Four Basic Marketing Metrics


Nov 22, 2014

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What To Look For

Every marketer needs to know how to measure his results. With the amount of time and resources business spend on digital marketing, it would be good for owners and marketers alike to know what to look for when it comes to marketing metrics.

Here are some of the basic and fundamental metrics businesses should use to measure the effectiveness of their marketing efforts.

ROI, ROMI

ROI – Return on Investment

In its most basic form, ROI is how much you gain less how much you spent. Internet educator Boundless defines ROI as “the dollar return of the investment divided by the initial value.” This is a simple formula to execute, but difficult to populate.

The formula is simple. Just take your net profit minus your cost of investment that that will equal your ROI.

ROI

ROMI – Return on Marketing Investment

ROMI is similar to ROI, the difference is that this metric is measured more frequently and is specifically tailored towards marketing efforts.

So say you spent $1,000 a month for social media enhancement and made sales from PPC campaigns equalling $5,000, that would mean you you had a 80 percent ROMI (5,000-1,000/5,000).

Customer Acquisition Cost

This is another important tool for businesses to understand how effective their marketing efforts are at getting new clients.

The formula is to take your total costs (sales costs, marketing cost, etc) and divide that number by you total new customers. Say we spent $1,000 on marketing and another $1,700 on sales costs and acquired 30 new customers. That means that each customer cost us an average of $77 to acquire ($2,700/30 = $77).

Average Lead Close Rate

It’s also good to know how effective your marketing is. You need to understand if your leads are turning into new customers.

Here’s the formula:

average-lead-close-rate

So say you had 40 new customers in the month of June but had 100 leads. Your average lead close rate would be 40 percent. (40/100 = .40).

Lifetime Value of a Customer/Client

This may be the most underutilized metric businesses have at their fingertips. This metric allows you to see a rough representation of how much money each of your clients will contribute in sales over the lifetime of that client.

So say you make an average of $250,000 a year with the 50 clients you work with. That would mean the average revenue each client brings in each year is about $5,000.

Now calculate that client’s average lifespan and multiply that by our $5,000 figure about. Say in your industry your clients stay with you for an average of 6 years. That would mean that client will generate about $30,000 for you over their lifetime.

This is valuable information for marketing and business owners alike. If you can know who will bring in the most money, you can better target your marketing to those types of industries.

So to recap, here’s the formula:

lifetime-value

We hope you’ll use these tools to generate more profits for your company. If you need someone to manage your marketing efforts, you’ve come to the right place. Click here to learn more about what we do for you.


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