In today’s technology and data-driven landscape, marketers are under constant pressure to prove the value of their efforts. But with the amount of data and analytics we have access to, it can be difficult to differentiate between the important marketing metrics and the not-so-important marketing metrics.
If you’re struggling to report on the success of your marketing campaigns, we’re here to help. Today we explain the five most important marketing metrics in 2017. Keep reading.
Lead-to-Close Conversion Rate (CVR)
All too often, marketing teams spend too much time worrying about the amount of leads they generate, and not enough on the quality of the leads. A steady stream of sales and marketing leads is important, but unless these people eventually purchase from you, they don’t provide much value.
Lead-to-Close Conversion Rate measures the average percentage of leads that end up becoming customers. The natural way to calculate this marketing metric is to divide the number of sales made in a specific time period, by the number of leads generated within that same time period. So, if your organization made 15 sales the first quarter, but generated 100 leads – your Lead to Close Conversion Rate would be 15%.
However, the average sales cycle can take weeks, or even months. Meaning, a lead you generate this November may not become customer until next November.
That being said, simply calculating conversion rate by time period won’t give you a true indication of how well your programs convert. Here’s an alternative: Look back to the same time the year prior, and determine how many leads were generated in one month. Then, determine how many of those leads then converted into customers throughout the year. Lastly, divide the number of customers, by the original number of leads to retrieve your conversion rate.
When CVR is calculated and monitored on a regular basis (i.e. monthly) it can also provide insight into the lead-quality your programs produce. For example, when your lead-to-close rate is high for a particular campaign or initiative, you can prioritize your time and resources accordingly. If your lead-to-close rate is low for a particular program, you can make the necessary changes to attract better leads.
Initial Customer Acquisition Cost (CAC)
Another important marketing metric is your Customer Acquisition Cost. This metric indicates how much your organization must spend to successfully secure one customer.
This metric is easy to calculate: Simply take all sales and marketing costs from one period of time and then divide that by the number of new customers acquired within that period.
Executives consider their organizations CAC as an indicator of performance and efficiency. When your calculations are consistently low, your executives can assume that your sales and marketing teams are operating efficiently. But, if CAC spikes quarter after quarter, it can indicate an issue.
For more granular results, try calculating the CAC by program, campaign, or initiative. These numbers can help you prioritize projects and scale your success.
Marketing Percentage of your CAC
Another marketing metric to monitor is the Marketing Percentage of your CAC. Again, this is another simple formula to calculate. Take your marketing spend for a specific time period and divide by the number of new customers generated within that time period.
This calculation reveals your marketing team’s impact on the overall CAC, and can be used to help make better sales and marketing decisions. Naturally, a lower number here is preferable. If your marketing CAC is high, it indicates one of two issues:
- Your marketing team is spending ineffectively.
- Your sales team is not performing well.
Tracking this metric over time will demonstrate how each team is improving.
Marketing Originated Customers
This marketing metric identifies the percentage of new customers acquired as a result of marketing initiatives. This proves the ROI of your efforts. And more importantly, can help reassure your team that their efforts are paying off.
Again, this metric isn’t hard to find as long as you track lead source. Take the number of customers that originated from a marketing initiative, and divide it by the total number of customers acquired within the same time period. Obviously, the higher the percentage the better.
Marketing Influenced Customers
In an ideal world, all customers would originate from your marketing team’s initiatives. Sadly, this is not the case. But that doesn’t mean that your efforts didn’t help move them along the buyer’s journey. Even if your programs didn’t generate the lead, your marketing team can still have a hand in closing a sale through educational content and nurture programs.
This metric is not unlike marketing originated customers, but it goes one step further. To find this number examine the leads converted within a given time period. Then, determine how many of those leads interacted with your marketing efforts at some point. After that, once you divide by the total number of converted leads, you’ll have the percentage of marketing influenced customers.
The bottom line
The key to marketing success lies in your ability to understand how your efforts contribute to your organization’s bottom line. Once you prove the value of your initiatives, your team will receive well-deserved credit.
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