Marketing metrics to grow your business

My previous article I wrote about headwinds ahead of SMB’s and Medium sized Enterprises.?

In this article I want to recommend important metrics every technologist and Marketer should measure to drive growth in their business.?

Over the years I had the privilege to support several great CMO’s and CEO’s. I want to share some of my learnings.?

1.0 Define growth metrics that matter to your stakeholders and your business?

Acquisition Metrics:

Website Traffic

Tracks the number of visitors to your website over a given period. Tracking your website traffic can help you understand how effective your marketing efforts are in driving visitors to your site. Additionally, it can also provide insights into the sources of your traffic, such as organic search, social media, or referral traffic.

Cost Per Click (CPC)

Is a metric that measures how much it costs to get someone to click on one of your ads. This metric is particularly useful for paid advertising campaigns, such as Google AdWords or Facebook Ads. By tracking CPC, you can evaluate the effectiveness of your ad campaigns and optimize your ad spend to drive more clicks and conversions at a lower cost.

Customer Acquisition Cost (CAC)

measures the cost of acquiring a new customer. It includes all of the expenses associated with acquiring a customer, such as marketing and advertising costs, sales commissions, and salaries for employees

involved in the acquisition process. By tracking CAC, you can evaluate the effectiveness and efficiency of your customer acquisition efforts. A low CAC is an indicator of a healthy acquisition process, whereas a high CAC may suggest that your acquisition strategies need improvement.

CAC = Total cost of acquisition / Number of new customers acquired

is critical to acquisition. It measures the percentage of visitors to your site who take a desired action, such as filling out a form, making a purchase, or subscribing to a newsletter. Tracking conversion rates can help you understand how well your marketing efforts are working to convert visitors into customers. By optimizing your conversion rate, you can drive more revenue and improve your return on investment (ROI).

Conversion Rate = (Number of conversions / Number of visitors) x 100

Activation Metrics:

Activation metrics are the set of growth marketing key metrics that measure the effectiveness of your onboarding process in converting sign-ups into active users. These metrics provide insights into how well you are engaging with your users and delivering value to them. By tracking activation metrics, you can optimize your onboarding process to increase user engagement, retention, and revenue.

Sign-up Rate

Sign-Up Rate The sign-up rate measures the percentage of visitors who sign up for your product or service. This metric is particularly relevant for businesses that offer a free trial or freemium model. Tracking sign-up rates can help you evaluate the effectiveness of your sign-up process and identify areas for improvement.

Sign-up Rate: (Number of sign-ups / Total number of visitors) x 100

Onboarding Completion Rate

Onboarding Completion Rate The onboarding completion rate measures the percentage of users who complete the onboarding process after signing up. This metric is critical for understanding how well your onboarding process is working, how well you introduce users to your product or service, and how you help them get started. By optimizing your onboarding process, you can increase the likelihood of users becoming active and engaged.

Activation Rate

Activation Rate The activation rate measures the percentage of users who become active after completing the onboarding process. This metric is the most critical activation metric since it directly measures the effectiveness of your onboarding process in converting sign-ups into active users. By tracking the activation rate, you can gain insights into how well your product or service is delivering value to users and identify opportunities for improvement.

Activation Rate = (Number of active users / Number of users who complete onboarding) x 100

Retention Metrics:

Retention Metrics are the set of growth marketing key metrics that measure the ability of your product or service to retain customers over time. These metrics provide insights into how well you are engaging with your customers, delivering value, and building loyalty. By tracking retention metrics, you can identify opportunities to improve customer retention, reduce churn, and increase revenue.

User Engagement:

User engagement measures how often and how deeply customers interact with your product or service. This metric is critical for understanding how well your product or service is delivering value to customers and whether they are likely to continue using it over time. By tracking user engagement, you can identify areas for improvement and optimize your product or service to increase customer retention.

User Engagement Formula:

User Engagement = (Total Number of Active Users / Total Number of Registered Users) x 100

Churn Rate:

The churn rate measures the percentage of customers who discontinue using your product or service over a given period. This metric is critical for understanding how well your product or service is meeting customer needs and whether you are delivering value. By tracking the churn rate, you can identify areas for improvement and take corrective actions to reduce churn and improve customer retention.

Churn Rate Formula: Churn Rate = (Number of Customers Lost / Total Number of Customers) x 100

Customer Lifetime Value (CLV):

Customer lifetime value measures the total amount of revenue that a customer generates for your business over the entire duration of their relationship with your company. This metric is critical for understanding the long-term value of your customer base and identifying opportunities to increase customer retention and revenue.

CLV Formula: CLV = Average Revenue per Customer / Churn Rate

Repeat Purchase:

Repeat purchase measures the percentage of customers who make multiple purchases from your business over time. This metric is a leading indicator of customer loyalty and satisfaction. By tracking repeat purchases, you can gain insights into how well your product or service is delivering ongoing value to users and identify areas for improvement.

Repeat Purchase Formula:

Repeat purchase = Number of customers who make repeat purchases / Total number of customers

Revenue Metrics:

Average Revenue Per User (ARPU)

ARPU measures the average amount of revenue generated by each customer over a given period.

This metric is critical for understanding the value of your customer base and identifying opportunities to increase revenue.

ARPU = Total Revenue / Total Number of Customers

Monthly Recurring Revenue (MRR)

MRR measures the amount of revenue that your business generates from recurring subscriptions or contracts on a monthly basis. This metric is critical for understanding the stability and predictability of your revenue streams.

MRR = Total Monthly Subscription Revenue + Total Monthly Contract Revenue

Gross Revenue

Gross Revenue Gross revenue measures the total amount of revenue

generated by your business over a given period. This metric is critical

for understanding the overall financial performance of your business

and identifying opportunities to increase revenue.

Gross Revenue = Total Sales Revenue – Cost of Goods Sold (COGS)

Referral Metrics:

Referral metrics measure how effectively your business is leveraging word-of-mouth marketing to acquire new customers. These metrics provide insights into how satisfied your customers are with your product or service and how likely they are to refer others to your business. By tracking referral metrics, you can identify opportunities to increase customer satisfaction, improve your product or service, and drive growth through word-of-mouth marketing.

Net Promoter Score (NPS)

Net Promoter Score (NPS) NPS measures how likely your customers are to recommend your product or service to others on a scale of 0-10. This metric is critical for understanding customer satisfaction and identifying opportunities to improve your product or service.

NPS = % Promoters – % Detractors

Referral Rate

The referral rate measures the percentage of new customers that come from referrals. This metric is critical for understanding the effectiveness of your word-of-mouth marketing efforts and identifying opportunities to increase referrals.

Referral Rate = (Number of New Customers from Referrals / Total Number of New Customers) x 100

E-commerce Important Metric:

Shopping Cart Abandonment Rate

The shopping cart abandonment rate measures the percentage of visitors who add items to their shopping cart but leave before completing the purchase.?

Shopping Cart Abandonment Rate = 1 – (Number of Completed Purchases / Number of Shopping Carts Created) x 100

2.0 Document definitions and calculations. Align those with your stakeholders. Champion those across the company.?

Having standardized, defined and aligned metrics across the org - breaks organizational silos in making decisions and allows one to improve these metrics.?

Document definitions and calculations to begin with in a spreadsheet.?

3.0 Govern these metrics and iterate through change management

Create a lean data governance team that represents all parts of the business and organization. Make sure you have executive sponsorship and an executive championing this team or committee.?

Once you have the 1.0 version documented in a spreadsheet, use a data cataloging solution to ensure these definitions and calculations are governed. We have implemented several in the past. Few being Alation, AWS Data Catalog and Databricks Unity Catalog. Big fan of Databricks Unity Catalog, because of the model governance features it offers. Will write about it in future posts.?

4.0 Data Analytics, Dashboards, Reports

I sincerely empathize with Marketing teams. Daily pressure to optimize metrics, managing diverse marketing channels, publishing metrics/KPIs through dashboards and reports are continuous work streams that small Marketing teams are burdened with.?

Dealing with bad quality data, reports at times running late, CMO needing to present numbers continues to be part of the daily job.?

I would strongly recommend investing in a Data & AI platform which collects data from all marketing channels, does data quality and cleansing using AI. To create customer centric view of these metrics, data is gathered from a diverse set of marketing channels - Facebook, Instagram, LinkedIn, TikTok, Youtube, Linear TV, Connected TV, Retail Media Network, Email, Direct Mail, Display, SEM - Organic, Inorganic etc. Use identifiers, apply identity resolution and stitch data using ML techniques.

Data & AI platform’s metric calculation engine calculates these KPI’s on a continuous basis.

Stakeholders can subscribe to metrics, dashboards, reports they care about. A paradigm shift for stakeholders, that is only alert if there is a change in the KPI’s.?

In a world of information overload, Data & AI Platform will suggest where to focus to drive growth metrics outlined above.?

In future posts, I will write about predictive ML solutions that one should build or license. Will write about A/B testing and challenges one has to solve for.?

Conclusion

Defining, documenting, measuring, optimizing metrics on a continual basis through constant experimentation is the only way to drive consistent growth in your business.

CEOs, CFOs want consistency & predictability in their business.?

My years at Netflix have taught me to be customer obsessed and continuously experiment to optimize metrics.?

Partner with a Data analytics and AI team, license a Marketing Co-Pilot product that assists you to drive your business forward.?