Did you look forward to getting your report card? Your answer might be a tell-tale sign of your relationship with metrics.
There’s something about report cards, isn’t there?
That evaluation experience stays with you, creates a sense of anxiety, and, even when you’re done with getting report cards, some other evaluation is there to take their place. Performance reviews, your income or bonus, or some other metric is always there to remind you how good or bad your performance is.
I’m here to tell you that it’s not about you! It’s about your business. And, marketing metrics are your business’s way of letting you know what it needs.
Why You’re Avoiding Marketing Metrics
I’ll bet you think that you’re the only one who doesn’t like marketing metrics. You’re not alone.
When I did a quick search to see how many businesses and marketers are measuring their marketing, I didn’t find anything.
What I found instead is how small business owners deal with marketing.
- More than half of all business owners don’t have a marketing plan.
- Nearly 30% don’t have marketing goals.
- 44% don’t know if their marketing is effective.
- 52% aren’t sure how to optimize their marketing
All of these statistics speak to several reasons that entrepreneurs are avoiding marketing metrics.
You don’t want to feel bad about yourself.
Nothing is ever good enough, and when you see the numbers, and they aren’t what you wish they were — you won’t be good enough.
You’re not sure what to measure
Hear me out on this one. You have a list of things you should be measuring, but there are so many, and you aren’t sure which metrics are going to be the most helpful.
And this is related to the last one…
You’re tired of fixing things and not getting results.
When you did look at the numbers and went out to try to fix or optimize something, it didn’t work. It not only didn’t work the first time, but it didn’t work the time after that, and the time after that. So, why bother?!
One thing you can do is reframe the way you look at your metrics.
Your Marketing Metrics are Telling You What Your Business Needs to Be Successful
Everything has a way of telling you what it needs.
Your business is your baby, and just like any baby, it can’t tell you what’s going on. You have to figure it out based on the messages it’s trying to send you.
And that’s what metrics do.
Your marketing metrics aren’t there to judge you. They are your business’s way of telling you what your business needs in order to attract more ideal customers.
So, it’s not about YOUR performance — it’s about your business and what it needs to stay alive and succeed.
Every business needs money to survive, and marketing activities like lead generation, customer acquisition, and customer retention are what’s going to make your business profitable.
When you start looking at metrics as a way of finding out what your business needs, the anxiety starts to go away and you begin to relax into the process of tracking and improving your marketing.
Marketing Metrics = Market Research
A big mistake we make as business owners is thinking that marketing metrics are just formulas you should be reviewing.
Marketing metrics are your own personal data that are part of your market research.
Marketing metrics are answers to questions that tell you what to do next in your marketing efforts.
Let’s take a look at the most common questions we business owners have
What marketing strategies should I focus on?
It’s all about the 80/20. You want to find the 20% of activities that generate 80% of your success. If you’ve been following any millionaire marketers out there, you’ll notice that each one of them preaches ONE thing. This one thing they preach is the one marketing strategy they found that worked for them.
Marketing Strategy Metrics
You are using all three of these marketing strategies in your business, but you want to find out which one you should focus on. That doesn’t mean you won’t do the others, it means that you’re going to invest most of your energy in ONE.
Here are the three marketing strategies and the marketing metrics that will help you figure out which one is most effective for you.
Content: Where you create content that helps your customer choose you
Focus on measuring traffic, engagement, and conversions from different types of content that you’re putting out there.
- Website traffic to specific pages
- Time on site: This shows what pages people are most interested in. The more time they spend, the more relevant the content. Put calls-to-action opportunities on those pages.
- Bounce rate: Is your content relevant? If your bounce rate is high, the visitor had one intent, but your page didn’t deliver
- Pages with no traffic can be optimized, or removed
- Traffic sources: Where is your best traffic coming from; social media, mobile phones, etc. maybe referrals.
Social media analytics
- Look for posts with the most engagement
- Look for posts that are getting lots of shares
SEO Keyword Metrics
- Google search console: find out what search phrases and keywords lead to your website. How many impressions and clicks specific pages are getting.
- SEMRush, Ahrefs, Moz: Use these tools to identify new keywords and ranking opportunities as well as your websites domain and page authority.
Direct: Where you target a specific audience who have a specific problem with your specific solution
The name of the game here is getting attention and action from the right people. So, no matter what marketing channel you’re measuring, you want to pay attention to how well you capture attention and drive engagement and action.
Email marketing is one of the most popular marketing channels for direct marketing focus on: open rates, click rates, and conversion rates. Each of these are milestone metrics that will help you identify where your prospects are getting “stuck” in your funnel.
- High open rates and low click through rates means you’re getting attention but not enough connection or urgency to have them explore further.
- Low open rates and high click rates means that your message is hyper targeted. But you might be missing out on more customers.
- Conversion rates: beyond click rates are conversion rates (the number of people who purchase after clicking).
Webinars and events are another popular marketing channel for direct marketers. If you’re using these lead generation tactics you want to measure:
- Registrations: How many people register to your event.
- Attendance: Out of the registrations, how many people attend. This can also be the attendance rate – the percentage of people who attend out of the registrations.
- Conversions: This is the number of people who convert from your call to action.
Advertising: Where you use paid advertising to get in front of your ideal customer.
I call this the pay to play strategy. Don’t be fooled, every single strategy requires an investment of time and money. Content and Direct marketing require more time than money, and advertising requires more money that time.
What ad is performing the best?
CPM (cost-per-thousand impressions): is a measure of the cost of an advertising campaign based on the number of times an ad is displayed (impressions). Lower is better
How many times will my ad appear?
Impressions: This metric measures the number of times an ad is displayed on the search results page. Note, this is not how many people saw the ad. It’s how many times the ad appeared on the platform. You want a lot of impressions, even more importantly, you want those impressions to appear to the right audience. You’re better off getting fewer impressions with the right audience. You want a balance between high impressions with the right audience
How many people were interested enough to click on my link?
Click-through rate (CTR): This metric measures the percentage of people who click on an ad after seeing it. Higher is better
Cost per click (CPC): This metric measures the amount that a business pays for each click on their ad. This tells you how efficient your ads are. Lower is better.
Conversion rate: The percentage of people who take a desired action (such as making a purchase or filling out a form) after clicking on an ad. This tells you if your ad is working. Higher is better.
Which ads are giving me the best customers for the money?
Return on investment (ROI): This metric measures the profitability of an ad campaign by calculating the return on the money spent on the campaign.
Return on Ad Spend (ROAS): This measurement looks at how much bang for your buck each campaign delivers in terms of total revenue. Put simply – it’s a mathematical way to make sure that every penny spent advertising yields significant returns.
ROI vs ROAS: What’s the difference? The difference is very subtle, but important. Return on Investment is the profits generated by the ad relative to how much they cost. ROAS is total revenue generated by the ad..
Knowing who you’re trying to target and how they interact with your business will give you an edge over competitors when it comes time for conversions. Here’s a list of common questions and the metrics you should track to help you improve your marketing.
Who is my ideal client?
Don’t be fooled by the number of people who sign up or the number of engagements you get or the amount of traffic you get to your site. None of that matters if your ideal customers aren’t rising to the top.
Here’s what you want to look for.
Find your qualified leads:
- Check your existing customer list
- Select your ideal customers (customers you love, who are most profitable, and you’d like to have a hundred more of)
- Reverse engineer where these customers came from (Lead source)
- Schedule conversations with these people to understand how they heard of you, what triggered them to choose you, what they experienced that had them know you were the best choice for them.
- Group these customers into segments and measure your sales results by segment.
How much money can I count on every month?
If you’re looking to get an accurate pulse of your business’s financial performance, then it pays (literally!) to keep a close eye on two important metrics: Monthly Recurring Revenue and Average Monthly Recurring Revenue. A regular check-in with MRR will tell you how much revenue is rolling in each month; AMRR takes things even further by factoring the number of customers into the mix for greater insight.
- Monthly Recurring Revenue = Total monthly revenue of all customers
- Average Monthly Recurring Revenue = Total monthly recurring revenue/number of customers
How much should I spend to get a new customer?
What if you could BUY as many customers as you wanted? You can! And I’m going to show you some cool marketing metrics that will help you reframe how you look at marketing metrics.
Cost per Acquisition (CPA) is the ultimate measure of how much it costs your business to acquire a new customer. Simply take your marketing spend over a specific period and divide it by the number of conversions (sales or leads) you generated during that same period. Voila! You now have a dollar amount that tells you exactly how much it costs to land a new customer.
With this information, you can identify areas of your marketing strategy that are working well and areas that need improvement. Plus, you can use CPA to compare the efficiency of different marketing channels and make data-driven decisions about where to allocate your budget. So don’t be afraid to do the math – your CPA will thank you (and so will your bottom line).
- Cost per acquisition = marketing spend over a period/number of conversions over the same period
Another of my favorite marketing metrics is Customer Lifetime Value. You can use CLTV to identify the best and most profitable customer segments; which helps you choose a target market, decide where to put your marketing resources. More importantly, knowing which your most profitable customers are will help you see where to focus your customer retention efforts.
- CLTV = Average order value * Number of repeat sales * retention time
I’m saving the best for last.
Customer Net Worth. This is – by far – the most IGNORED customer metric. I’m not sure why people don’t like this metric, but if I had to choose ONE – this is the one I’d choose.
Customer net worth tells you how much profit each customer contributes to your business. This is important for one important reason – it tells you how much you can afford to spend to BUY a customer just like that one.
Here’s the formula.
- Customer Net Worth = Avg. Profit $ * Number of years you’ve had the customer
What are the most profitable areas of your business?
Everyone loves to share metrics and formulas, but there are other marketing metrics you should be looking at that come from REPORTS that you can pull from your accounting software.
I recommend you partner up with your bookkeeper or accountant to see how you can easily pull these numbers together so that you can look at them
Who are my most profitable customers year over year?
To get this information, you will have to have a handle on your costs. Work with a bookkeeper to help you track your costs and associate them appropriately. The investment in this is more than worth the time and money.
Here are a few costs you want to make sure that you have:
- Your time: Track this for every activity including research, writing, meetings, client work, phone calls, etc.
- The cost for each product or service; the time you’ve invested, outsourcing, software, support, etc.
- Fixed costs: Utilities, rent, annual software expenses, etc.
To keep things simple, you can simply pull all these costs together and create an average cost. You can also get more specific and come up with the average cost by product, service, or customer.
Whatever you choose, I can’t stress enough how important it is for you to have a handle on your costs, otherwise you could be working like a dog in your business with hundreds of customers and projects and still be losing money.
With that in place, here are the marketing metrics you can use to see what customers you are attracting and which of these customers are your most profitable year over year.
- Annual revenue by customer and percentage of revenue – This tells you who your biggest customers are and what customers are driving most of your revenue.
- Cumulative revenue and cumulative percentage: This calculation will tell you how many customers it takes
- List of customers by profit margin: This information provides insights you wouldn’t believe. You’ll be surprised to see which customers
What are my most profitable products/services
This is another set of powerful metrics that no one talks about. Whenever you create an offer or a bundle of products and services, make sure that you have both a price and cost associated with that so that you can track your profits.
Then, be sure to run profitability reports for each of your products and services so that you can see which of your offers are most popular and most profitable.
Here’s the formula.
- Profit by product = Annual revenue by product – costs associated with that product
Where do my most profitable customers come from?
You can also run this same process across your marketing channels and lead generation events.
- ROI by marketing channel = total revenue by marketing channel – total costs associated with the marketing channel (this includes outsourcing, time, ad spend, etc)
- Social media channel
- ROI by lead source
I recommend that you run these numbers after every marketing campaign and event to see which type of event and offer combination yielded the best, most profitable customers for the least amount of effort.
Branding and Messaging Metrics
This next set of metrics is all about your brand; do people know who you are and what you do? How often do people mention your brand, and in what context; is it positive or negative?
There are a lot of branding metrics big companies track, but I’m going to point out some simple ones that don’t require any fancy surveys that will offer you way more insights.
For a small business, the biggest thing you can do when it comes to branding metrics is to use social listening to uncover opportunities and manage your message.
How can I stand out from the competition?
First, let’s be clear that your competition isn’t just another company who sells something similar to the same customers.
Your competition is any alternative to what you’re selling – and that often includes the customer doing it themselves.
This is where social listening becomes increasingly important.
- Use a tool like Brand24 or HootSuite to see what users are asking for and talking about when it comes to your industry, product, service, competition, etc.
Here’s an example of how you can use Brand24 to get an idea of what people are actually saying as well as the sentiment around that comment.
In this example, you can see a person talking about @flipkart. And if you were going after that same customer, you can jump in and join the conversation. This is also a great way to see how your brand compares to other brands.
What should I be saying to my prospects to get them to become customers?
The following marketing metrics can also help you tweak your marketing message and make changes that increase your connection and engagement with you customers.
- Email open rates by subject line (tell you which subject likes are garnering interest)
- Email click rates – tell you what CTAs are most effective
- Social posts with the most engagement
Set a Baseline to Start Listening to Your Business
I started this article by saying that metrics aren’t so much about performance as they are about your business TELLING you what it needs and wants in order for you to meet your goals.
So, if the only thing you get from this article is to shift your thinking about metrics from performance to communication – you are a winner.
With this new viewpoint in mind, you can start small by identifying a few different ways that you can start listening to your business.
- Set a baseline for where your business is right now; who are your customers, what are your costs, etc.
- What opportunities do you see? Are there outliers or does something jump out at you right away?
- Choose one thing you’re going to start measuring and tracking. Keep it simple. Your goal is to simply look at this information regularly.
- Identify one small improvement you can make and watch it over time.
The Power of ONE Thing
The best way to eliminate overwhelm is to start with one thing. Don’t think measuring and metrics as having to do it all. Start small and finish strong.