Marketing is so important to small businesses in this ad-cluttered modern world.
Successfully cutting through the noise and getting your product and service in front of the customer is the difference between soaring as a company and facing closure in a few months.
According to Vital, companies often spend 20 percent or more of their revenue on marketing. But if you aren’t tracking the right metrics, you’re basically just throwing that money into the darkness, hoping and praying it has the desired effect.
Most likely, it won’t.
So if you need to put together a marketing campaign, or tweak the one you have, it’s time to start tracking some critical metrics.
At a glance: The best marketing metrics your business should track
The top marketing metrics your small business should be watching
There are countless marketing KPIs (key performance indicators) you could be tracking, but we’ve boiled it down to a list of eight key metrics, with KPI examples, you absolutely must track in order to have a solid understanding of where your marketing dollars should be going.
A qualified lead or qualified prospect is a potential client who matches a seller’s ideal customer profile, even though they have not contacted your company.
Every business has its own definition of a qualified lead, but in every case, it refers to someone who has a high chance of making a purchasing decision.
Qualified leads are so important to any marketing campaign because they are the leads most likely to pull the trigger and buy your product and service.
Campaigns can produce lots of leads, but may qualify very few, while other more successful campaigns find only a handful of leads, but are able to pull a much higher percentage of qualified leads.
Tips for using qualified leads
- Create a personalized campaign: Bulk emails can be helpful, but don’t just rely on your email marketing software to convert your list of qualified leads with a mass marketing campaign. Give each of them personal attention with a phone call or face-to-face meeting.
- Spend more time finding them: Rather than spending all your time cold-calling or blasting out marketing emails to large lists, set aside time to go through the list and do some research to qualify them. It could save you a lot of time down the road.
2. Customer acquisition cost (CAC)
Customer acquisition cost (CAC) is simply how much you spend convincing the average customer to buy a product or service.
CAC incorporates all the cost of reaching a customer and moving them through the sales pipeline, and provides a convenient number that you can compare to the average sale to determine how much profit you’re pulling in.
For example, if your total marketing expenses for the year was $50,000 and you brought in 1,000 new customers, your CAC is $50.
Tips for using CAC
- Use it to impress investors: If you have a low CAC relative to your average sale revenue, show this to investors. They crave stats like this that allow them to quickly calculate a company’s profitability.
- Be aware of the caveats: A company’s CAC may be bad if they are expanding marketing into a new area, or the business is undergoing a reorganization and no results are expected until a later time. CAC should be viewed in context with the company’s overall strategy.
3. Time spent on site
A great sign that potential customers are interested in your product is their time spent on site.
If they’re spending a significant amount of time not only reading the page that you sent them to, but also checking out other pages on the site, that’s a sure sign that they have found something of value and are interested in what you have to offer.
Tips for using time spent on site
- Start gathering data: If you aren’t monitoring traffic on your site, you need to start gathering this data right away. Tools like Google Analytics and Clicky allow you to track time spent on site and other metrics, going beyond basic tools that merely track overall traffic and offering KPI reporting to help you make informed decisions.
- Note low-performing pages: If you have pages that are significantly lower than others in terms of visitor time spent, take a look at them and try to figure out why, and then make the necessary adjustments. This will boost traffic not just for this page, but for your entire site.
4. Bounce rate
The bounce rate is related to the time spent on site metric, but it’s more specific. The bounce rate refers to someone who visits your home page and then immediately leaves.
It’s often difficult to decipher the intentions and thoughts of people who visit your site, but someone who “bounces” is pretty clearly signaling they aren’t interested in what you have to offer.
If you have a high bounce rate, this is a big indication that either your home page is poorly designed or you are focusing your digital marketing on the wrong people and need a shift in strategy.
Tips for using bounce rate
- Tweak your site design: Sometimes, it takes only a simple tweak to improve your bounce rate. Maybe you just need to add a picture with a link, or add some more enticing text. Play around with it and monitor traffic to see if the bounce rate improves.
- Ask yourself if you’re focused on the right customer: If your bounce rate remains stubbornly high, take a look at the customer profile you’re targeting and determine whether it needs adjusting.
5. Return on investment (ROI)
Return on investment (ROI) is one of the most fundamental metrics that all businesses in all industries track.
It allows business owners to identify which marketing tactics are resulting in promising revenue returns and which aren’t making any traction. This allows them to reallocate resources to more successful marketing tactics with a higher ROI and therefore more profit potential.
Tips for using ROI
- Don’t immediately toss a marketing strategy: If an ROI evaluation shows a couple of low performers among your marketing tactics, don’t immediately toss them. First ask if you can do anything to adjust them in a way that might make them more successful.
- Don’t be married to a marketing strategy: On the flip side, if it’s clear that a marketing strategy is a loser, be ruthless and cut the fat right away, even if it’s something you’ve done for the past 30 years.
6. Customer lifetime value (CLV)
Customer lifetime value (CLV) refers to how much the typical customer will bring into your organization in terms of revenue over their lifetime.
Some customers will make a one-time purchase of $20 from you, while others will spend thousands of dollars over a period of years if they really love what you have to offer. By adding all the revenue you’ve collected together and dividing it by the number of customers you’ve ever had, you can come up with the CLV.
Tips for using CLV
- Wow investors with CLV/CAC: You can take your CLV and divide it by your CAC to determine exactly what profit you’re getting on each customer you acquire. This is an incredibly powerful metric to share with investors.
- Examine your CLV: Compare your CLV to your lowest sales and your highest sales. Is the CLV closer to the former? Maybe you need to work on customer loyalty.
7. Conversion rate
The conversion rate measures just what percentage of people who end up on your landing page end up turning into a customer.
This can be closely related to bounce rate: landing pages with high bounce rates typically have low conversion rates, although not always.
A low conversion rate is bad for an obvious reason: it means you’re spending money on push marketing to send people to the page and not getting the sales you want out of it.
Tips for using conversion rate
- Tweak your landing page: As is the case with bounce rate, sometimes a low conversion rate can be fixed with some tweaks to the landing page. It can be something as simple as changing the color of your call to action, or adding an image or striking headline.
- Sweeten the pot: Consider offering some freebies to entice visitors to sign up. They may not be far enough down the purchasing funnel to be ready to make a decision, but they might be interested enough in your product to take something of value you have to offer and thus build a relationship with your company.
8. Organic traffic
Organic traffic is fantastic for one very simple reason: it’s free.
This traffic comes either from your site showing up in search engines or people who know your brand coming directly to your site. Regardless, it means your website is being seen and your reputation — and therefore your band authority and trustworthiness with consumers — is growing.
You can build organic traffic by developing a relationship with the paid traffic you bring in, as well as by creating informative, helpful, and well-researched content on your site that is relevant to your customer base.
Tips for using organic traffic
- Create a content marketing campaign: Draw up a content marketing strategy that involves regular articles that help solve a problem your customers have in order to increase your profile in search engines.
- Monitor keywords you rank for: Use sites like SEMrush or Ahrefs to see which keywords you rank for, and look for opportunities to write articles about related keywords to expand your authority.
Taking the next step to track your marketing metrics
Tracking the metrics is one thing, but executing is another — and that’s where CRM software comes in. We’ve reviewed some of the best CRM software options that can help marketing professionals increase sales pipelines and boost conversion rates.
View more information: https://www.fool.com/the-blueprint/marketing-metrics/