4 Marketing Metrics Every Company Should Track

That’s where marketing metrics come in.

Marketing metrics are data points that are used by companies to demonstrate the effectiveness of initiatives across all marketing channels.

Using metrics efficiently means you can overcome the big challenge of unpredictability. Rather than executing a strategy and hoping that it’ll move the needle in sales, using insights you gain through metrics allows you to effectively plan and optimize your campaign.

But with data coming from all directions, it can be hard to separate the basic KPIs from the marketing metrics that truly matter.

Should you continue pouring money into a campaign, increase the time you spend on a certain channel, or even discontinue something altogether? The most obvious metrics—like website traffic and clickthrough rates—won’t tell you this.

To help you identify which metrics you should be focusing on, here are some of the most critical marketing metrics you and your team should be measuring.

So your campaign is up; it’s optimized, it follows all the best practices, but is it actually making people take action?

No matter how well-optimized it is or how much traffic it gets, a campaign that doesn’t spur visitors into action is useless, so measure your conversion rate to see if your efforts are paying off.

Your conversion rate is the percentage of visitors to your landing page or website that complete a conversion goal. Depending on your company objectives, this goal could be almost anything, but here are a few popular types of conversions:

• Signing up for a newsletter
• Submitting a form (contact us form, order form, etc.)
• Making a purchase
• Downloading a content asset (ebook, whitepaper, etc.)

Calculating the conversion rate is actually pretty simple.

All you need to do is divide the number of conversions you get in a certain period by the total number of visitors to your landing page or website and multiply the result by 100.

For example, if your campaign generated 15,000 visitors and 2,500 conversions last month, your conversion rate is 16.66%. Knowing this figure can tell you whether your marketing strategy is working or requires a tune-up.

However, measuring and optimizing your conversion rate in the practical world is often like using a lighthouse as a landmark while sailing on a dark and rainy night—you might know where you’re headed in general, but it’s still difficult to map a route that’ll help you get to your destination safely.

Fortunately, free tools like Google Analytics (GA) can serve as a navigator that guides you through the stormy waters of marketing.

Using the Admin > Goals section of GA, you can set up conversion tracking for your landing page or website.

In fact, if you set up your tracking right, most marketing analytics tools and online advertising tools will happily present you with your conversion rate right in their dashboards.

2. Customer lifetime value

Customer lifetime value (CLV) is essentially how much money a customer spends on your business across all of their interactions with you.

You can’t predict the future to know how long a customer will stick around, but the CLV is a good projection based on the existing numbers. Simply put, it’s a reflection of what your team is doing right.

Generally, the higher your CLV, the stronger your customer relationships. And since it costs less to keep existing customers than to acquire new ones, a high CLV is also a good sign that your business is operating cost-effectively.

For example, consider a customer that has been buying from your company for five years and spent an average of $1000 per year. Their CLV is $5,000.

Which sounds pretty good, but if their CAC were $5,500, you lost $50. This means you should re-evaluate your marketing and sales processes to see where you can cut marketing costs and boost customer spend and value.

Unfortunately, in a real-life scenario, calculating all these numbers isn’t as straightforward, and there are infinite ways to address high CACs and low CLVs. It can be tough to track and tweak all the incoming and outgoing values, which is why many companies don’t even bother to calculate them at all.

Savvy marketers use a CRM to crunch some numbers automatically, so they can spend less time doing math and more time focusing on growing their business.

3. Marketing percentage of customer acquisition costs

Knowing how much is being spent to acquire new customers is key to evaluating marketing performance, but your customer acquisition cost isn’t the only essential metric for your bottom line.

An equally important calculation is your marketing percentage of customer acquisition cost (M%-CAC).

The marketing percentage of customer acquisition cost reveals how effective your marketing team’s spending and performance is. You calculate it by taking all of your marketing costs and dividing them by the total sales spend you used to compute CAC. Because M%-CAC is typically expressed as a percentage, you also multiply the result by 100.

So if you incurred $3,000 in marketing expenses in the previous quarter and your total sales spend was $8,000 during that time, your M%-CAC for that quarter is 37.5%.

Tracking your M%-CAC over time is a great way to evaluate your current standing. A decrease in M%-CAC means that the costs of your marketing department have gone down, while an increase isn’t necessarily bad—it might indicate that your company is shifting to a more inbound model because what Marketing is doing is working and it doesn’t need to spend as much on Sales.

4. Return on investment

Known as the “holy grail” of marketing metrics, the return on investment (ROI) is the profit and loss you generate based on the amount of money you’ve invested in marketing.

If your ROI is less than the amount you’ve spent on a campaign, you’re losing money. So, no matter what marketing strategy you have in place, your return on investment will determine the future with that strategy.

There are several ways to calculate ROI, but the most popular method is to take the total sales generated by a specific campaign, subtract all the money spent on the campaign, divide the number by all the money spent on the campaign, and multiply the result by 100.

So, if you spend $2,500 on a marketing campaign that generates $3,000 in sales, your ROI would be 20%.

Surprisingly, close to 70% of marketers fail to quantitatively prove the impact of their long-term marketing efforts. Taking the initiative in your own department and nailing down ROI numbers puts you ahead of the pack.

Marketers who have Google Analytics set-up can also calculate the ROI of various marketing campaigns through the Cost Analysis function.

Using the Cost Data Import feature in Cost Analysis, you can generate reports that display the visit, cost and revenue performance data for your paid marketing channels.

You can then compare the cost of running a campaign with its associated revenue to see how each initiative is currently performing.

There’s no doubt that marketing metrics can be useful in your efforts to improve company profitability. The trick comes in knowing what to analyze and when in order to reveal significant trends.

By measuring and agreeing on a set of metrics that provide real insight into the costs and returns from marketing, you will be able to demonstrate the value of this business function within your organization.

Focus on how each metric is having an impact on another, and identify patterns and connections that may not be instantly obvious.

For example, if you’re trying to increase customer lifetime value, you should see how the changes you’re making influence conversion rates or your acquisition costs.

With the help of an analytics tool and data from your CRM, you can easily dig deeper into your marketing metrics to find patterns important to your strategy.