Without the right metrics, you will have no idea whether the marketing activities you use work. Here’s the issue. There are so many marketing metrics. Which ones are important? Today I’m going to share 5 simple metrics you should be tracking right now.
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Five Key Marketing Metrics You Must Start Tracking
Without the right metrics, you will have no idea whether the marketing activities you use work. But here's the issue. What marketing metrics do you track? Which ones are most important for your business? Have no fear today, I'm going to share with you five simple marketing metrics that if you are not tracking, you should start tracking today, and I'm going to walk you through each one of them to help you get through this.
I am Tim Fitzpatrick with Rialto Marketing where we believe marketing shouldn't be difficult, all you need is the right plan. I want to thank you so much for taking the time to tune in. I'm going to help you with metrics. Okay. I was a math major so I can get very analytical.
I can dig into the weeds on this stuff. But the issue with marketing metrics is there are so many out there. People, it's just information overload, right? And you're just overwhelmed you're not. Where do I even start? The problem is, there are so many marketing metrics that are vanity metrics.
They don't mean anything if they aren't translating to leads and customers. How many visitors do you have coming to your website? How many people do you have on your email list? How many followers do you have on Facebook or Instagram or whatever social channel it is? Man, there are so many people that have a plethora of all of those things, and they're not generating any business.
So none of that stuff freaking matters. So let's cut through the noise. Stop worrying about metrics that might make you feel good, but don't translate into business or money in your pocket. So here are five metrics that I think are super important. They're the easiest place to start.
You can certainly get more sophisticated, but you got to start from ground zero, man. You can't start at 60 miles an hour. Okay, so let's start with these five first.
One leads. How many leads are you generating each month? Now really important to determine what the threshold is to be considered a lead for your business.
For example, in our business, if somebody signs up on our email list, that is not a lead, in my opinion. Somebody only becomes a lead when they raise their hand and say, "Hey, I'm interested in learning more about what you do.? Or, "I've got a problem I think you might be able to help me with. I would like to chat with you." Right? "I want to get a free consult."
"I want to schedule a strategy session or discovery call/" or whatever that may be for you and your business. You need to determine what the threshold is for somebody to be determined, somebody to be classified as a lead. But once you have that, now, you can start tracking the number of leads that you are generating each and every month. Super important. I mean, almost everything starts from this. So if you don't know how many leads you're generating, you're not going to have a whole lot of information to work from.
Lead Generation Channels
So you got to start here. Now, second is as those leads come in, where are they coming from? What marketing channels and tactics are generating those leads that are coming in? Really important, right. Because now once you have that information, you can start to look at, "Hey, we generated 30 leads last month and 20 came from this channel." Gives you a really good indication of what channels and activities that you're taking from a marketing perspective are working and bringing leads in. Okay, simple.
But a lot of people that I talked to have no idea exactly how many leads they're generating and where they're coming from. Okay. Really, really important information. Simple. And once you know it, you have a lot of really great information that you can now start to take much more informed and make better decisions from that data.
Right. So we've got leads we got where are they coming from.
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Then we have how many of those leads are actually converting into paying customers? That's really important, too, right. Because you can, as you'll see here, as we start to go through this, you can start to work your way backwards and determine how many leads you actually need to hit the goals that you have set for yourself. But do we need five leads to convert a customer? Do we need ten leads? Right. There is no right or wrong answer there. And once you start tracking these, then you can start to dig into, "Hey, can we do a better job of converting more leads to customers?"
But until you have an idea of how many leads you're actually converting to customers, well, you can't do anything with that. So you need to understand how many leads you're bringing in. And then how many are converting to customers. Really, really important. Now, I have two more metrics I want to share with you. But if you're starting to get a little overwhelmed and you're like, "Gosh, I don't know." Start with these three. Leads. Where are they coming from the lead source and leads to customers, start there, and then you can start going more. But I think most of you will be able to start to look at these other metrics as well, which I think are really, really important.
Customer Lifetime Value
So the fourth one is customer lifetime value or some people will refer to that as CLV.
Customer Lifetime Value is the value of a customer for the entire time that they choose to work with you. So you need to have a decent understanding of a few things here. Most of us do not make just one sale to a customer. If you only make one sale to a customer, well, then that is the customer lifetime value. What's the average sale? That's the customer lifetime value. But most of us don't have customers that buy just once. They might start doing regular, consistent business with us monthly, or they might buy every quarter or every year. Whatever that is, you need to determine how often they're going to buy what that average sale price is and how long they will stay with you. Is it a year?
Is it two years? Is it five years? Whatever that is, you need to understand that because once you understand what the average sale is, how often they're going to buy and how long they stay, then you can determine the total revenue generated from one client. That is the customer lifetime value. Now, a lot of people stop there with customer lifetime value.
So the average ticket is $100. They buy ten times it's $1,000. Right. That's the lifetime value. But I think it's really important to dig one step deeper and look at what is your gross profit margin on that $1,000 of revenue because you don't keep that $1,000, all of that $1,000 of revenue.
So, you know, if my gross profit on that $1,000 in revenue is 30% right, then I made $300. Okay. That's the $300 is what actually came in that we kept. So I think you want to go one step further to really determine CLV and look at gross profit on the total revenue that's generated. That's going to give you a better indication of what you're actually keeping.
Customer Acquisition Cost
Super important, though, to understand that because that leads into the fifth metric, which is your people call it a CAC Customer Acquisition Cost, right. This is your cost to acquire a customer. So I'm going to make this simple. And if you guys want to dig into this, there's tons of resources online about customer lifetime value and customer acquisition cost. I don't want to go into the weeds on that today.
But to simplify it, let's just say that it's costing you $100 per lead. Cost you $100 to get a lead, and it takes you five leads to get a customer. Okay. Which means your cost to acquire that customer was $500. Okay. This is a very simple, simplified example.
Okay. But in that example, right. It cost me $500 to get a customer. Now, if we go back to what the example I just gave you on customer lifetime value and said the gross profit on that customer over the lifetime of the customer is $300. And we just spent 500 to acquire that customer.
We have a problem, right? We're $200 in the hole, that ain't going to work. But you'll never know that if you don't track these metrics, that's why they're so important, because you can now determine when you understand the customer lifetime value and your cost to acquire a customer, right? You now know whether it's profitable. But frankly, if you just know CLV customer lifetime value and what you make, now, you can determine how much you can actually spend to acquire a customer.
That's your threshold. And then you look at the numbers for the different activities you're taking to determine how much it's costing you in those channels to acquire that customer, and whether that makes sense for you to continue to do. But if you don't have this information, you are flying blind guessing, thinking that, "Oh, my gosh, we're generating a bunch of customers." But you know what?
You can generate a bunch of customers. And if you're spending more to acquire a customer than you actually make, you are basically you're putting yourself out of business. Nobody wants that, right.
Conclusion: Five Key Marketing Metrics You Must Start Tracking
So I hope you see how powerful these five metrics are. If you track leads, lead source, where they're coming from, how many leads it takes you to get a customer, the customer lifetime value, and then your customer acquisition cost, your cost to acquire a customer.
Let's just review what you now know. You know how many leads you're generating in any given month. You know, out of those leads that are coming in where they came from. So I now know what activities I'm taking are actually bringing leads in. I know how many leads I need to bring in to generate a customer. Super powerful.
I now know how much I can spend to acquire a customer and have it be profitable for me. And I can start to actually work my way back. If I know that I want to get to a certain revenue target, I now have the information I need to work that revenue target back to the amount of leads that I need to generate to hit that. Do you see how powerful this is? I mean, these are pretty simple numbers. Incredibly powerful, and this does not have to be complex.
You can track leads, lead sources, and how many leads are going to customers on a spreadsheet. Okay, so don't say you can't do it. Anybody can do this. I know you can do it. You do not have to over complicate this.
If you are not tracking these five metrics, start tracking them now, and I guarantee you three months from now, you will be so empowered by the information that you can now glean from that. If you're getting stuck on this, right? And you're like, "Oh, my gosh, Tim. My head is spinning on these." That's totally okay. Happy to help you.
Just look, schedule a free console. Rialto Marketing dot com. That's R-I-A-L-T-O Marketing dot com. I would be happy to talk to you about this. If you're just running into roadblocks with marketing in general, you're trying different tactics.
Nothing seems to work. You're not sure what that next right step is for you based on where you currently are and where you want to be, schedule that consult. Be happy to help you. I will give you clarity on what you should be doing and where you should be focusing to get to where you want to go. Thank you so much for taking the time to tune in until next time. Take care.