Marketing metrics are essential for marketers to understand the effectiveness of their campaigns, however, not all marketing metrics should be treated the same. Per-post Facebook engagement gives us very different information than customer acquisition cost. We've outlined the top 6 marketing metrics that actually prove your ROI.
1. Customer Acquisition Cost (CAC)
This is used to determine the total average cost your company spends to acquire a new customer. It's important because it illustrates an exact dollar amount that your company is spending every time you get a new customer. A low CAC is desired, and if your CAC is increasing over time, it may indicate an issue with sales or marketing efficiency. This is particularly useful in outbound marketing and digital marketing!
2. Marketing % of CAC
This is the marketing portion of your total CAC, calculated as a percentage of the overall CAC. It's important because it shows you how your marketing teams performance and spending are impacting your overall CAC. An increase in Marketing % of CAC can mean:
- Your sales team may be underperforming
- Your marketing team is spending too much
- You are in an investment phase, spending a lot on marketing to provide higher quality leads
3. Ratio of Customer Lifetime Value to CAC
This metric is a way for companies to estimate the total value that your company derives from each customer compared with what you spent to acquire that customer. It's important because the higher the lifetime value (LTV) to CAC ratio, the more ROI your sales and marketing team is delivering to your bottom line. However, this metric shouldn't be too high, because you should always be investing into acquiring new customers.
4. Time to Payback CAC
This metric shows you the number of months it takes for your company to earn back the CAC it spent when acquiring customers. It's important because the lower this number is, the quicker your company becomes profitable off of your new customers. A general rule for businesses is to make each new customer profitable in less than a year.
5. Marketing Originated Customer %
This metric is a ratio that shows what new business is driven by marketing, by determining which portion of your total customer acquisitions directly originated from marketing efforts. It's important because it shows the direct impact your marketing team's lead generation efforts have on acquiring new customers.
6. Marketing Influenced Customer %
This metric takes into account all of the new customers that marketing interacted with while they were leads, anytime during the sales process. It's important because it accounts for the impact marketing has on a lead during their entire buying lifecycle. It can be used as an indicator of how effective your marketing is at generating new leads, nurturing existing ones, and helping sales close deals. It gives your boss a "big picture" overview of the overall impact marketing has on the entire sales process. (AKA, how important your job is!)
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