May 02, 2023
If you're into digital marketing, you probably know about Customer Acquisition Cost (CAC). But did you know there are other metrics to consider when optimizing your campaigns? 😳 Let's dive in and find out what other metrics can help improve your campaigns overall!
Before we get too far into the woods, let me give you a quick intro. Digital marketing metrics are basically numbers that help you see how well your digital campaigns and marketing channels are working.
They show you how successful your marketing efforts are at motivating people to take actions that are valuable 👏.
There are different categories of marketing metrics to look at:
We chatted with some performance marketing leaders worldwide to see how they look at their marketing campaigns and what metrics they care about.
Here is a summary of the key metrics they consider a MUST for every business.🔥
CAC is a key indicator of the success of your marketing and the performance of your sales campaign. In fact, it is one of the most important metrics marketers can measure!
It refers to the amount of money a company invests in obtaining a new customer.
It is calculated by summing up the investments made in marketing and sales and dividing by the number of customers gained in the same period.
Measuring your CAC accurately is essential to determine if your investment in customer growth is generating an adequate return for your company.
CAC = Total Marketing + Sales spend / Total number of New Customers
According to Hubspot, the value of your customers should be three times the cost of acquiring them, as it should take roughly one year to recoup the cost of customer acquisition, which implies an LTV: CAC ratio of 3:1.
CPL (aka PPL) is a metric that tells us the amount invested in marketing campaigns to capture leads. It is used to determine the profitability of the marketing investments made to capture potential customers.
Let’s recap: in marketing, a "lead" is considered a potential customer of a product or service that we offer, in which they have shown interest and have left certain information to learn more about our product or service.
You can calculate the CPL from each channel by calculating the amount spent on each channel and dividing it by the leads generated on that channel.
CPL = Total spend in Marketing / Total number of New Leads
You should keep in mind that a lead will cost more the higher the ROI (Return On Investment), while a lower ROI means you will pay less for leads.
We cannot offer you a range of this cost, but to give some perspective, here is a table with the Projected 2023 Average Cost Per Lead By Channel.
This metric shows the relationship between the number of users who visit a website and the number of users who end up converting.
The higher your conversion rate, the more effective your content and marketing campaigns are!
Conversion rate accurately measures the result of your website strategy and helps you understand where to make improvements.
You can calculate the general conversion rate, or you can look at the conversion rate per campaign, channel, or landing page.
Conversion Rate = number of Total Conversions / number of Total Visits
Generally, a good conversion rate is greater than 10%, and while this number varies by industry and channel, on average, only a small percentage of businesses achieve 11.45%.
These conversion rate statistics are based on a Popupsmart study.
There is no need to explain much about this metric, as it’s pretty self-explanatory… It is used to calculate total sales (what a surprise!).
It’s important to note that we can differentiate between net and gross sales. Net sales include discounts, products, or damaged products, and it’s usually a more accurate measurement, while total gross sales has no deductions.
This metric refers to the percentage of sales that come from marketing actions.
It is one of the most difficult metrics to calculate since it is difficult to determine the original source of the contact every time, but an estimate will help us evaluate our marketing efforts. Also, determining this usually causes discussion (and potential headaches) with sales departments.
It’s important to identify the most important actions of value and be aligned with the rest of your team, including sales!
You can also evaluate how many of these contacts come from marketing actions and how many have been influenced by marketing campaigns, which could be differentiated as 1) main source marketing or 2) last source marketing.
MRR is the sum of all payments received by a company on a monthly basis, and it is calculated by the relationship between the purchase of products or services and the amount paid each month.
This metric is used, of course, in subscription-based products or services! If not here, you could take a look at the average sales ticket.
MRR = sum of Monthly Recurring amounts for all Customers
This metric measures the number of customers or subscribers who have stopped following a company or stopped paying a subscription over a period of time.
It is one of the most important metrics to have at hand because it illustrates the level of satisfaction of your customers. Also, losing clients means losing money. Also, it is easier to make sales with a current client than with a new one. That’s just basic business.
Churn Rate = Subscribers Lost in a month / Total Subscribers at the beginning of the same month
There is no ideal churn rate, however, the lower the rate, the less money spent on acquiring new customers. It varies according to whether revenue lost from customers or other sources is used to calculate it.
Generally speaking, a rate between 5% and 7% annually can be considered good if you're basing your calculations on customers.
This metric indicates the total revenue a company can expect to earn from a customer. It takes a customer's revenue into account and compares it to the company's expected customer lifetime, i.e., how long we expect you will continue to pay for our service if it is recurring.
Some companies distinguish between Customer Lifetime Value (CLV) and LTV. LTV would only refer to the average customer lifetime value across the entire customer base, whereas CLV refers to the lifetime value of an individual account.
LTV = Average Spend x Acquisition Cost x Life of the Customer
As mentioned in the CAC definition, your Customer Lifetime Value should be at least three times greater than your Customer Acquisition Cost (CAC). If you're spending $10 on marketing to acquire a new customer, that customer should have an LTV of at least $30.
This metric lets you know how much money the company loses or earns with the applications made on different channels.
This way, you can know which investments are worthwhile and how to optimize those that are already working, so that they have even better performance.
ROI = (Total Profit ⏤ Costs) x 100 / Costs
The industry standard for marketing ROI is a 5:1 ratio, with exceptional ROI around a 10:1 ratio. Anything below a 2:1 ratio is considered unprofitable.
Related to the ROI, we can find other metrics:
An impression is a metric to calculate the number of times the content appeared in someone's news feed on social media, on the search results page of a search engine, or on another site (within the Google Network, for example).
Normally, this is calculated for a particular campaign or group of ads.
Impressions are a key metric, as they measure how often ads or other content are served. If you want to increase brand recognition, this is the metric you need to be looking at. However, you need to take into account that a viewer does not have to interact with the post (or necessarily even see it) for this to count as an impression.
This measures the size of the audience that has seen your ads or your campaign content.
The main difference between reach and impressions is that while reach is the measure of the audience for your ads, impressions measure the frequency with which they are shown. This means that impressions can be much higher than your reach, as an ad can be shown multiple times to consumers.
To add another metric that may be relevant, frequency is the minimum number of times a unique user saw your ad during a given period.
CTR is a metric related to digital marketing campaigns; it’s the number of clicks a link gets in relation to its number of impressions.
It is always calculated as a percentage, and it is a metric used to measure the impact of a digital marketing campaign.
CTR = number of Clicks / number of Impressions x 100
The average CTR for search ads is around 1.91%, compared to 0.35% for display ads. You can find other rates based on the industry or channel used here.
This metric determines how much advertisers pay for the ads they place on websites or social networks, based on the number of clicks the ad receives.
Your ideal CPC is determined by your target ROI. As we mentioned above, normally a 5:1 revenue-to-ad ratio is considered acceptable. This means for every dollar spent on advertising, five dollars in revenue should be produced.
CPC = total Cost of Clicks / total Clicks
This metric measures the price of an ad per 1,000 impressions or views. It is used to evaluate the profitability of ads and bill them accordingly.
CPM = Ad Price / Reach x 1000
Google search ads' average CPM is $38.40, while Google display network ads have an average CPM of $3.12.
This is a bidding method for video campaigns where you pay per view.
A "view" is equivalent to watching 30 seconds or more of a video ad or interacting with this video, whichever comes first.
CPV = Total Ad Cost / number of Views
The medium CPA can vary by industry and channel, but the average CPA for pay-per-click (PPC) search (across all industries) is $59.18 while the CPA for display (also across all industries) is just slightly higher at $60.76.
This metric is highly dependent on the type of content and the channel. It measures the degree of engagement, and the level of interaction of the audience, with the content published by a brand.
Here we could talk about metrics such as pages viewed by users, time spent on a website, comments on a post, or the number of subscribers... On Twitter, for example, it would be replies, retweets, and shares. On Facebook and Instagram, you can take into consideration likes and comments, and on email marketing campaigns, it could be the Open Rate, percentage of unsubscribers, or bounce rates.
We hope you found these digital marketing metrics helpful, and we tried to be inclusive of all possible metrics to measure⚡️. Having said that, do you have any other, more relevant metrics to add? Shoot us an email at 📨firstname.lastname@example.org