
Trial Conversion Rate =ƒ Count (Trial-to-Paid Users) / Count (Trial Users)
Keeping a high trial conversion rate:
The best way to keep your trial conversion rate high is to ensure that people find it easy to use your product. Try to highlight your most valuable feature and create a sense of urgency for upgrading to a paid account. Giving personalized demos and sending end-of-trial emails could also increase the conversion rate.
9. Cost Per Lead (CPL)
Cost per lead or CPL is the amount of money you spend to obtain new leads.
The formula for calculating cost per lead:
Cost Per Lead (CPL) = Total Marketing Spend / Total New Leads
Reducing your CPL:
To keep your CPL low, you should narrow down your target audience so that you can run extremely personalized campaigns. Always deliver relevant content so that your target audience sees value in associating with you. You can also try remarketing to people who have come across your content once as it will help you keep your cost per lead low.
10. Click-Through Rate
Click-through rate is a metric in online advertising that measures the percentage of individuals who view an advertisement and click on it which leads to a landing page. The success of any online advertisement is measured based on how high its click-through rate is.
The formula for calculating the click-through rate:
CTR = Total Measured Clicks /Total Measured Ad Impressions ×100
Attaining a high click-through rate:
You can achieve a high click-through rate by using the right keywords and relevant content. It is also a good idea to use relevant images along with the text.
11. Customer Churn Rate
The percentage of customers that stopped using your company’s services or products during a certain period is called customer churn.
The formula for calculating churn rate:
Churn rate= (Lost customers ÷ Total customers at the start of the time period) x 100
Reducing your customer churn rate:
Focusing on customer feedback to understand their need is critical in helping customers stick to you. Improving your customer service, providing supporting resources, and educating users about your product so that they find it easy to use the product can help your customers feel valued.
Tracking your marketing metrics allows you to analyze the success of your marketing campaign and subsequently, create a holistic marketing strategy.
