My Top Metrics to Track to Improve Your Marketing

When it comes to success in marketing, the number one challenge I have seen with most businesses is that they have no idea where their marketing dollars are going and deciphering what marketing is working and what is not.

They try to “do marketing” with all the popular channels out there; posting content, writing emails, going to networking events, paid ads, SEO…etc. Sometimes they have data, other times, they don’t.

In almost every case, there is a lack of understanding of what data to track and how to use it effectively to achieve a return on investment.

So, let’s start there…investment. It is CRUCIAL for any business owner or marketer to recognize that marketing is NOT AN EXPENSE. It is an INVESTMENT. When applied and measured properly, that investment should provide a return. First a return OF investment (i.e. don’t lose money), then a return ON investment.

The best investors understand that they need to analyze an investment before placing their money. They know what metrics to watch, what news headlines to follow, and how to value the prospective investment effectively.

Marketing should be NO different. It takes time and skill to master, but once you do, can provide massive returns for your business.

Today, I am going to break down some of the most important marketing metrics to measure and track consistently in your business to ensure you are on the path to success.

In the coming weeks, we will take more time to unpack each metric and how to effectively measure and use it for marketing success…so…if you are not subscribed, be sure you take a moment to subscribe now to follow along.

Here are the core metrics I encourage all businesses to track within their marketing:

Leads

• Leads, by my definition, are individuals in your general target market who you have the ability to contact. This tends to be a name, email, and phone number. (However, you can adjust with name and contact info only - i.e. ability to send a direct message on a social platform)

Marketing Qualified Leads (MQLs)

• MQLs, as I define them, are the leads who choose to engage with you or your content. This tends to be those who have opted into a mailing list, downloaded a lead magnet, or have had some form of two way communication with you or your business. They may or may not be qualified to buy, but are at the first stages of starting a conversation with your business. They are engaged.

Sales Qualified Leads (SQLs)

• Further down the funnel, we have SQLs. These are the prospects who have been deemed as qualified to buy from you. They fit your target market and have clear B.A.N.T. (Budget, Authority, Need, and Timing). For most service based businesses, BANT is established through the course of a conversation with the sales team. Though a line of questioning, the team is able to establish the prospect has the budget to make a purchase, has the authority to make a purchase decision, has a need your product or service solves, and the conversation it timely (I.e. the solution needs to be provided now).

Opportunities

• Opportunities are simply your sales meetings. This is the actual sales conversation that has the ability to make an offer to buy. For some industries, the SQL and Opportunity stage may happen at the same time, for others, there may be a series of 2-3 sales meetings (opportunity meetings) to achieve a buying decision.

Sales (by number and dollar amount)

• Sales is probably one of the easiest metrics to understand. Did you get a new customer or not is the base here. When we are measuring, it is important to measure both the total number of sales AND the dollar amount of sales. When we get deeper into our measurement, we may find that one lead strategy produces a higher number of total sales, but a lower dollar volume as compared to an alternate strategy.

Cost Per Lead/MQL/SQL/Opportunity

• Cost per lead…at EACH stage of lead. Measured by taking total investment for the time period (i.e. month) divided by the total number of leads. As an example, if I invest $1,000 this month and generate 10 MQLs, then my cost per MQL is $100.

Average Dollar Sale / Average Order Volume (AOV)

• Average dollar sale or AOV is simply the average dollar amount that your customers spend on a single transaction. The simplest way to measure this is to take your total dollar amount in sales divided by your total number of sales. For example: if I did $10,000 in total sales dollars and there were 8 transactions, then my AOV would be $1,250 ($10,000 / 8).

Customer Acquisition Cost (CAC)

• This is probably one of the MOST important measurements to track in your marketing. This metric gives you how much it costs you to acquire a new customer. When paired with the Average Dollar Sale, we can quickly see whether we are making money on the initial transaction. CAC is measured by taking total investment for the period divided by total number of new customers. For example, if I invested $1,000 in marketing and got 8 new customers as a result, my CAC would be ($1,000 / 8) $125.
  
  PRO TIP - if my AOV is $100 and by CAC is $125…I am losing money (Gained $100, Spent $125 to acquire…loss of $25…before adding in your cost of goods or services). The goal is to get CAC to be lower than AOV.

Lifetime Value and Lifetime Gross Profit (LTV and LTGP)

• Let’s start with Lifetime Value. LTV is simply the average amount a customer spends with you over their lifetime. For example, if I gain a new customer who spends $125 with me and, on average, they tend to buy 4 more times from me over the coming months/years/etc. Then I know my LTV is $125 x 5 = $625.

• Lifetime Gross Profit is an even better metric to consider. It is calculated in much the same way as LTV, but takes into account the cost your business has to provide the goods or services. For example, if I am selling a widget for $125 and it costs me $50 to buy/make the widget, then my gross profit is $75. If the same scenario is true that an average customer will buy a total of 5 times, then my LTGP is $75 x 5 = $375.

Return on Ad Spend

• Finally we have the cornerstone metric to measure, Return on Ad Spend. ROAS is calculated by taking the total dollar sales during a time period divided by the investment we made during the same period. For example, if I make $10,000 in sales this month and invested $8,000 into marketing for the same month then my ROAS is 125% ($10,000 / $8,000). We ultimately want this number to be above 100%. Anything under 100% is a loss on ROAS.

To get started, I recommend you begin measuring (tracking) each of these metrics at a global level for your business. In other words, as a total of the business, what are the numbers for each of these. KEY POINT - don’t try to change or improve them…simply measure.

As we navigate and build consistency in measurement, then we will begin to get a bit more specific in the tracking. I then recommend you measure at a “local” level - measuring each number by lead source (marketing channel - i.e. Networking or Facebook or Google Ads), then by team member. The more we break down the numbers, the more ways we can adjust and improve. This will be a topic for a future article.

For now, start by familiarizing yourself with the definition of terms above. Get comfortable and consistent in tracking. Build your optics and know what is really happening in the business. Armed with this knowledge, you will be ready for step two.

p.s. - if you need a simple place to start, DOWNLOAD A FREE COPY of Coach Tanner's Marketing Measurement Dashboard HERE. This simple tool can be a starting point to measure the above mentioned metrics weekly in your business. Enjoy!