4 Marketing Metrics You Should Be Tracking

To fully understand the success of your digital marketing efforts, you must carefully examine the most important marketing metrics behind each campaign. Simply put, marketing analytics help you understand how your digital marketing campaigns are performing. By using a few tools to optimize metrics, you can get the most out of every dollar you spend.

At ArcMinute Marketing, we know there is an endless list of marketing metrics to measure. We believe that these are 4 marketing metrics you should be tracking. Measuring and understanding these metrics is vital to having a successful digital marketing strategy. Having a strong grip on these metrics and truly understanding how they impact the success of your marketing efforts, can do wonders for your bottom line.

Customer Lifetime Value

Customer Lifetime Value, or CLTV, is a metric that measures the revenue a customer will generate over a lifetime of being a customer with a company. CLTV is essential to understanding the break-even and positive ROI points of paid search campaigns. The higher the CLTV, then the lower the break-even and positive ROI points will be.

CLTV is a metric of averages, calculated by multiplying the average purchase price with the average number of purchases a customer makes over a lifetime as a customer (Average Purchase Price X Average Number of Purchases = Customer Lifetime Value). The formula shows that CLTV is an aggregate value of all purchases a customer will make over time, rather than the initial purchase.

Bear in mind that:

• A new lead might not make a purchase right away. Adding incentives for a new lead to commit to a first purchase is a great way to get started.
• Loyal customers have an extended lifetime and make multiple purchases during that time.
• A great way to boost CLTV is by up-selling, down-selling, or cross-selling. Additional purchases will provide greater value to the customers, and their CLTV will grow as well.
• Turn your customers into referral hubs! Offering additional discounts or
• even commissions on sales to referred customers in their networks is a great way to multiply the CLTV and turn your customers into your best ambassadors.

Close-Ratio

The close-ratio measures how efficient you are in converting qualified leads into actual sales. The formula for close ratio is “Number of Sales / Number of Leads = Close Ratio.” It is a percentage metric that gives insight into how good you are at closing deals with already-interested customers.

Close-ratio varies dramatically depending on the industry, product, or service. On average, a close-ratio of 20% to 30% is considered excellent. Close-ratio has a direct correlation with the following factors:

• The quality of your follow-up process
• Whether the follow-up was immediate
• How much value is in the offer for the customer
• Brand awareness

The higher each of the factors ranks, the more the expected close ratio should grow. A great way to improve the close ratio is to focus on the following aspects of advertising:

• Improve the prequalification of leads by writing better copy for ads, landing pages, and forms.
• Focus on creating highly targeted offers that cater to a smaller group of prequalified leads who make purchase decisions.
• Optimize the copy and content of the marketing materials by removing underperforming keywords.

Finally, the formula for calculating expected new revenue is a combination of the two mentioned metrics: close ratio and CLTV (New Revenue = Number of Leads X Close Ratio X CLTV). It provides an overview of the expected revenues from newly acquired customers.

Cost Per Lead

Cost Per Lead, or CPL, is a key metric for lead generation channels like paid search. Cost per lead provides an understanding of the cost of acquiring new leads and how it directly influences the profitability of marketing campaigns. The basic formula for CPL is “Advertising Budget / Number of Leads = Cost Per Lead.” It is a rather simple formula, but it carries a lot of weight when it comes to making marketing decisions.

To better understand the CPL paid search metrics, it is important to note that the information necessary for calculating CPL according to the formula is not available before the campaign starts. So, estimation is the only way to get a glimpse into future numbers.

To get the missing information, you need to estimate the number of leads you expect to acquire during the campaign. To estimate, use this formula: “Number of Leads = (Advertising Budget/Average Cost Per Click) x 10% Conversion Rate.”

For example, you are willing to spend $2,000 on a marketing campaign, and the average CPC for such a campaign is $4, and you will use a landing page that converts at the rate of 15%. Plug those numbers into the formula: ($2,000/$4) x 15% conversion rate = 75 leads. Such a campaign should yield 75 qualified leads.

All you need to do now is plug the values into the original formula: “Advertising Budget of $2,000 / 75 leads = Cost of $26.67 per Lead.” This gives you a quick insight into what you can expect in the short term. Bear in mind that most campaigns start slower, with a three- to four-week ramp-up period.

Where Analytics Meets Marketing Strategy

At ArcMinute Marketing, we strive to provide localized B2B and high-value B2C digital marketing services for customers who understand the importance of having a strong digital marketing strategy and knowing how to act on it. As a paid search agency, we see marketing through the Customer Journey lens, relying on responsive website design, SEO, paid search, local search, content marketing, social media, lead tracking, and analytics.

Our expertise stems from experience in the automotive retail vertical, where our experts develop a suite of high-quality digital marketing services that target hyper-localized businesses. The success achieved with automotive retail key performance indicators (check out our paid search case study) helped us expand into other sectors such as, professional services, health & wellness, education, entertainment, consumer products, shipping, and logistics.

If you would like to improve your digital marketing strategy, schedule a discovery call with ArcMinute Marketing.