4 Metrics That Matter to Your Marketing ROI

Technology and the internet are amazing tools for marketers.  Aside from allowing companies to reach more of their potential customers, they allow you to measure the success of your marketing activities. Marketing ROI is an essential part of every strategic marketing plan. Marketers need to know if what they're doing to get more customers is working (or not). It’s not just about sales - there are other metrics that can give marketers a better view of success.  Here are 4 metrics that matter to your marketing ROI:  

1. Marketing-Originated Customer Percentage (How many customers came from marketing initiatives...)

It used to be difficult to determine exactly which of your sales and marketing efforts brought new customers in the door. However, with tools that help you capture more data, you can take a closed-loop approach to marketing.

One of the things you can do is to find out your Marketing Originated Customer Percentage (MOCP), or simply, how many of your customers are generated directly from your marketing activities versus other methods.

How to calculate it:  Decide on the time period you want to calculate your MOCP, then count the number of customers that came in via marketing and then divide it by number of total new customers from the same time period.

By finding out the percentage of customers you are bringing in via your marketing activities, you know if your marketing investments are paying off. 

2. Customer Acquisition Cost

Customer Acquisition Cost or CAC is one of the most important metrics for any company in general – how much does it cost to acquire and keep your customers?

How to calculate it:  find the total marketing and sales cost in a period and divide by the number of new customers in the same time period.

You want, of course, a low CAC, otherwise, it indicates that you have an inefficient marketing and sales function.

3. Ratio of Customer Lifetime Value to CAC (LTV:CAC)

LTV:CAC is an excellent indicator of marketing ROI if you have a revenue stream that relies on subscriptions or any situation that requires customers to purchase repeatedly.

How to calculate it:  take the revenue you get from a customer and subtract the gross margin.  Then divide by cancellation rate, and then compare it to the customer’s CAC.

This ratio shows you if you are getting a favorable return rate on what you spend to keep that customer – ideally you want a higher LTV per customer.

4. Marketing Influenced Customer %

This metric may sound similar to Marketing Originated Customer Percentage, but it casts a wider net to include anyone who had contact with marketing during the buying process.

How to calculate it: use the same formula as MOCP, and include anyone who had any interaction with marketing.  For example, people who may have been brought in by a sales lead, but read materials prepared by marketing and then eventually closed.

Metrics: Improving Your Marketing Efforts

Metrics are a vital part of marketing, and with the technology available, there’s simply no excuse NOT to use them to help you formulate plans that can help make your business better.

Want to know about these and other metrics that can help you increase your profits and close rates? Contact The Mezzanine Group now. We can help you refine and execute your strategic marketing plan and ensure that you get a better return on your marketing activities.

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