Marketers should be constantly working towards the goal of growing ratios of a very long list of KPIs (Key Performance Indicators). When talking about metrics in marketing to keep an eye or measure on your team, we have to mention indicators that impact not only this area but the company in general, especially its directors, who need to be responsible for the long-term outcomes.
To know how to measure your marketing team’s success, you need metrics that help you show your results by speaking clearly about the total cost of marketing: salaries, cost of campaigns, the return of investment, and, of course, customer acquisition. It is the best way to understand the effectiveness of marketing actions.
With the help of these metrics, you will be able to know how adequate the performance of your team is based on customer acquisition, the return of investment, and the effort it represents. 89% of marketers use these metrics, including customer lifecycle, as part of their strategy.
Here are some of the most common types of metrics in marketing.
Most Common Types of marketing metrics
- General or area metrics: they are focused on the relationship between organizational effort and investment, with respect to customer acquisition.
- Campaign metrics: measure the behavior of the target audience regarding a particular campaign, both in the acquisition of leads and sales effectiveness.
- Product metrics: they indicate the level of popularity of a certain product and its characteristics compared to the competition.
- Digital metrics: with regard to Internet presence, they measure the acquisition of followers, the number of times they search for your company, as well as the level of interactions and conversion, for example.
Oftentimes, each metric you develop belongs to two or more of these types, depending on your specific goals and the most used communication channels within your company.
The 6 marketing metrics to measure your results
Customer acquisition cost (CAC)
Marketing percentage of Customer Acquisition Cost (M% -CAC)
Ratio of Customer Life Cycle to CAC (LTV:CAC)
CAC investment payback time
Marketing Originated Customer Percentage
Marketing Influenced Customer Percentage
1. Customer Acquisition Cost (CAC)
The customer acquisition cost or CAC is an indicator that determines the average cost that your company invests to make a potential consumer become a new customer and acquire your products or services.
The CAC allows you to assess how much money you have used to capture those customers. The measurement can be carried out in certain periods, either monthly, quarterly, semi-annually, or annually.
Customer Acquisition Cost tells what your company spends to acquire a new customer. Usually, you always want to have a low CAC; If you have a high CAC it means that your company is spending more, comparatively speaking, to acquire new customers and it could indicate that there is a problem with the efficiency of sales or marketing.
2. Marketing percentage of Customer Acquisition Cost (M% -CAC)
The marketing percentage of customer acquisition cost is a portion of the total CAC, calculated as a percentage of the total CAC.
The M% -CAC indicates the impact of the cost of the marketing team on the total cost of customer acquisition. An increase in M% -CAC can mean:
- Your sales team may not have reached targets and therefore has lower commissions and bonuses.
- Your marketing team is spending too much money or has too many overhead.
- That you are in an investment phase. You spend more on marketing to get leads and thus improve the productivity of the sales team.
3. Ratio of Customer Life Cycle to CAC (LTV:CAC)
It is a way of estimating the total value that your company receives for each client, compared to what you have invested to achieve it. It is very important because it indicates the gross margin that a client can generate from the beginning of their cycle in your company until it ends.
The higher the LTV:CAC, it means that marketing and sales are generating more ROI to the company. However, do not forget that nobody wants to have this ratio too high, since you will always have to invest to attract new customers. Investing more in marketing and sales will lower LTV:CAC, but will give your business and its growth cruising speed.
4. Recovery time of the CAC investment
The CAC payback time tells you the number of months your company needs to bring back the money invested in CAC to acquire new consumers.
In sectors where customers pay a monthly or annual fee or subscription, the normal thing is that you want to have a return on investment of fewer than twelve months. The shorter the payback period, the sooner you can start making money from those new customers. In general, almost every business seeks that each new buyer brings benefits within a year.
5. Marketing Originated customer percentage
This ratio indicates what new business or customer is born from the marketing area, that is, their contribution rate.
Here you can see the impact that the marketing team has on generating new leads and customers – many times it is higher than the sales team imagines. This indicator is based on the relationship that marketing has with sales and how it is structured.
The ideal percentage will depend on your business model. A company that has outsourced the sale and a small internal sales support team would be between 20 to 40%; whereas, with a focused internal sales and marketing team, it should be between 40-80%.
6. Marketing Influenced customer percentage
The ratio of customers influenced by marketing (in percentage) takes all the new customers that the marketing department has interacted with when they were leads; that is, throughout the sales cycle.
This metric takes into account the impact that marketing has in generating new leads or nurturing existing ones, which helps to close more sales. It will give your CEO or CFO a clear view of the impact your area has on the process.
Thanks to these metrics, you will be able to track and measure the performance of your marketing team, while transmitting everything they need to know to managers. These metrics are useful for people in managing positions, to understand how to invest and track the money they are pouring into marketing efforts. Also, do not lose sight of social networks, the website traffic, and conversion rates.
When you are clear about the marketing metrics that really matter in terms of money and investment, you will be in a better position to optimize budgets or have a clear investment strategy for marketing in the future. Ultimately, you and your team will benefit.