There a few important numbers that really impact your marketing decisions. Owners and marketers alike should know these numbers and keep an eye on them since they change every month or quarter. I am going to cover what I consider to be the two most important numbers and why your business should be tracking them closely.
Average Lifetime Value
Do you know the lifetime value of your customers? We should start here and move backward. Knowing how much the average lifetime of your customers is will help you answer so many questions, including seeing if your marketing activities help improve this stat. We serve clients as much in retention as new client acquisition, so it is important to be able to tie the marketing activities to real data and lifetime value. In my opinion, this is vital. Here is a link to help you learn how to calculate the average lifetime value of your customers based on a Starbucks case study by KissMetrics.
Basic equation: (average spend per customer per transaction) x (average number of transactions per month) x (average customer lifespan) = LTV
Cost Of Acquisition
Do you know how much it costs to get a new customer? You need to know how many new customers you are getting and how much it costs you on average to get each one. The reason why is because once you know this, you can take strategic actions to lower the cost. If you have multiple online and offline efforts, you should calculate the costs for a specific time period and divide it by the number of new clients you get for the same time period. The costs are not just ad spend but labor also; both internal and outsourced. Get specific, but not too granular – like the cost of paper coffee cups. Don’t change the formula regularly. Find something that works for you and make sure decision makers agree that you are measuring the right things. Here is a great blog that explains multiple ways to calculate COA.
Get Strategic and Specific
If you know these numbers you should be able to quickly identify what marketing channels or tactics are having the best results. If you are a larger company, you should be using some form of marketing automation that tracks a lead through converting to a customer. If you know how the person converted to a customer and what channel produced that result you may consider putting more emphasis and budget behind that channel. The key channels we always encourage people to look at leveraging are web content and blogging, social channels, and permission email marketing. There are also paid channels that can have a big impact on lead generation and customer conversion like pay-per-click through Google and Youtube, paid social targeting, and retargeting.
Do you know what efforts have the biggest impact? Just because one channel does not perform well does not mean you should abandon it. If you are not experimenting regularly with different tactics across multiple channels, then you will never make big strides in improving your lead generation. Want some guidance through this? Get the conversation started.