Let’s face it, we’re all accountable to our bosses. As a marketing professional, you want to look good in the eyes of your boss, right? Unfortunately, it’s not always easy to figure out what the boss expects or how to build credibility. Fortunately, the following six marketing metrics can help you crack that code as well as provide you with the insights you need to do an even better job.
- Customer Acquisition Costs – How much does it cost to acquire a new customer? This number is important! In order to determine customer acquisition costs, add up all sales and marketing costs for a given time period (month, quarter, or year) including advertising, overhead, salaries, bonuses, and commissions. Now, determine how many customers were acquired during that same time period. Divide your costs by the number of customers to come up with your customer acquisition cost.
- The Marketing Percentage of Customer Acquisition Costs – How much of your marketing budget goes toward customer acquisition costs? Deduct sales from the equation and express marketing’s portion as a percentage. Once you have a baseline, you can watch the percentage for signals. For example, if your percentage increases or decreases dramatically, you may want to investigate.
- Length of Time Required to Recoup Customer Acquisition Costs – In other words, how long until your newly acquired customer becomes profitable? For example, if it costs you $100 to acquire a new customer to a fitness center and the customer signs up for a $20 per month plan, it will take at least five full months before you recoup your costs. From that point forward, the customer will become profitable.
- Customer Lifetime Value – How much is each customer worth over time? For example, if the typical fitness center customer stays for an average of five years and spends $1,000 per year, the customer lifetime value would be $5,000 less acquisition costs. However, some customers will cancel which affects the entire customer pool’s CLV. To account for this, divide your initial figure by your customer churn rate. You can take this even further, and impress your boss even more, by calculating the ratio between customer lifetime value and customer acquisition costs. If you have a high customer lifetime value to customer acquisition cost ratio, this means that you have a higher return on your sales and marketing investments.
- Number of Customers Directly Acquired by Marketing – This metric and the next one can be used to show your boss how many customers the marketing department was responsible for acquiring or nurturing. While you may have a friendly, or not-so-friendly, rivalry with the sales department, marketing is often undervalued. By showing your boss exactly how many customers your team has brought in, your department may get more respect. If this metric increases, it means that marketing is driving more sales or that the sales team has become less effective at prospecting.
- Number of Customers Nurtured by Marketing – This metric shows the number of customers that your department helped at any point in the process. For example, the sales team may have been responsible for originating a lead; however, if that lead requests additional information by signing up for an autoresponder series, the marketing department becomes involved and helps nurture that lead from that point forward. Again, your department should be recognized for its contributions. If this metric increases, it means that marketing is influencing more leads.
Your boss may not know exactly what he or she expects as far as key marketing performance metrics go. By presenting these six marketing metrics, you can give your boss significant insights into your team’s productivity.