If you’re a marketer, you’ve explored the seemingly never-ending list of metrics, such as social media engagement, site visits, and conversion rates. It’s also likely you have to report to your company’s executives the results of your marketing efforts. But with all these marketing metrics to choose from, have you ever thought about which ones the execs actually care about? Here’s your guide to the six marketing metrics that matter to your boss’ bottom line.
1. Customer acquisition cost (CAC)
The CAC is a metric to determine the total average cost your company spends to acquire a new customer. It’s self-explanatory as to why your boss would deem this important.
2. Marketing percentage of customer acquisition cost
The marketing percentage of customer acquisition cost is the marketing portion of your total CAC, which is calculated as a percent of the overall CAC. Note: An increase in this metric may indicate one of three things: 1) your sales team under-performed, 2) your marketing team is spending too much and/or has too much overhead, and 3) you’re in an investment phase.
3. Ratio of customer lifetime value to CAC
This metric is a way to estimate the total value that your company derives from each customer compared with what you spend to acquire the customer. The higher the ratio, the more your sales and marketing team deliver to your bottom line. However, your ratio shouldn’t be too high as you always want to invest in reaching new customers.
4. Time to payback CAC
The time to payback CAC calculates the number of months it takes your company to earn back what it spent to acquire customers. This is an important metric to show how much time it takes to start making money off customers. In industries where your customers pay a monthly or annual fee, you will typically want your payback CAC to be less than 12 months.
5. Marketing-originated customer percentage
Marketing-originated customer percentage is a ratio that shows what new business is driven by marketing. It calculates this by determining which portion of your total customer acquisitions is derived from your marketing efforts. A company with an outside sales team and inside sales support may be at 20-40% marketing-originated customer, while a company with an inside sales team and lead-focused marketing team may be at 40-80%.
6. Marketing-influenced customer percentage
Marketing-influenced customer percentage calculates the percentage of new customers that marketing interacted with while they were leads at any point in the sales process. Execs will want to look at this metric because it indicates how effective your marketing is at generating new leads, nurturing existing ones, and helping sales close the deal.
What Does This Mean for Your Team?
Don’t stop tracking other metrics such as site traffic, social shares, and conversion rates – just because they didn’t make the top six list doesn’t mean that they aren’t worth tracking.
However, when you report to executives, you want to present marketing metrics that they care about – those that affect their bottom line.