The modern business environment is extremely competitive, to put it mildly, as customers nowadays can pick and choose their favorite brands from a rich pool of reputable companies, one of which is you. Aside from the fact that you need to have an amazing brand identity in place to separate you from the competition, it’s imperative that you start basing all of your business decisions on relevant, actionable, and verified data and industry insights. If you don’t act on data but instead follow your instincts (no matter how refined they may be), you are invariably exposing your company to risks, and one way or another, something will slip through the cracks. Here we introduce 5 key metrics to help along your journey.
Actionable data allows you to prioritize your business goals, streamline workflow, manage your financial resources wisely, and drive innovation in the right direction so that you can always stay one step ahead of your competitors. So, let’s break all of this down into the most important business 5 key metrics you need to keep track of in order to successfully execute your growth strategy.
5 Key Metrics
Customer acquisition cost
Do you know how much money you’re actually spending on every new lead that you manage to convert? How much does it cost your company to reel someone in, nurture them until they take an actual interest in your products or services, and then incentivize them to make a purchase? We are not talking about a one-time deal, no, we are talking about transforming a lead into a long-term customer. As you might have guessed, the customer acquisition cost is one of the most important metrics every growth-oriented company needs to tack, because it can influence your future in a big way.
It’s no secret that customer acquisition is much more expensive than customer retention, which is why you need to use this data to figure out where you’re losing money during this process, and how you can better your retention strategy as a whole. When you compare it with your retention rate, you can see where your customer acquisition strategy is failing, and what you need to improve.
Average customer retention rate
The next important metric you should always keep an eye on is customer retention. This metric tells you two very important things: the percentage of customers that stay with you to become loyal brand followers, and the percentage of customers that leave you in a predefined time frame. The average customer retention rate is especially important to companies that operate on a subscription-based business model because you need your customers to keep renewing their packages in order to build brand trust and authority and to maintain strong cash flow.
Of course, the goal here is to maximize retention and to minimize your churn rate, and you can use technology and dedicated software solutions to quickly calculate how many people are staying and how many have left you in a given time period.
Digital marketing metrics
Digital marketing encompasses numerous important tactics, all of which can have numerous metrics, which means that we can’t just list a single metric. What’s more, because digital marketing produces large volumes of data, it’s important to leverage comprehensive reporting software that allows you to manage all of your reporting channels with ease, and organize all data on a centralized platform in order to produce truly actionable reports. These reports will help you improve your marketing campaigns and minimize expenditure.
Some of the most important marketing metrics include website traffic, channel-specific traffic, conversions, website bounce rate, search trends, brand visibility, trust, and sentiment, landing page conversions, CTR, traffic by source, new vs returning visitors, most visited pages and dwell time, email open rate, and the overall campaign ROI. It’s a lot, yes, but these metrics are necessary nonetheless if you are to make better marketing decisions in the future.
Customer lifetime value/revenue
It’s important to generate repeat business, and it’s imperative to build loyalty, but you also need to keep in mind that not all loyal customers will benefit your business in the same way. This is why you need to calculate your customer lifetime value (also known as customer lifetime revenue), which measures the revenue generated from long-term customers.
This is not a metric that you can easily keep track of in those early stages after conversion, but if you give it time, you will start accumulating customer data that will allow you to extrapolate certain findings about their lifetime value potential. You can then use that metric to upsell to customers, incentivize them to buy more products and services, get them on a better plan, and it will help you figure out how much you can actually spend on customer acquisition.
Break-even point per quarter
Finally, you should always know where your break-even point lies. This is not the same as the break-even point for a company that is just starting out, this is a metric that you need to track continuously in order to manage your finances more prudently, and prepare for each quarter. You can also calculate your break-even point on an annual basis, but that leaves you open to risks should the market make a dramatic shift before the end of the year. Knowing your break-even point for every quarter will let you prioritize goals, allocate resources wisely, and prepare for every eventuality.
Every good business decision is rooted in verifiable data, and although it might sound a bit drab, that means that you need to start making some serious graphs and pie charts if you want to grow your business. Be sure to follow these metrics and you should have no problem setting yourself up for success in the years to come.
Jolene Rutherford is a marketing specialist - turned blogger, currently writing for technivorz.com. Interested in digital marketing and new technology trends. Love sharing content that can help people.