It sometimes shocks marketers to realize that the numbers which mean so much to their day-to-day activities mean very little to the people further up the chain; your CEO doesn’t care much about traffic, click thru rates, or conversion rates. Instead, what your boss actually cares about are metrics which help them understand exactly what marketing is doing for the company and how your efforts each day directly influence the company’s overall ROIC (Return on Invested Capital). Show your value, and your boss will give you the resources you need to meet your potential. So how do you show that value in a way your boss will care about? Consider these five marketing metrics:
1. Marketing Originated Customer %
This is the metric which tells your boss exactly what percentage of your incoming customers originated from leads generated by the marketing department. You want this number to be high—it looks bad for your department if sales is getting its own customers without your help, or if a significant percentage of customers are showing up unprovoked. Not that such things are bad for the company, per se; you just ought to be making up a higher percentage, if you want to be seen as pulling your weight.
2. Marketing Influenced Customer %
This is the subtler cousin of Marketing Originated Customer %, and can make up for a shortcoming on that metric, especially if your business model or industry naturally undermines the number of marketing generated leads. Essentially, these are customers who made their final decision to buy by marketing efforts, even if their lead wasn’t generated by the marketing department. It’s useful to have other associated marketing metrics at hand to support this, such as proof that marketing-influenced customers closed at a higher rate than customers with no encounter with marketing materials.
3. Customer Acquisition Cost and M%-CAC
What it costs to acquire a single customer. You don't want it to look like you’re essentially paying people to buy your products. It doesn’t work in the long term unless you can create an incredible following via word of mouth. M%-CAC refers to the portion of CAC which is spent in marketing as opposed to sales and marketing, making it more relevant for your department (though CAC effects everyone, so you should be paying attention to it).
The ratio of Lifetime Value (LTV) to Customer Acquisition Costs (CAC) is one of the metrics most directly connected with high-level corporate metrics such a ROIC, making it extremely important to your boss. A 1:1 ratio means you’re breaking even at best, probably losing when factoring in other business expenses. 3:1 is a good target, with 4:1 indicating superior performance or under-investment in sales and/or marketing.
5. Time to Payback CAC
How long does a customer take to pay for their own CAC? Depending on your model, this might be ‘the moment they become a customer, or it could be months or years out. If your time is too low, however, it could indicate a timidity in sales and marketing—spending more with a low Time to Payback CAC will often drive profits up, as valuable-but-not-perfect customers who might have slipped through falls into your sales funnel.
Once you know the marketing metrics which matter to your growth and profitability, you can tailor your efforts to improve them. Just don’t forsake the metrics more relevant to doing your job in favor of metrics which look good. You want to improve both in tandem, not sacrifice efficiency and efficacy for short-term gains.