Modern day marketers are overwhelmed with marketing metrics. Metrics like bounce rate, exit rates, engagement rates, share rates, and the list goes on. Sure, these metrics serve a purpose but too often they are being used as a way to measure the digital marketing efforts as a whole leaving top executives upset because bounce rate does not directly equal money.
While some of these metrics may be insightful for strategist, there are ultimately vanity metrics. Top executives want to see metrics that matter to a business, and when it comes to reporting, you have to know who your audience is to be sure you’re reporting the metrics they want.
Business Metrics That Matter
For most businesses, there are only 3 metrics that matter to a business.
A lead is often defined differently depending on the company though at the most general definition it is a potential sales contact. A lead for a software company may be a newsletter subscription because this is someone who is interested in the company and is providing them with their information opening the door to be marketed to. But a lead for a service-based company may be a full form submission for their website because at that point the lead hasn’t committed to the company only requested more information.
Leads matter to businesses because they are a sign for what your near-term sales might look like. For example, if we knew that 2 out of every 10 people who signed up for our newsletter converted after 2 monthly newsletters, and we got 40 newsletters subscriptions this month, we would be able to predict 8 new sales in two months. If this number started shrinking, we would have to focus on improving our leads.
What is a Direct Purchase and Why Does it Matter?
This one is pretty self-explanatory, a direct purchase is someone who gave you money for a product or service. It is pretty obvious why this metric matters to businesses as it directly correlates to their profit.
It is also a metric for marketers to follow closely. Comparing direct purchases year-over-year or month-to-month can identify growth, stagnation, or a decline. If this comparison results in a stagnation or decline it may be time to re-evaluate the marketing initiatives.
What is Cost of Customer/Year-Long Value or Life-Time Value or customer and Why does it Matter?
Cost of customer is simply how much a business has to pay to hear a customer. This is an important metric because if a business is spending more than a customer is giving, that business is at a loss and will eventually go out of business.
Depending on the business type, a top executive may look at year-long value or life-time value.
Life-time value of customers is a metric that matters to a business where customers are either on reoccurring payments or often return for additional purchases. In this case a business may be more willing to pay more upfront to earn a customer and wait for the return on investment instead of trying to get it right away.
Year-long value of customers is a metric that matters to a business that only has a short engagement with their customers. That way if they have to spend $500 to earn the customer that year, they earn $600 back that year and make a profit that year instead of waiting for their customers payments to catch up.
While modern day marketers are overwhelmed with marketing metrics, it is part of the job description to filter these metrics and only report the metrics that matter. Top executives want to see metrics that matter to a business, and when it comes to reporting, you have to know who your audience is to be sure you’re reporting the metrics they want.