Marketing metrics

Marketing metrics: the 5 most important business metrics

No matter how ridiculous it may be, this statement is the motto of many domestic representatives of small and medium-sized businesses, who still perceive marketing as a kind of ephemeral science. Not knowing and not understanding what marketing indicators really need to be measured when conducting marketing events, companies are really throwing money down the drain. But the most important indicators are not so many! And it is absolutely not difficult to analyze them, the main thing is to do it regularly. Therefore, I decided to highlight the most important marketing metrics for small and medium businesses and show how to calculate them.

The most important marketing metrics

# 1 – Distribution of marketing investments

Allocating marketing investments is the backbone of the basics of marketing planning. You can act like Vanamaker (this is what many entrepreneurs do) and say that I allocate $ 500 a month for marketing, but I don’t know how they are used. But then you shouldn’t be surprised that some of them go to the wind.

Your marketing budget should be fully detailed on your marketing calendar, stating what % of the budget is used in each marketing channel, as well as what goals you expect from each campaign.

Thus, you will be able to identify more effective acquisition channels and invest in them.

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# 2 – Cost of customer acquisition

The cost of attracting 1 client is one of the most important indicators.

Knowing this figure, you can calculate the effectiveness of any customer acquisition channel or marketing campaign. And based on the findings – to abandon ineffective channels and focus only on profitable and profitable ones.

The cost of attracting a customer is calculated quite simply. You need to divide the cost of a marketing campaign (the amount of marketing investment in a certain channel of attracting customers) by the number of attracted customers.

# 3 – Investment payback period

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To understand how quickly the investment in attracting a new client will pay off (and whether it will pay off at all), it is important for us to know a few additional indicators.

– Average sales

This indicator can be found quite simply by taking sales statistics for the same period last year, or for the previous month. The average sales amount is calculated by dividing the sales amount by the number of customers who made a purchase.

– % margin

– Number of purchases per year

Now let’s return to our example and calculate how quickly the investment is paid off for each attracted client.

Moreover, the logical conclusion is a significant increase in investments in contextual advertising and in VK announcements, as well as a decrease in the budget for advertising on Facebook, and refusal to place a guest banner.

After reallocating investments, next month it is necessary to analyze how much each of the key indicators has changed. Only then will you be able to determine the most effective proportions of the distribution of the marketing budget for each channel.

In addition to these 3 indicators, there are no less important marketing indicators that also need to be measured regularly. This is conversion and lifetime customer value.

# 4 – Conversion

Conversion shows what % of potential customers who responded to ads made a purchase. The higher the conversion rate, the better your company’s sales and marketing system works. And the higher the profit. If you are looking for a good profit by playing online then click here.

On the other hand, a small % conversion shows that you have a failure at one of the stages of the sale (remember the marketing hourglass ?). You need to be sure to understand at what stage the client “falls off”, as well as think over the actions to increase conversion.

# 5 – Customer Lifetime Value

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Customer Lifetime Value is an indicator of how much profit the customer will bring to your company over the entire period of cooperation. Carl Sewell, author of the book “Customers for Life”, clearly spoke about the lifetime value of a client :

“I sell passenger cars. In order not to complicate the calculations, we will assume that the average price of a car is $ 25,000. As a rule, an average customer buys 10 cars from us during his life. That is, it is $ 250,000. In addition, customers spend about a third of its price on maintenance. That gives about $ 82,500 more, for a total of $ 332,500. This amount can be earned by turning the buyer of one car into a customer for life. “

 

This is of course a crude example. You also need to consider the cost of acquiring a customer, as well as the cost of customer retention programs. But most importantly, this metric really makes your customers love, once you know how much money they can bring to your company.

Summarizing

As Peter Drucker said, “What is not measured is not controlled.” It’s the same with marketing: if you don’t measure your most important marketing metrics, you run the risk of wasting money.

If you’re a small to medium-sized business, you don’t need an entire analytics department to measure your key marketing metrics. There are very few of them, so you can analyze them yourself, or entrust your marketer.

Do analytics monthly. Find and invest in better customer acquisition channels. Refuse unprofitable customer acquisition channels.

Make your marketing predictable, controllable and effective!