At BosonHub, we’re passionate about helping businesses make data-driven marketing decisions. In this guest post, Chris Bretschger from Bastion Agency shares insights on key metrics that shape successful campaigns
Planning and executing marketing campaigns is a critical element of business development. Not only do these initiatives help connect with potential and current customers directly, but they can also be a great way to ensure a healthy return on investment in products and services.
However, to ensure the business achieves more positive returns over time, it’s essential to have methods for extracting valuable data insights. Collecting and analyzing customer data over time helps businesses understand what’s working and what isn’t, allowing them to redirect their resources effectively.
Below, we’ll focus on the most important data metrics you can focus on to ensure your marketing campaigns are delivering long-term value to the business.
Customer Lifetime Value (CLV)
Your customer lifetime value (CLV) is a metric that helps you quantify the total contribution your customers make to your revenue streams over time.
CLV is a good metric to use when filtering your data down to understand who your most active and profitable customers are. Averaging out these customers can help you establish essential benchmarks you can use to create a reasonable budget when considering the amount you’ll spend to acquire new customers.
Having your CLV established not only makes sure you’re putting enough funds in place to keep the largest paying customers happy, but also makes it easier to plan for future expansion.
Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) indicates the average expense incurred by a business to acquire a new customer. This is calculated by factoring in all your paid advertising and other associated costs necessary to successfully convert a sale.
CAC is another critical metric to track, as it can help you ensure your marketing efforts remain as efficient as possible. You can compare the costs between one channel and the next and the overall success they bring, as well as accurately calculate the net profitability of each sale you make.
Combining this metric with your CLV also gives you a more complete picture of how long it will take for a customer’s value to cover the cost of their acquisition.
Conversion Rate
Conversion rates can be measured in various ways and are crucial in gauging your effectiveness in guiding individuals to take specific actions. Some of these actions could include signing up for a newsletter, filling out a contact form, downloading whitepapers, or making a purchase.
Part of measuring your conversion rate accurately is thoroughly tracking how customers interact with various page elements on your site and tracking their behaviors. This is critical to understand what site elements or other marketing initiatives lead to the highest percentage of actions being taken.
Understanding your business’s average conversion rates is also important to make sure you’re seeing adequate returns on investment, often when carrying out pay-per-click campaigns.
Return on Ad Spend (ROAS)
Your business’s ROAS, or Return on Ad Spend, tells you the exact dollar amounts that you put toward paid advertisements in relation to how much money you gain in return. This can be a highly granular metric that not only tells you which PPC advertising campaigns are most profitable, but even which keywords or phrases are bringing you the best returns.
The goal is to maximize your ROAS while leveraging the sell-through data to optimize it going forward. You can examine your past purchase history, in addition to your conversion rates, to help piece together this puzzle and enable your teams to make smarter decisions regarding spend.
Cost Per Lead (CPL)
Cost per lead (CPL) refers to the amount of investment it takes to bring in new leads to your business. Knowing this metric is important, since the more leads the business is able to bring in, the higher the percentage chance it has of converting leads to sources of revenue.
Analyzing the sources that introduce new leads to the business and recognizing the associated costs can help businesses fine-tune their campaigns to maximize their impact.
Trying to lower CPL as much as possible, especially when the leads acquired are higher quality, helps to not only reduce overall marketing spend but also reduce the amount of workload necessary for sales teams to close more business. This reduces the acquisition cycle and helps the business achieve more success in less time.
Customer Retention Rate (CRR) and Churn Rate
Knowing how easy or difficult it is to keep your customers is critical to helping you create more sustainable revenue sources. Part of understanding how effective your customer retention rate (CRR) is is to first calculate your churn rate.
The churn rate is calculated as the percentage of customers who decide to stop making purchases within a certain period of time. Once this percentage is factored in, you’re then able to see how your CRR measures against those losses.
Focusing on retention is one of the most cost-effective things you can do. It’s far cheaper to keep an existing customer happy than it is to acquire a new one. By using your data to identify where churn can be taking place and invest in public relations and other relationship-building processes, you’ll be able to help reduce unnecessary customer losses.
Purchase Frequency and Consistency
Knowing how consistent custom purchases are, their relative frequency is highly valuable. It allows you to create more customized marketing strategies while also keeping them perfectly timed and personal. Instead of guessing when to reach out, you can connect with customers right when they are most likely to require your business’s services.
Restaurant marketing is one area where this approach really excels. If you know that certain guests visit the restaurant at a certain cadence and have a preference for certain menu items, you can send them discounts or other incentives timed around when they’re likely to visit. This can help lead to higher-value orders and make their experience feel more personalized.
Use the Right Metrics to Help Drive Business Growth
Taking a closer look at your business data can provide you with invaluable insights into how to enhance your marketing campaigns. By focusing on the metrics discussed, you’ll be able to make smarter data-driven decisions that can help you grow the business effectively.
Author Information
Chris Bretschger, Managing Partner at Bastion Agency, is a seasoned marketer with over 20 years of experience in integrated marketing. He has developed brand strategies, managed media campaigns, and built analytics tools for clients like Mazda, Adidas, Jenny Craig, and Kia. When not leading Bastion, Chris enjoys superyacht regatta racing on the open seas.
Chris Bretschger, Managing Partner at Bastion Agency, guest contributor on BosonHub.
Want to turn these metrics into action? Explore BosonHub’s marketing automation services here.
