Effective marketing is a science, not an intuition! It means tracking numbers, analyzing data, and measuring results, but none of these would happen unless the right marketing metrics are followed. Knowing the key marketing metrics and KPIs is crucial, whether you’re looking to monitor digital marketing performance, SEO progress, or your social media growth.
The marketing team cannot determine if your strategy is effective enough or if it needs to change course without going through the marketing metrics first. However, there are so many metric types and examples that it can be daunting to choose the right ones to follow to measure the performance of your efforts.
What are marketing metrics in business?
Marketing metrics are measurable ways to track the performance and success of a marketing campaign. They help you demonstrate the effectiveness of your campaign strategy across all of the marketing channels and support your business goals. According to a study conducted by Google and MIT, 89% of the leading marketers measure their campaigns’ efficiency by strategic metrics.
The most effective marketing metrics vary from one campaign to another, but in the end, you should care about the ones that ultimately have the most impact on your business goals. You don’t want to get confused jumping from one metric to another to see if the results match your expectations or support your choices. To avoid this, you should understand these measurements thoroughly and select the right metrics that help you:
- Support your decisions with enough proven data
- Provide early warning for your marketing campaigns
- Choose the best channels for the highest return on investment
- Justify your marketing expenses and budget allocations
Therefore, we compiled a list of the most important marketing metrics we believe every team should adopt in 2023.
1- Qualified Leads
Quality or Quantity; That is the question! A qualified lead is somebody that matches your ideal customer profile, someone that is likely to make a purchase decision based on specific criteria of your business. Campaigns are likely to generate many leads, but only a few of them can be considered qualified!
Kelsey Meyer, the co-founder of Influence & Co, says “Our most successful campaigns produce a low number of leads, but a high percentage of qualified leads.”
It is very important for any marketing campaign to generate qualified leads because, in the end, these are the people who most likely are going to pull the trigger and buy your product or services. So, in other words, what we’re saying is that instead of focusing on the number of leads you can bring in, it’s time to focus on the quality of them.
Leads who offer personal information (usually their email address, which can be used for email marketing) or have spent significant time on your website are the ones that you should care about.
How to Track Qualified Leads Metric?
Using CRM software is an easy way to manage your leads and get enough information about them to determine if they are qualified or not. For instance, HubSpot or Keap CRM software helps you analyze your prospects and create detailed reports that allow you to track your campaigns’ success.
2- Customer Lifetime Value (CLV)
Your customer lifetime value is the primary metric to determine the value of your customer. CLV is a marketing metric to measure how much a business can earn from average customers over the course of its relationship.
Remember that the process of converting your existing customers is much easier than bringing in new ones. Statistics show that the probability of a new customer making a purchase is 5%-20%, whereas this possibility is 60%-70 % higher for existing customers. Therefore, your priority should be improving your current customer lifetime value and driving growth. Be mindful of the value that your customer can bring you and monitor your customer experience and measure feedback on key touchpoints to learn about the factors that influence your CLV.
Here are some reasons why you should care about your customers’ lifetime value:
- Enhancing your strategies
- Budget planning
- Making better decisions on Customer Acquisition Costs
- Improving your future forecasting
- Increasing profitability.
How to Calculate CLV?
Calculating CLV might be difficult for big companies, due to their separate teams, faulty systems, and unfocused marketing; but once the data is integrated into one, it becomes easier to measure.
You can calculate your Customer Lifetime Value the simplest way by following these steps:
- Identify the ways the customers create value
- Keep track of your customer journey
- Measure revenue of each way they create value
- Add total cost of acquiring and keeping the customer
- CLV= (Customers Revenue) x (Duration of the relationship) – (Total cost of acquiring and serving your customers)
3- Customer Acquisition Cost (CAC)
Customer acquisition cost, or CAC, is the key marketing metric that will help you estimate the resources needed to acquire new customers in a specific period of time. This metric shows the total cost of sales and marketing efforts that your company requires to convince a customer to buy your products or services.
Why is it Important to Calculate CAC?
CAC is an important metric that you can use for balancing marketing and sales costs and determining profitability and efficiency. However, in order to achieve this balance, you need to know how much to spend without compromising the lifetime value and revenue of the customer.
If the expense to bring in new customers is higher than your Customer Lifetime Value, then you are not profiting. Jordan T. McBride, the author of ProfitWell, suggests that “The best rule of thumb is to be spending 33% or less of your customers’ lifetime value.”
To reduce your CAC, we suggest following these three easy and practical tips:
- Know your customer well
- Engage customers early
- Keep them coming back
How to Calculate CAC?
In order to calculate CAC, divide the total cost of sales and marketing to acquire customers in a specific time frame by the total number of customers received. So if you spent $40,000 to reach 2000 customers, your CAC is going to be $20 per person.
- CAC = (Total Sales & Marketing cost) / (Total number of customers acquired)
- $20 = ($40,000 ) / (2000)
4- Conversion Rate
Purchasing, subscribing, downloading, or contacting your business are some of the few examples of conversion rates. Depending on your business goals, conversions could be different. Simply put, a conversion rate is the percentage of visitors on your website or landing page that made a specific conversion attempt.
Your conversion rate indicates how persuasive you were to convince your visitors to do what you wanted them to do. The good news is that you can easily calculate your conversion rate and measure your progress.
How to Calculate Conversion Rate?
To calculate your conversion rate, you simply divide the number of conversions by the total number of people who visited your website and multiplied it by 100%. Therefore, if you had 25,330 page views last month and you could convert 3039 of them, your conversion rate is 12%.
- Conversion rate = ( Number of Conversions) / (Number of Total Visitors) x 100%
- 12%= (3039) / (25,330)
While you can track your conversion rate through different platforms like Google Ads, Google Analytics, Facebook ads, and more, you should know that boosting it won’t happen overnight. However, here are some steps you can take along the way that can have a significant impact.
- Make Sure You Have a User-Friendly Website
- Optimize Your Website for Mobile Devices
- Use popups to promote
- Take Advantage of Email Marketing
- Make it easy to purchase your products via social media.
5- Time on Site
Time is money, right? It is pretty common to hear this phrase and ignore it, but marketers are the ones profiting from it! Time on site or session duration is the average amount of time that viewers are spending on your site.
This metric is calculated by recording the timespan from when visitors open the website until when they decide to navigate away.
It shows how useful your website is to visitors and how long it takes for them to make a purchase and be converted to a customer. In the end, how do you expect to convert your target audience if they don’t spend enough time on your page to engage with it?!
Remember, the more time a user spends on your website, the more likely they are to return and purchase something or engage with your services. This metric will allow you to figure out how much time viewers spend browsing your content and if it is attracting them or not. Google Analytics benchmarking indicates that:
- Good session duration is between 2-4 minutes.
And the average time spent viewing an application is:
- 4 minutes and 25 seconds on a mobile
- 6 minutes and 38 seconds on a tablet.
You can calculate the average time on site by dividing the total time spent on sessions by the total number of sessions. For example, if your website had 15,000 sessions in the past month, equating to 550 hours (33,000 minutes), your visitors’ average time on site is 2.2 minutes.
- Average session duration = (Total Session Duration) / (Total Number of Sessions)
- 2.2 = (33,000) / (15,000)
6- Bounce Rate
Bounce rate is the percentage of visitors who leave your webpage without taking any action, such as filling out a form, going to another link, or making a purchase. In simple terms, it is the percentage of single-page time visits that indicates the level of user engagement and state of content quality on your webpage.
Tracking bounce rate is essential because:
- It helps you to stop viewers bouncing, thereby improving your conversion rate.
- It will help you rank higher on the Google search engine and appear on the first page.
- It shows you your content problems and why you should start fixing them.
How to Calculate Bounce Rate?
To calculate bounce rate, divide the number of visitors to the website who did not interact with the site by the number of visitors to the site as a whole.
- Bounce Rate = (Number of Bounces) / (Total Sessions) x100
- 35% = (350) / (1000)
On average, a website bounce rate ranges between 41 and 51%. Although it depends on your business and where your traffic is coming from. For mobile users, the average is expected to be 16% higher than desktop users. However, this metric needs to be used alongside other metrics, such as time on site and page views.
7- Return on Investment
The legendary ROI or return on investment is one of the most important marketing metrics for any business to follow. By tracking this metric, you can compare how much you paid for an investment to how much you earned and measure its success.
Keeping track of your ROI allows you to reallocate your marketing strategy and choose the tactics that have a high revenue return. By calculating your investment return, you can see how much profit or loss you have earned, and based on that, continue or replan your roadmap.
How to Calculate ROI?
You can easily calculate your return on investment by dividing the amount you’ve earned from it (The net profit) by the total cost of that investment and multiplying it by 100. Take your present value and subtract your investment costs to find your net profit.
For example, if you invested $6000 in your project and profited 7500, your ROI is 25%.
- ROI = (Present Value – Cost of Investment) / (Cost of Investment) x 100
- ROI = (Net Profit) / (Cost of Investment) x 100
- 25% = (7500 – 6000) / (6000) x 100
8- Organic Traffic
Organic traffic refers to the traffic that landed on your website through unpaid sources and organic means only. Organic traffic is a key metric to watch since it can increase your website’s trust and conversion rate.
Visitors who organically land on your website are more likely to be interested in purchasing your products or services. Search engine optimization and social media (unpaid services) are mostly the channels that visitors can reach your website organically.
Usually, when you search for a term or keyword in a search engine, a list of results will be shown to you in a logical order. The first two or three results might be paid ads with a cost per click, but the rest are organically ranked. These results are the sites with the highest ranks for that specific keyword that you’ve searched. The higher a website ranks for a keyword, the more organic traffic it receives.
Here’s a short list of steps you can take to grow organically and attract more visitors:
- Optimize your content both for your readers and search engines
- Use long-tail and high volume keywords in your content
- Use your social media as an anchor to increase more organic traffic to your website
- Use backlinks and internal links for your content
- Make sure that your website is mobile-friendly
Turn numbers into actions!
By now, you are aware that not all metrics are measured equally, and not all of them are as important as others to present the most accurate results. However, measuring and tracking the eight key marketing metrics above must be a core aspect of your business if you hope to make better strategies and grow. In addition, analyzing your customers’ behavior and journey throughout this data provides valuable insights that will help determine the best practice for your business.
Frequently Asked Questions
What are the three most common marketing metrics?
There are literally thousands of metrics you can monitor in different digital channels to give you specific numbers and data. However, It is not necessary to track all of these metrics and analyze them for better results. You only need to follow the key metrics that provide you with detailed information regarding your business journey and your current marketing strategy to result in growth and better outcome. Here is the list of the three most common marketing metrics that you must know:
1- Customer Lifetime Value (CLV)
2- Conversion Rate
3- Website Traffic (Qualified Leads and Organic Traffic)
How do you measure marketing metrics?
Marketing metrics are the modern-day fortune-tellers of businesses; they give you detailed information about where you are exactly in your business and where you’re headed in the future. To measure marketing metrics, there are specific formulas, but to evaluate their effectiveness, you must consider each campaign’s timeframe. You can determine the effectiveness of a metric by analyzing the long-term and short-term revenue of your campaigns and how well you were able to reach your targeted audience. Therefore, by measuring marketing metrics in both a short and long-term time frame, you can analyze all the data and guide your team to better performance.