Few career paths blend logic and art as well as marketing. Right-brained creativity meets left-brained analytics and no talent goes unused. Sounds like the ideal balance, right?
But while you’re busy creating content, social posts, and graphics, your boss is waiting to hear back on the analytics they asked about.
Marketing professionals are expected to prove their campaigns generate results, but which metrics are important, and which are vanity metrics that don’t mean much to management?
Nearly three-quarters of all executives don’t believe marketing drives demand or revenue (HubSpot). So how do you prove your campaigns produce ROI? What data does your management care about? And what impacts your bottom line?
Understanding what to measure and why is the first step to marketing success. Let’s go over some metrics that are smart indicators of effective marketing. You can also check out our marketing metrics cheat sheet for full calculations.
Customer Acquisition Cost (CAC)
The customer acquisition cost (CAC) averages what your company spends to acquire a new customer. It’s also the cost of convincing a prospect to select your brand.
Knowing how much you’re spending on each customer helps you invest in the right channels and avoid the ones that aren’t worth your time. The lower your CAC, the higher your profit.
Quick Math: Sales and Marketing Cost ÷ New Customers
Marketing’s Percentage of CAC
This percentage measures the marketing portion of your CAC. New customers are often found through promotional campaigns. Isolating marketing’s impact shows you how your team is performing.
Long term, this tells you if your budget is being allocated more toward sales or marketing. An increase may mean marketing costs went up, and a decrease could mean higher sales spending. Again, the lower this is, the better.
Quick Math: Marketing Cost ÷ Total Sales and Marketing Cost
Ratio of Customer Lifetime Value to CAC
The Ratio of Customer Lifetime Value to CAC estimates how much your company gains per customer compared to how much you spent to find them.
This ratio is especially useful for subscription brands. The longer a customer relationship, the more value they offer. This metric should amount to at least three times more return than what it cost to get the customer in the first place.
Quick Math: Ratio of LTV:CAC
Time to Payback CAC
The Time to Payback metric shows how many months it takes for your company to reach a break-even point from what it spent on CAC.
The less time it takes, the faster you’ll start profiting from each new customer. Obviously, earlier is better, but companies typically expect to see a return within a year.
Quick Math: CAC ÷ Margin Adjusted Revenue
Marketing Originated Customer Percentage
So how well do your marketing strategies drive business? How many new customers are a direct result of your marketing campaigns?
This metric tells you how your lead generation efforts are doing. It also reveals how well your sales and marketing teams are collaborating together.
Quick Math: New Customers Originally Marketing Leads ÷ New Customers in a Month
Marketing Influenced Customer Percentage
Your marketing team nurtures leads long before the sale, and now you have a metric to prove it. This measures marketing’s influence on leads throughout the buyer’s journey.
Relationship building, lead generation, and sales support are all backed by this metric. It’s perfect for giving your CEO a big-picture understanding of marketing’s impact on the sales process.
Quick Math: Total New Customers Linked to Marketing ÷ Total New Customers
Ready to Report
Presenting marketing metrics that speak to your management will help you make a case for budget increases and new marketing strategies. Being able to prove your results can benefit your entire team both now and moving forward.
Show Your Boss the True Value of Your Marketing
Get these 6 key metrics to prove your marketing ROI.