6 Marketing Metrics You Should Be Measuring to Better Track ROI
Have you heard the Peter Drucker quote “you can’t manage what you don’t measure”? Without clear objectives and measurable goals, you could be left guessing at how to improve your business marketing activities. Using your data correctly is key to determining ROI so that you spend your marketing dollars, and man-hours, wisely.
Data-driven marketing starts with having an infrastructure in place to keep score of all your major marketing activities. However, a vast majority of businesses don’t use centralized data to regularly track and manage their efforts. One of the main reasons for this is that businesses are overwhelmed with data, making it hard to identify the things that drive real results. So where do you start?
Focus on collecting the right data to create momentum by asking yourself: What metrics do I need to track to define success? This goes beyond the scope of measuring ROI, and creating a balanced scorecard for your marketing campaigns. Here are 6 metrics to include in your scorecard so you can begin tracking the impact of marketing, and improve the ROI of your activities.
Customer Churn Rate
This is the percentage of existing customers who stop purchasing your products or services, often measured in a year. When left unchecked, your churn rate not only wastes your acquisition efforts, it also reduces revenues and narrows your profit margins.
Customer Life Time Value (CTLV)
CTLV can be one of the most important metrics for any business. It puts a customer-centric view into financial terms that can guide marketing strategies. It is a powerful insight that predicts net profit from the entire future relationship you will have with a customer. This metric helps you understand what a customer is financially worth over the course of their relationship with your brand.
Customer Acquisition Cost (CAC)
Knowing the CAC cost for each of your marketing channels can be highly beneficial. It will let you know which channels have the lowest CAC and where you can easily double your spending for highest return. By allocating more of your marketing budget into lower CAC channels, the easier it is to gain valuable customers for a fixed budget amount.
Take rate is the percentage of customers accepting your marketing offer. This metric measures the internal effectiveness of a campaign and can be linked to cost. By initiating tactics that improve your take rate and lower your CAC you will start to see impacts on the cost side of your marketing performance thus increasing your ROI.
Payback measures the time for marketing investment to pay back cost of the initiative. Don’t confuse payback with ROI. This is a break even number measured by your specific campaign cycle. This will ensure that any campaign you launch is able to payback the cost you have incurred in a respective time frame. This will help you better understand if the time and money you put into a campaign is feasible and aligned with business goals.
Customer Satisfaction – The Golden Metric
The only way to measure this is by reaching out to your customers and asking if they like your product or would recommend to a friend. It costs you nothing to ask these 2 important questions and it can help you understand if your company is heading in the right direction. Keep track of this over time, and If your customer satisfaction begins to decline, it is a great indicator that future sales may start to decrease thus damaging your brand.
The point here is if you can measure something, you can control it and radically improve performance. If marketing campaigns are designed for measurement up front, the impact is easily captured downstream. One of the biggest differences you will see between successful and unsuccessful companies is their internal process used for measuring campaign and marketing performance. Stay ahead of the pack and start implementing data-driven marketing strategies today.
What are some of your favorite marketing metrics to track? Let us know by leaving a comment below: