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The most Important marketing metrics

You need metrics to analyze your actions and your business, evaluate marketing effectiveness, set goals, and increase profits in the end. A good marketer must understand metrics, be able to prioritize them properly and react correctly to their values.

You see, there are a lot of metrics. However, I would like to tell you about just a few of them that I consider important.

How to measure marketing metrics correctly 

There are two main tips. Make metrics calculation a daily routine and teach your team to do the same. It is better to calculate metrics separately for each traffic channel.

The goal of this post

The goal of this post is as simple as ABC. I want to share those metrics that I consider tremendously important for marketing, regardless of online business type. Metrics are very flexible, and they fit everywhere. Moreover, you can customize them for yourself. 

I want to draw your attention to this topic. Talking to many Junior/Middle specialists, I realize that most of them have a poor understanding of business metrics and numbers. However, metrics show your efficiency. It is the best feedback about your team’s work and evaluation of your strategy’s effectiveness. You shouldn’t do something just for doing something. Before implementing any idea or strategic plan, it is better to think about how you will evaluate the result, and, therefore, find a metric.

Top-7 Vital Marketing Metrics

  1. ROMI — Return On Marketing Investment

This metric shows in percentages what the return on marketing investment will be. If your business has early sales and repeat sales (or deposits), I advise you to calculate ROMI separately for the early sales.

You should always evaluate your marketing efforts based on the first customers. I mean their quantity and your profit. After all, the generation of early sales and new customers is always the key goal of marketing itself. Everything else mostly depends on the product and many other factors. Moreover, I advise you to calculate ROI. The difference between ROI and ROMI is only in items included in the costs. Traditionally, you should factor all investments (expenses) to calculate ROI. These are payroll, software, and marketing costs. There are some exceptions, for example, overhead expenses, such as a space lease. To calculate ROMI, you should take into account only marketing costs, such as expenses on content, links, advertising on Instagram, and collaboration with a social media influencer.

ROMI formula: (gross profit – marketing expenses)*100%.

  1. LTV — Lifetime value

It is the queen among product metrics. This metric shows the profit an average user generates for you during the entire time of interaction with your product, app, casino, store, etc. Now I am going to give you some recommendations. You should calculate LTV based on gross profit rather than income. You need to calculate LTV over a certain time span and use cohort analysis. The standard parameters for cohort analysis are the time when the client came, their source, geolocation, and device. Overall, I can write a whole post about LTV and even more than one. I advise you to google this topic in detail, read articles, and watch videos about LTV. As for affiliates working under the Revenue share model, I can recommend dealing only with those products, stores, and companies where you have traffic with a high LTV.

LTV formula: I’d rather make a separate post about it.

  1. CAC — the Customer Acquisition Cost metric should always stand next to LTV

CAC is also called a startup killer. It stands for customer acquisition costs. Everything is simple here: your CAC value should be smaller than LTV. To calculate CAC, you should take all your expenses associated with sales and marketing for a given period, including salaries and other personnel-related costs, and divide it by the number of customers gained during that period. Or, to begin with, you can take at least marketing costs for a certain traffic channel to estimate how much a customer from a particular channel costs you. However, this indicator may not be accurate because, after all, not only marketing turns a user into a client. Moreover, not only the marketing budget is spent on conversions. Below, you will find a simpler metric for this. 

CAC formula: Total expenses/number of acquired customers.

  1. CPA — Cost per Action

It is you who should define the necessary action or conversion. It can be registration, filling out a form, or purchasing. In the same way, you should divide everything spent by the number of those actions. You need to calculate it for each traffic source separately and in total. You can call it CPO (cost per order), but it’s just a name. I want to emphasize once again that CPA is a vital marketing metric because the key marketing task is mostly to attract a person to a product. Of course, a user can make a decision based on what marketing tells him/her about the product. However, everything is complicated here, and much depends on how a company runs the show.

CPA formula: All costs/number of conversions

  1. Income from each source

I wasn’t going to tell you about this metric because, to my mind, everything is clear here. However, I decided to list it out anyway. You need to understand how much money this or that source brings you.

If your product or the product you work with has repeat sales, you should always calculate these profits separately.

Early sales are the “sacred cow” of marketing.

Repeat sales are the “sacred cow” of the overall product/business/company.

  1. Conversion funnel 

If you don’t measure it, it can be an issue because this is where growth points, bottlenecks, or problems that prevent income growth are most often found.

For example, your funnel looks like this:

  1. The user lands on the site.
  2. The user clicks the button/CTA element and switches to the registration page.
  3. The user signs up.
  4. The user makes a purchase/places a deposit/replenishes the balance.
  5. The user gives/leaves feedback.

It is an example of a very simple funnel. If you have an e-commerce platform, it can be a little more complicated or, on the contrary, even simpler. The point is that you should track each stage of your funnel and, of course, explore each traffic source separately, with the option to view it page by page. After all, conversion differs significantly depending on the traffic. Classically, you can get the best conversion from PPC and SEO traffic. However, SMM prevails in some niches. That’s why separate landing pages are usually made for traffic from different sources.

  1. AOV — Average Order Value 

This is the sum of all orders/their quantity ratio. It serves as an additional tool for the evaluation of advertising campaigns, clusters, or audiences. Moreover, AOV will be useful in pricing and creating an offer. In no case should you think it is always cool when the average ticket is higher. It does not always work that way. The average ticket may be higher, but the sales number is lower. That’s why I say that it is an additional tool for evaluation. The average ticket may vary depending on the traffic source.  

That’s all. I hope it was useful.