Marketing has shifted to a data-driven industry, powered by metrics like conversion rates, click-to-open percentages, SEO, and keyword analytics. How can you, as a marketer, take a step back and evaluate your Marketing effectiveness? L7 Creative has defined the Marketing Performance Report Card to help with this problem. Why do you need this? Marketing is always battling the presumption that it is a cost center and not a revenue driver. Don’t shoot yourself in the foot by focusing on engagement and brand awareness metrics rather than business metrics.

I’ve polled L7 Creative and developed the Top 6 metrics to use as your own personal marketing performance scorecard.

Customer Lifetime Value (CLV)

This forward-looking metric is a calculation in which businesses predict how much a customer will spend on a brand over the course of their engagement. It gives businesses and marketers a chance to see the full potential of their customers. Retaining and growing new customers is almost always the focus of sales but looking at this metric can be a telling story. It can serve as a catalyst to focus efforts in customer retention and customer loyalty.

Customer Lifetime Value (CLV) = Profit ($) * ( Retention (%) / (1+ Discount (%) – Retention (%))

For example, if the profit from your customer is $1,000 a year, your retention rate is 75%, and assume a discount rate of 2%. Your CLV would be $2,778.

Key Performance Indicators (KPI’s)

Knowing these crucial numbers prior to developing a campaign is imperative in determining what really matters to the business. Creating your KPI report will give a clear picture of the actions and tools of measurement used in progressing your marketing plan.

Examples of KPI’s are open rate, web traffic, average purchase value, etc.

Cost Per Lead (CPL)

This metric accounts for the costs necessary to acquire a lead. It is determined by dividing the amount of money spent on advertising by the number of submissions or CTA completions. The depth of this calculation usually excludes personnel, general and administrative expenses. Understanding the cost to acquire a lead is fundamental in assessing your marketing spend. Finding ways to lower CPL to the minimum level necessary is efficient, smart business and will increases your ROI.

Cost Per Lead ($) = Spent ($) / Leads Acquired (#)

For example, if your Billboard costs $5,000 and 5 leads were generated from your campaign specific tracking number, your Cost Per Lead would be $1,000.

Conversion Rate (CR)

Conversion rates can be defined a few different ways. At L7 Creative, we measure conversion rates by calculating the percent of users that complete a desired action (i.e. form submission, ecommerce purchase, info request, etc.). You can also measure conversion rate by the percentage of leads that turn into a customer but often times, that involves a sales process that is out of a marketers control. Measuring the conversion rate is a simple way of gauging the success of a single marketing campaign in a vacuum. Conversion rates can also help at the top of the funnel to influence bottom of the funnel metrics like Total Leads, Cost per Lead, etc.

Conversion Rate  = (Total Actions Taken / Total Number of Visitors) * 100%

For example, if 90 people submit a form submission on your landing page and there were 180 recorded visitors, you would have 50% conversion rate.

Cost to Acquire a Customer (CAC)

The amount of money necessary to gain a new customer.

Since there are many methods of acquiring a customer, understanding which options have lower costs associated with them, can help maximize revenue. The cost to acquire a customer should be used in comparison to the customer’s immediate value as well as in regards to the customer’s lifetime value.

Cost to Acquire a Customer  = Marketing Spend ($) / Total Customers Acquired (#)

For example, if you spent $20,000 on marketing in a given year and acquired 1,000 customers in that same year, your CAC would be $20.

Return on Investment (ROI)

There is no shortage of analytics to measure the effectiveness of a marketing campaign but this certainly trumps the rest. ROI is how marketers know their campaigns are yielding profitable results and how businesses know they’re effectively investing their marketing dollars. There are just too many options out there to be throwing money at marketing tactics that aren’t yielding results. We think this is the single biggest measure of effectiveness – the overall impact on revenue. Sure, happy customers and a clever idea feel good but ROI helps to prioritize opportunities. The result of positive revenue for your client will help you make smarter marketing decisions.

ROI (%) = Net Profit ($)¹ / Total Investment ($) * 100 (%)

¹ Net Profit = Gross Profit – Marketing Investment

For example, if your campaign costs you $50,000 and made you a $110,000 net profit, your ROI would be 220%. When compared to other campaigns, you’ll prioritize campaigns with higher ROI.

It’s important to note that in marketing there’s hardly ever just one chapter. There’s always a story to be told. With one single metric, you might miss the big picture but with too many metrics you can lose your focus. Decide for yourself what is important for your own personal report card and optimize your marketing plan based on metrics that make sense for you.

Did you find this useful? Read The 7 Principals of Digital Brand Engagement for more helpful tips on how to survive in the new era of Digital Brand Engagement.

Want to learn more about metric-centered marketing to achieve your goals? Let’s talk.

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