Let's face it—online marketing can feel like walking through a maze without a map.
That is to say, you have emails to send, social media profiles to manage, paid advertising campaigns to run, and much more.
Yet, you must also determine which efforts are working and which aren't.
It's enough to make your head spin, right?
But here is some good news: You don't have to guess your way through.
Above all, focusing on the right marketing metrics can help you convert confusion into clarity and achieve actual results.
With the above in mind, here are the five key marketing metrics that every small business must track to ensure their efforts are moving the needle and driving growth.
So, let's dive in.
1. Conversion Rate: The King of Metrics
If there's one metric you must pay attention to, it's your conversion rate.
But why?
Notably, it's the ultimate measure of whether or not your marketing efforts are working.
Specifically, your conversion rate tells you the percentage of people who take a desired action after interacting with your marketing campaigns—whether making a purchase, opting into your email list, or completing a contact form.
Think of it this way: Receiving thousands of visitors to your website is meaningless if that traffic isn't converting.
Above all, your conversion rate is like a report card for your marketing efforts.
Fortunately, calculating your conversion rate is pretty straightforward.
Simply divide the total number of conversions (actions taken) by the total number of visitors and multiply by 100.
For example, if 50 people out of 1,000 visitors make a purchase, your conversion rate is 5%.
However, don't just track your overall conversion rate—break it down by marketing channel.
Notably, doing so will give you insights into which channels deliver the most conversions so you can focus your efforts (and budget) on what works best.
2. Customer Acquisition Cost (CAC): How Much Are You Paying?
Let's talk about money—specifically, how much you spend to acquire a new customer.
By all means, your Customer Acquisition Cost (CAC) is a crucial metric that tells you exactly that.
That is to say; it's the total amount you spend on all marketing activities divided by the number of new customers you gain during a specific period.
To emphasize, determining your CAC is essential for understanding the profitability of your marketing efforts.
Above all, if your costs to acquire a customer exceed what you earn from them, that's a problem.
Instead, you want your CAC lower than your customer lifetime value (CLV) so that each acquisition results in profit.
With this in mind, to calculate your CAC, add up all your marketing and sales expenses—ads, salaries, software, etc.—and divide that by the number of new customers you acquired during that period.
For example, if you spent $10,000 on marketing last quarter and gained 100 new customers, your CAC is $100.
It is essential to remember that you must keep an eye on this metric over time.
Hence, an increasing CAC means your marketing campaigns are less efficient than they once were, meaning you may need to tweak your strategy.
3. Return on Investment (ROI): How Much Bang Are You Getting for Your Buck?
ROI is one of those metrics that makes every small business owner's ears perk up.
Why?
Because it tells you if your marketing efforts are making money or burning through it.
Considering this, ROI measures the return on your marketing investment relative to the cost.
In other words, how much money are you getting back for every dollar you spend on marketing?
If your ROI is positive, congrats—you're making money!
But if it's negative, that's a red flag.
Above all, understanding ROI helps you decide where to assign your marketing budget and which campaigns to double down on.
Moreover, the ROI formula is simple: (Revenue from marketing efforts - Marketing costs) / Marketing costs * 100.
So, if you spent $5,000 on a campaign that brought in $15,000 in sales, your ROI is 200%.
By all means, that's a pretty good return!
However, you should avoid looking at ROI in isolation.
Instead, consider it alongside metrics like CAC and CLV to get a complete picture of the profitability of your marketing campaigns.
4. Customer Lifetime Value (CLV): Playing the Long Game
While focusing on achieving quick wins in digital marketing is tempting, the real money lies in playing the long game.
Accordingly, that's where Customer Lifetime Value (CLV) comes in.
Considering the above, CLV estimates how much revenue a single customer will bring throughout their relationship with your business.
Additionally, knowing your CLV can help you make smarter decisions about your Customer Acquisition Cost (CAC) or how much you can spend to acquire new customers.
Notably, a high CLV means a customer is worth more to your business over time, which can support or justify a higher CAC.
Yet, CLV can be tricky to calculate since it involves predicting future customer behavior.
Regardless, the basic formula is as follows:
Average Purchase Value x Number of Purchases per Year x Average Customer Lifespan
For example, if a typical customer spends $200 per purchase, makes five purchases a year, and sticks around for two years, their CLV is $2,000.
With this in mind, you can increase your CLV by focusing on customer retention strategies—like loyalty programs, superior customer service, and upselling—to keep your customers returning for more.
5. Website Traffic Sources: Where Are Your Users Coming From?
Finally, let's talk about website traffic sources.
Notably, this stat tells you where your visitors are coming from—organic search, paid ads, social media, direct traffic, or referral links.
Above all, analyzing your traffic sources helps you see which marketing channels send the most visitors to your site.
It also gives you insights into which channels are underperforming and might need more attention or a different strategy.
To emphasize, Google Analytics is your best friend here.
That is to say; it breaks down your traffic into different channels so you can see exactly where your visitors are coming from.
Consequently, if you notice a spike in traffic from social media channels, for instance, it's a good sign that your social campaigns are working.
However, you can't simply look at traffic volume—consider the quality of that traffic.
Are visitors from a particular source more likely to convert?
If so, focus on that traffic source to bring in more high-quality traffic that leads to sales.
In Conclusion
There you have it—the five key marketing metrics for small business success.
By all means, focusing on these key indicators will help you gain clarity on what works and what doesn't so you can start seeing real, measurable growth in your small business.
So, given the points above, you are now ready to take control of your marketing metrics.
Get started today!
Hope this helps,
Erik
We implement creative, results-based digital and hybrid marketing strategies for local business clients.
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