Marketing is a creative exercise in attracting your target audience to your products and services. To know if it’s working, you need to be able to measure the results. Today, tracking key metrics is easier than ever.
Marketers (and business owners) are expected to clearly define their key marketing metrics and watch them closely. This helps them know which strategies are working, what could be improved, and what their return on investment is.
Learn what key marketing metrics are, so you can leverage the best insights for your business.
Table of contents
What are marketing metrics?
Marketing metrics are any quantifiable data that helps you understand the effectiveness of your marketing campaigns. This information can be pulled from a variety of sources, such as your sales records and website analytics tools.
Marketing metrics are important for helping you make decisions about your marketing efforts, and they’re especially precise when it comes to digital marketing performance.
Key marketing metrics
- Customer lifetime value
- Percentage of revenue from new customers
- Marketing return on investment
- Customer acquisition cost
- Cost per lead
- Return on advertising spend
- Advertising ROI and aMER
- Cost per click
- Social media engagement, reach, and sales
- Email subscribers
- Direct website traffic
Marketing metrics should align with your business goals. They can help marketing teams understand how to allocate budgets, and measure the impact your marketing strategies have on your business.
Customer lifetime value
Lifetime value (LTV) is the average value of a customer for your business over the entire span of time they shop with you. This helps marketers understand how much they can invest in profitably acquiring new customers. There are several methodologies to calculate your customers’ lifetime value.
Percentage of revenue from new customers
This ratio helps you understand the cost of acquiring new customers and keeping existing customers engaged. Some marketing teams assume a higher percentage of new customers is always better from a marketing perspective. This isn’t necessarily true—customer retention can lead to major profits. Every business needs to determine the ideal ratio based on its growth goals and product mix.
Marketing return on investment
Marketing return on investment (ROI) is determined by the total revenue generated in a period divided by your total marketing costs. It’s sometimes also referred to as a business’s marketing efficiency ratio (MER). It shows how effective a business’s marketing efforts are in terms of increasing revenue.
Customer acquisition cost
Customer acquisition cost (CAC) is your total advertising spend divided by the number of new customers gained in a period. For example, if you spend $1,000 on ads and gain 200 new customers, your CAC is $5.
Marketing teams use CAC to answer two important questions. The first is in forecasting: How much additional spending is needed to acquire a target number of new customers? Your historical CAC can inform this forecast.
The second is related to profitability: Marketers compare their CAC to LTV to understand whether their marketing is profitable. To be profitable, a business’s CAC should be less than the revenue generated from a customer’s LTV.
Cost per lead
Cost per lead (CPL) is similar to CAC, but instead of measuring the cost to acquire a customer, it measures the cost to acquire a new lead. A new lead is typically defined as capturing an email or SMS text number.
B2B (business-to-business) companies may segment this further into cost for marketing qualified leads (MQL) or cost for sales qualified leads (SQL). An MQL is a lead that meets specific criteria to show they qualify to become a customer, such as living in a targeted sales area. An SQL is a lead that a salesperson has contacted to validate they are interested in buying your product or service.
Return on advertising spend
Return on advertising spend (ROAS) is calculated as the total revenue from advertising divided by the total spend on advertising. It is often calculated on a channel level. For example, a business would compare ROAS for its Meta ad campaigns to ROAS for its Google ad campaigns to understand where to spend more.
It’s important to note, each platform has its own customizable methodology for attributing revenue to campaigns, which can make cross-platform analysis difficult.
Advertising ROI and aMER
Advertising ROI is similar to marketing ROI but is focused on advertising spend instead of total marketing spend. It is calculated as: total revenue divided by total advertising spend for a period. It’s expressed as a ratio.
So if a business sells $150,000 in a month and spends $15,000 on advertising, it would have an acquisition marketing efficiency rating (aMER) of 10.
A marketing team can use aMER as a balancing metric alongside ROAS. Return on advertising spend requires making assumptions about what revenue can be attributed to advertising. But those assumptions are imperfect. If both ROAS and aMER rise, it suggests advertising is more effective.
Cost per click
Marketers use cost per click (CPC) to understand how much it costs them to drive more website traffic. CPC is calculated by taking the total amount spent on an ad divided by how many viewers clicked on the ad.
You can lower your overall CPCs with more compelling ads, improving keyword use through research, and narrowing your ad focus to avoid ineffective spend. However, CPC can also be affected by the advertising competition for your target audience. This makes it an imperfect marketing performance metric, but it’s still helpful for marketing forecasting.
Social media engagement, reach, and sales
If your business has a strong social media marketing component to its strategy, these three metrics are the most important for understanding its impact.
- Reach measures the number of people who saw your content on social media platforms. It helps you quantify the brand awareness impact of your marketing efforts.
- Engagement measures the number of people who took a meaningful action on your posts, such as a click, repost, or like. It tells you whether your content is resonating with people.
- Sales refers to anyone who clicked an organic social media link (such as a link in bio) and then made a purchase. It is not always precise, but still helps demonstrate the impact of social media.
Email subscribers
This refers to the number of people who have opted into your email marketing list. This shouldn’t include people who have unsubscribed or whose emails have bounced.
Email is one of the most powerful organic marketing channels because it lets marketers speak directly to an audience that has shown interest. The number of subscribers helps show the potential a brand has for email marketing.
Direct website traffic
Direct website traffic refers to visits to your site that didn’t arrive via a measurable channel like social media, email, or search. Typically, these are people who typed your website’s URL directly into their browser.
This helps marketers quantify general brand awareness and word-of-mouth marketing. Although this traffic can’t be directly attributed to marketing, it is often a website’s traffic with the highest conversion rate and is a valuable indicator of overall marketing success.
Marketing metrics FAQ
What is the most common marketing metric?
The two most common, and arguably most important, metrics for ecommerce stores are customer lifetime value (LTV) and customer acquisition cost (CAC). If your marketing can sustain a CAC profitable relative to your LTV, your business has the potential to keep growing.
What are KPIs in marketing?
Key performance indicators (KPIs) in marketing are specific measurements that can provide insight into the progress a business is making toward its marketing goals. There are many ways to measure the efficacy of a marketing campaign, but marketing KPIs are those you consider the most important marketing metrics to track and evaluate your marketing efforts.
How do you track marketing metrics?
Marketing metrics can be tracked in a variety of ways. Many small businesses manually track them in a spreadsheet every week or month. Other businesses use dashboard tools like Shopify Analytics or Looker Studio to automatically track them.
