6 Marketing Metrics You Need To Know (And How To Calculate Them)

Marketing Metrics You Need To Know
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Marketing strategy is critical for any business. But how do you know if your marketing efforts are paying off?

You need to track the right metrics.

In this post, you will learn 6 important marketing metrics you should be tracking, and how to calculate them.

We’ve also got calculators for all of these metrics so you can work everything out quickly.

Let’s get started:

6 marketing metrics that can help you track your business’ success

Conversion Rate Calculation (CR)

A term that is very familiar amongst marketers is conversion rates. A conversion rate tracks how well a desired action has converted. The most common action that is tracked by marketers is email sign ups, or purchases made on a landing page.

It is calculated by the converted figure and dividing it by the total times a conversion could have happened.

Here’s an example:

20 subscribers have signed up to your newsletter. Your sign-up popup form for your newsletter appeared 1000 times. Therefore, we take 20 and divide it by 1000 then times by 100 to give us our conversion percentage, which is 2%.

Conversions (brought a product/subscribed etc / total clicks x 100 = CR

Conversion rates are important to monitor because they show a business if their marketing tactics are working. A high conversion rate means their tactics are working, which leads to more people signing up to their email list, or buying products from them. A low conversion rate means that further optimization is needed where the conversion takes place.

Monitoring conversion rates will help you deliver the best results, and enable you to use your marketing resources to maximum efficiency.

Visit our Conversion Rate calculator.

Customer Acquisition Cost Calculation (CAC)

If your business sells products regardless of whether it’s physical or digital, calculating your customer acquisition cost is vital. Your customer acquisition cost tells you how much of your marketing efforts you’re spending to acquire a new customer.

It is calculated by taking the sales and marketing costs and dividing it by the total new customers.

Here’s an example:

You’ve spent £100 on a marketing campaign, and as a result you’ve received 5 new customers. Therefore, we take £100 and divide it by 5 to give us our customer acquisition cost, which is £20.

Sales & marketing costs / new customers = CAC

Calculating your customer acquisition cost is important because, not only does it tell you how profitable a product or service is, it can also give you an indication as to whether your marketing strategy to get new customers is working.

The higher the customer acquisition cost doesn’t necessarily mean a product or service is not profitable, it could mean how you’re marketing it is ineffective.

Visit our Customer Acquisition Cost calculator.

Customer Lifetime Value Calculation (LTV)

If you have a business that offers subscriptions, or focuses on repeat sales then calculating your customer lifetime value is useful to determine profitability and the future development of your business.

Customer lifetime value refers to the amount of money a customer will spend, this usually involves monthly or yearly memberships, or those customers who send recurring payments to a business.

It is calculated by taking the average order value and multiplying it by the number of repeat sales, then lastly this figure is then multiplied by the retention time.

Here’s an example:

The average order value is £20 which is then multiplied by the average number of times your customers make an order which is 12, this equal £240. Lastly, this figure is multiplied by the retention time, let’s say our example is 1 year. Therefore, our customer lifetime value is £240.

Average order value x Number of repeat sales x retention time = LTV

This metric ties closely with your customer acquisition cost, because if your customer lifetime value is lower than the cost it takes to acquire new customers, then you’re losing money every time you make a sale.

Understanding your customer lifetime value is vital to allow you to make the correct decisions in terms of how to utilize your marketing resources, as well as help you assess the potential for the future development or growth within your business.

Visit our Customer Lifetime Value calculator.

Return On Investment Calculation (ROI)

Another term you will hear often is return on investment, and its definition is simply just that – the return you get from the investment you make.

It is calculated by taking the cost of the investment such as marketing costs, and deducting it from the profit made during that campaign, we then divide this figure by the investment amount, and lastly times it by 100 to get a percentage.

Here’s an example:

You spend £800 on marketing, and from these marketing efforts you gather £1,000 in sales. Therefore, we deduct £800 from £1000 to get £200, we then divide £200 by the investment which was £800. Lastly, we multiply it by 100 to get our percentage. In our example we get a 25% return on investment.

(Profit – cost of investment) / cost of investment x 100 = ROI

If you want to make the correct financial decisions for your business, you’ll need to understand how to work out your return on investment.

Also, it proves useful in working out which types of marketing strategies are more profitable. For example, your return on investment could be more profitable on social media, compared to Google Ads therefore, you’d focus your marketing efforts more on social media.

Visit our Return On Investment calculator.

Lead Conversion Rate Calculation (LCR)

Lead conversion rate takes your conversion rate metric, and channels it into a calculation that is more specific – when a lead finally converts via a specific channel or to a specific opportunity. For example it could be when someone clicks on a social media ad and signs up to your email list, or when a free trial becomes a paid member.

It is calculated by taking the number of leads that are converted, then dividing it by the total of leads generated.

Here’s an example:

120 people have signed up for a free trial of your product, out of those 120 people, 40 have decided to upgrade and purchase the paid product. Therefore, we take 40 and divide it by 120 which gives us 0.33. Lastly, we multiple this figure by 100 to give us a percentage – 33%.

Leads converted to (insert desired action) / total leads x 100 = LCR

Your lead conversion rate is important to monitor because it tells you how well you’re performing in your lead generation efforts. For example by monitoring each part of your sales funnel with this metric you’ll be able to assess which stages of the funnel are most effective, and which need improving.

Visit our Lead Conversion Rate calculator.

Email Open Rates Calculation (EOR)

Our last metric which you need to know is your email open rate. Your email open rate is the number of subscribers who receive your emails and open them.

It is calculated by taking the number of those who opened your emails and dividing by the number of emails sent, this figure is then multiplied by 100 to get your email open rate percentage.

Here’s an example:

Let’s say 25 people open your email, however you’ve sent out 100 emails in total. You’d take the 25 and divide it by 100, which is 0.25. This figure is then multiplied by 100, therefore, 25% is our email open rate.

Number of subscribers that opened your email / total number of emails sent x 100 = EOR

Why should you monitor your email open rates? Email is still the most effective way of connecting your subscribers, and it’s a great metric to use to measure engagement.

You should always aim for a higher open rate, however the average email open rate is 17.4%.

It’s worth noting that most email providers will calculate these figures for you automatically, but we’ve got a calculator you can use just in case you’re doing manual email outreach.

Visit our Email Open Rates calculator.

Over to you

We’ve been through 6 important marketing metrics you can use for your business to make sure it’s performing efficiently, but also profitably.

Remember, marketing strategies can always be tweaked and improved. If you find your performing low on a specific metric, adjust your marketing tactic and see if this metric improves.

These metrics are a great indicator to help see the potential of your business and products, as well as where you can get the most out of your marketing efforts.

Marketing Metrics You Need To Know
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