Do You Know Your Marketing Metrics?
You might think doctors have a lot of acronyms (and you’d be right), but as a marketer, it’s your job to be an expert at some acronyms, too.
But don’t worry, you don’t need a PhD. in marketing math to enjoy massive benefits from making improvements to your marketing numbers.
A simple GED will do.
Let’s start by giving you a quick overview of the vital marketing metrics in your business and what you can do once you learn them.
It’s completely possible to multiply the revenue your business generates without working harder or even spending more money. All you need to do is determine your marketing numbers and apply some creativity to improve each of these areas.
The results are geometric growth (2x2x2) as opposed to linear growth (2+2+2).
Even small improvements can make life-altering changes for you and your business.
How many of the nine major marketing metrics do you know?
If you’re like most small business owners, you know how much you spend on marketing and how much your business makes each month, but that’s about it.
But how can you expect to truly grow your business if you don’t know the magic numbers that make substantial growth possible? How do you know where to focus your resources if you don’t know how your business is performing in key areas?
You don’t have to be a math whiz to know your metrics, you just need to apply some common sense and establish accurate estimations for the nine major marketing numbers below.
The 10 Vital Marketing Metrics
- Average Monthly Visitors (AMV) – Your average monthly visitors is the total number of people that visit your website or walk in to your store each month. Figuring out your website visits is easy, but keeping track of the amount of in-store visitors will take some creativity. Publishing more content to improve your search engine rankings and improving your window displays are great ways to increase your AMV.
- Average Transaction Value (ATV) – Average transaction value is the total of all your sales divided by the amount of transactions. The best ways to increase your ATV are to raise prices, bundle products together or develop upsell and point-of-sale products.
- Average Annual Transactions (AAT)– To figure out your average annual transaction figure, you’re probably going to need a robust customer database that keeps track of a customer’s purchases over time. To increase the number of times a customer makes a purchase over a given period of time, create more and better promotions or launch your own loyalty card or program.
- Average Customer Lifespan (ACL) – Keeping customers longer is an efficient way to grow your business and increasing your average customer lifespan should be a top priority of your marketing strategy. The best ways to extend the lifespan of your customers are to improve your customer service and to collect customer information so that you can consistently keep in contact with them.
- Visitor To Contact Rate (VCR) – Contact is made when a visitor to your website calls you or fills out a form and in-store when a visitor asks a question, requests more information or fills out an in-store survey. Divide your number of contacts by your number of visitors. Improve your VCR with better, more prominent forms and calls-to-action in your store and online.
- Contact To Lead Rate (CLR) – Your contact to lead rate is a bit subjective. To determine your CLR, you’ll need to grade your contacts based on your own buyer intent parameters. Divide the number of contacts that are genuinely looking to make a purchase by the total number of contacts. The best way to improve your CLR is to qualify leads better with better website copy and product offers.
- Closing Rate (CR) – Your closing rate is the percent of leads that convert into paying customers. Simply divide your total number of sales by your total number of leads. To increase your closing rate, hire or train better sales people and follow up longer and more often with your leads.
- Cost Per Lead (CPL) – Cost per lead is an important metric that can give you insight into the health of your business, as well as help you set your sales goals and marketing budget. To determine your CPL, divide your total marketing budget by your total number of leads in a given time period. The best way to improve this number is to improve your other numbers and implement more efficient marketing tactics.
- Profit Margin (PM) – Profit margins are another metric that most small business owners should know, but don’t. Your profit margin is your total profits as a percentage of the total sales revenues generate. Calculate your profit margin by dividing your total profits by your total revenue generated and multiplying by 100.
- Lifetime Customer Value (LCV) – Knowing your lifetime customer value can give you an unstoppable competitive advantage over the rest of the competition and can completely transform the way you market your business. The simple way to calculate your LCV is to multiply your average annual transactions, average customer lifespan, annual transaction values and profit margins together.
Do you know most of these metrics? Do you have systems in place to calculate them sooner rather than later?
If not, it’s time to take action.
In later lessons, we’ll take a look at these numbers in more detail and with additional examples. Until then, put pencil to paper and see how many of these marketing metrics you can define for your business.