It’s the new year and now that the festivities have come to a close, it’s time to ask that question that every business owner needs to ask themselves at the beginning of the year:
How am I going to sell more this year?
When it comes to selling more, you have to go back to the basics. Specifically, what are your business’s key performance indicators (KPIs)? Depending on what you sell and how you sell, there are different metrics that you need to pay special attention to. To truly find a path to sustainable growth, you need to identify the right marketing metrics that will be your north star during the year.
To make it easy for you to get started, we’re going to dive deep into the key marketing metrics every marketer should track to grow this year. By aligning your strategies with these essential marketing metrics, you’ll be well-equipped to make informed decisions and propel your business to new heights in the coming year.
Finding Your Key Performance Indicator
To embark on a successful marketing journey, it’s imperative to understand the basics of marketing metrics. Metrics provide valuable insights into the performance of various aspects of your digital marketing efforts. There are many marketing metrics you can track that could be key performance indicators for your business, such as:
- Conversion Rate
- Customer Lifetime Value (CLV)
- Return on Investment (ROI)
- Cost Per Lead (CPL)
- And much, much more
How do you know which is the one? Which one of these is your key performance indicator?
To get a better idea, you should be asking yourself these hard questions:
- Is this KPI easily quantifiable?
- Is this KPI within our control? Can we drive change in this KPI?
- Is this KPI easy to understand?
- Can this KPI be measured with accuracy and timeliness?
- Will this KPI remain relevant?
Got an idea of which KPI you want to track? You’ll probably need some more information, which is why we’ve created a comprehensive guide that will explore the key indicators that every marketer should track to optimize campaigns, enhance customer experiences, and drive profitability in 2024.
Conversion Rate: The Metric To Track Success
At the heart of every marketing campaign lies the conversion rate—the percentage of website visitors who take a desired action after engaging with your marketing ads, campaigns, or other collateral.
This “desired action” could be making a purchase, filling out a form, or signing up for a newsletter. Tracking and optimizing your conversion rate is essential to finding out if your campaigns are working so you can fine-tune marketing strategies to maximize your impact.
How do you calculate it? It’s simple:
Conversion Rate = Conversions / Total Clicks x 100
Let’s say you run a PPC ad promoting a President’s Day sale that your company is running on shoes. If 10,000 people click your ad and visit your website, and 1,500 people purchase shoes, you will have a conversion rate of 15% (CR=1,500/10,000 x 100).
How can you improve your conversion rate on your next sale? You can run A/B tests on your CTAs, personalize your content, and optimize your website’s user experience.
Want to get into the specifics? Drop us a line here so we can talk about setting conversion rate goals for 2024.
Customer Lifetime Value (CLV): Building Long-Term Relationships
Understanding the long-term value of a customer is essential for sustainable business growth.
Customer Lifetime Value (CLV) is the total revenue your business can expect to earn from a customer during their entire business relationship.
By focusing on strategies that enhance customer loyalty, satisfaction, and retention, you can increase CLV, contributing to sustained profitability over time.
How can you measure customer lifetime value (CLV)? It’s easy:
Customer Lifetime Value (CLV) = Average Transaction Value x Average Number of Transactions in a Year x Average Customer Retention Rate
Here’s an example – let’s say your business sells paper towels:
- Average Transaction Value = $20
- Average Number of Transactions Per Year = 5
- Average Customer Retention Rate = 3
CLV= $20 x 5 x 3 = $300
Your current Customer Lifetime Value is $300.
Knowing this, you can boost your CLV by nurturing prospects and upselling existing customers so you can generate more revenue from each of your customers. Some examples of upsells include loyalty programs, offering discounts on bundled products, and giving a subscription offer to keep them coming back for more.
Want to get into the specifics? Drop us a line here so we can talk about boosting your Customer Lifetime Value in 2024.
Return on Investment (ROI): Maximizing Your Profitability
Return on Investment (ROI) is an important metric that refers to the amount of money your marketing efforts generate compared to their total cost of investment.
By comparing the gains from your marketing campaigns against the costs incurred from your investment, you gain insights into the effectiveness of your strategies. A positive ROI validates the success of your initiatives, while a negative ROI signals a need for strategic adjustments.
How can you measure ROI? Here’s how:
Return On Investment (ROI) = (Gross Profit – Marketing Cost) / Marketing Cost x 100
Here’s an example. Let’s say you’re a D2C company selling workout supplements on Amazon, and you spend a marketing budget of $5,000 in design and advertising for a promotional campaign during Prime Day. This campaign results in $40,000 in sales at a 40% margin.
To calculate marketing ROI, you’d first need to calculate your Gross Profit, which would be $40,000 x 0.40 = $16,000 in gross profits.
Then, ROI = ($16,000 – $5,000) / $5,000 x 100 = +220% ROI
Here, your campaign generated a positive ROI of +220%. Great job!
Knowing this, you can optimize your ROI in a bunch of ways. You can compare the ROIs of different channels to understand which ones you should double down on and prioritize with your investment. You can find ways to reduce your initial investment without hurting your gross profits. You can increase your margins by playing with the selling price and/or manufacturing cost of your product. Most importantly, ROI gives you a clear guideline on which initiatives your stakeholders should invest in for maximum returns.
Want to learn more about how to increase your ROI? Drop us a line here for a free consultation so we can talk shop.
Cost Per Lead: Balancing Growth and Cost-Effectiveness
You can’t grow your business without acquiring leads. Every sales team knows this. More leads mean more potential customers. Lucky for you, there’s a good way to measure that through CPL: Cost Per Lead.
Cost Per Lead (CPL) is the amount you pay to acquire each lead from your marketing campaigns. It’s easy to measure and a timely metric to find out if you are effectively acquiring new leads through the top of your marketing funnel.
When you compare CPL across different channels and campaigns, it helps you assess which efforts generate leads at the lowest cost.
How do you calculate CPL? It’s simple:
Cost Per Lead = Total Cost of Marketing Campaign / Number of Leads Generated
Let’s say you ran a social media ad campaign to get people to sign up for your email newsletter with a marketing spend of $1000, and you acquired 200 email sign-ups.
$1000 / 200 = $5 Cost Per Lead
The CPL for this particular brand awareness campaign would be $5, as it costs you $5 for each email sign-up. This metric gives you an idea of how efficient your new customer acquisition campaigns are at the top of your customer journey. A rising CPL would mean your campaigns are becoming less efficient as it costs more to acquire one lead, and a decreasing CPL would mean they are becoming more efficient.
Keep in mind that when it comes to brand awareness, CPL just scratches the surface. Other key performance indicators like customer acquisition cost (CAC), cost per acquisition (CPA), and marketing qualified leads (MQL) are essential to follow if your business is looking to grow.
Want to learn more about how to grow your number of customers? Drop us a line here for a free consultation.
Net Promoter Score (NPS): Measuring Customer Satisfaction and Loyalty
Are your customers happy? If they are, there’s a good chance your business is growing. Customer satisfaction and loyalty are pivotal for sustained success.
Net Promoter Score (NPS) is a metric that measures the likelihood of customers recommending your brand to others (also known as the likelihood of referrals). While measuring NPS often takes time and a market research investment, it is an incredibly valuable metric to gauge your customer’s interest in your brand.
To calculate NPS, you must survey customers and see how likely they are to recommend your business on a scale of 0-10. Then, you organize responses into Detractors (0-6), Passives (7-8), and Promoters (9-10).
Finally, you’re left with this equation:
Net Promoter Score (NPS) = Percentage of Promoters – Percentage of Detractors
Let’s say you run a survey of 1,000 customers, and the result is made up of 650 promoters, 200 passives, and 150 detractors. Your NPS calculation would look like this 65% – 15% = 50. You’d have a 50 NPS Score. For reference, as of 2023, Apple has an NPS score of 72, 18 points higher than the industry average of 54, which means they have a lot of referrals.
If you’re interested in getting to know how likely your customers are to recommend your product or service through a Net Promoter Score, drop us a line here for a free consultation. Our sister market research company, ROI Rocket, specializes in running NPS score surveys.
Email Marketing: Open Rate, Click Rate, and Click-Through Rate
Is your email marketing channel a big part of your business? You should pay close attention to user engagement metrics like Open Rate, Click Rate, and Click-Through Rate (CTR).
How do you calculate engagement rate metrics? It’s simple. Tracking your email’s Open Rate (# of Emails Opened / # of Emails Sent) will help you craft the best possible subject line so your target audience will open your emails. It’s one thing for people to open your emails, though—you need them to click in order to sell anything.
Tracking Click Rate (# of Clicks / # of Sends) and Click-Through Rate (CTR) (# of Clicks / # of Opens) will help you create the best possible Call To Action (CTA) to drive your target audience to conversion.
You’ll also want to keep an eye on unsubscribe rates to see which email content is losing you customers and bounce rates to identify whether your email list is clean to send to.
Want to talk about best practices for your email marketing channel in 2024? Drop us a line here for a free consultation with our Email Marketing team.
Search Engine Optimization (SEO) Metrics: Keyword Rankings
If you’re focused on optimizing your website in 2024, there are a few Search Engine Optimization (SEO) metrics you need to focus on.
Interested in increasing your organic traffic? Then you should keep a close eye on Keyword Ranking.
Keyword Ranking is your landing page’s position in search results for a specific search query. Each of the pages on your website has a rank for multiple keywords. And the top three search positions on Google get 2/3rds of all clicks.
Let’s say you’re selling luxury chairs, and you want to rank in the top three for “luxury chair”, “office chair”, and “executive chair”. Using tools like Google Analytics, Hubspot, and SEMRush, you can track where you are currently for these keywords and make efforts to optimize your website page so you can rank in the top three for these keywords and increase your page views and website traffic. Effective SEO campaigns include high-quality, relevant content marketing, optimizing on-page technical SEO elements, building authoritative backlinks, and prioritizing a seamless user experience.
Interested in getting on page 1 of Google? Drop us a line here for a free consultation with our SEO team.
Work With An Expert Team
Got a better idea of what your key performance indicators are? Whatever metrics you choose to follow, make sure you stick to them so you can find what works for your target audience and what doesn’t. By focusing on these key marketing metrics—conversion rate, customer lifetime value, return on investment, cost per lead, NPS, engagement metrics, and SEO metrics—your marketing team can gain a holistic understanding of your performance and how to improve it.
To truly leverage the power of data-driven decision-making in 2024, it takes a team. And sometimes it can help to have an experienced marketing partner provide an unbiased perspective to guide you as you continue to scale. Drop us a line here for a free consultation – we can talk metrics, benchmarks, goals, and strategies to help you increase your bottom line in 2024.