Man, do I have a closet full of hats, both literally and figuratively. I counsel clients with SME Digital and I run a startup called CredHive. I have written post after post challenging marketers to measure, and how the act of measuring alone is a magic bullet. But that’s only part of the story. It’s one thing to measure, but it is another thing to measure what’s really important. And through my work with both SME Digital and CredHive, I can tell you that there are only four metrics that matter. And four of them are aligned with what the C-suite is looking for. These metrics will put you in a position to growth hack yourself where you need to be and will point out any problems you may have in your products, services, or brand.
The rate in which you acquire and convert customers is critical to me. It can give cursory validation to messaging and, in some instances, the product, services, or idea itself. Look at the number of people who visit your site; if you can convert 3% of them, you’re doing an average job. The better the conversion rate, the better (obviously). The conversion rate is a good measuring stick to what’s performing well and not so well on your site. But, it is cursory, something that you can dive deeper into to find ways to improve the overall experience on your site to drive conversion. Conversion rate can also be a good predictor when buying media, knowing you’ll need a specific number of impressions to generate an average conversion to a sale.
Cost per acquisition
This is the #1 thing your CEO cares about: cost per acquisition. It is how much it costs you to acquire the sale. CPA is a great way to predict spend based on your funnel. If we know that acquiring a customer is $20 or $2, we can plan for that. We can also look at how that trends over time. Is it becoming more or less expensive to acquire a sale? Why? This all-important metric is valuable to you in budgeting and in predicting outcomes.
“What was the return on our investment in terms of sales?” Answer this question and you will win big points with leaders in the c-suite. Marketing is responsible for the company’s growth, and yet we are viewed as a cost center. This tells me that the ROI conversation is not happening nearly enough. We should know what our marketing dollars generated in terms of sales. We need to stop being viewed as a cost center and start being viewed as a profit center; we can only get there by focusing on ROI. What’s delivering positive ROI, and how can we replicate those efforts? Better yet, make them even more efficient.
Lifetime Customer Value
If we want to really knock their socks off, we will know who our best customers are in terms of lifetime customer value. Roughly defined, Lifetime Customer Value is the projected revenue that a customer will generate during their lifetime. This helps you see the potential of each customer. By studying this metric hard, you can see how your products and service offerings can increase or decrease this number.
The other stuff
Agencies and consultancies love to create new metrics to prove that what they are doing is working. While some of them are nice key performance indicators of a program, they are not what will drive your career forward as an ROI marketer. And trust me, being an ROI marketer is the way forward as a career trajectory. So try not to sweat too hard over stuff like engagement, share of voice, traffic, uniques, time on site, bounce rate, and so on. I am not saying that these metrics are not important; what I am saying is that they are less important when wearing the ROI marketer hat.
Without a doubt, there will be comments talking about cost per lead and source. Cost per lead is important, but not as important as cost per acquisition. Track it, but be sure that it aligns with the cost per acquisition metric. As for source, I do not believe in last touch or first-touch attribution models. Until we can tell our leadership how our omni-channel efforts affect a sale, I do not think source should make this list.
Having seen all kinds of metrics in all of my jobs, wearing all of my hats, the only ones I report to my leadership are the ones listed above. They tell me everything I need to know about the health of my marketing work. Here’s to streamlining those reports!