Table of contents
An Overview of Marketing Metrics
Vadym Kramarenko, Senior Growth Marketing Manager at OWOX
Marketing metrics are the lifeblood of any successful marketing program. They provide a quantifiable measure of performance, allowing businesses to gauge the effectiveness of their strategies and make informed decisions. In this overview, we'll take a look at the various marketing metrics that are crucial for businesses, shedding light on their significance and how they can be harnessed to drive growth. Whether you're a seasoned marketer or just starting out, understanding these metrics is key to navigating the complex landscape of modern marketing.
Importance of Marketing Metrics
Marketing metrics provide a transparent view of the effectiveness of your marketing strategies and reveal areas that can be enhanced. Without them, it's like shooting in the dark and hoping for the best. But with them, you can make informed decisions, optimize your strategies, and drive better results. One may choose to go with one channel or a mix of several channels, but measuring the correct metrics is always the most important step.
Visibility into Marketing Performance
Marketing metrics provide visibility into your marketing performance. They help you understand which strategies are working and which ones aren't.
For example, if your email marketing campaign has a high open rate but a low click-through rate, it might indicate that your emails are engaging but your call-to-action isn't compelling enough. By tracking these metrics, you can identify areas of improvement and take action to enhance your marketing performance.
Tracking Return on Investment (ROI)
One of the most important aspects of marketing metrics is their ability to track return on investment (ROI). ROI is a measure of the profitability of your marketing efforts. It tells you how much return you get for every dollar spent on marketing. To determine the most lucrative marketing strategies, it's crucial to track your return on investment (ROI) and allocate your budget accordingly.
Key Marketing Metrics
There are several key marketing metrics that every marketer should track. These include Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), and the LTV: CAC Ratio.
Customer Acquisition Cost (CAC)
Measuring the cost of acquiring a new customer is essential, and this is where Customer Acquisition Cost (CAC) comes in as a crucial metric. It includes costs associated with marketing and sales, such as advertising expenses and salaries of sales teams. A lower CAC indicates a more efficient marketing strategy.
The formula for calculating Customer Acquisition Cost (CAC) is:
This formula takes the total amount spent on marketing and sales (including salaries, overheads, software, advertising, etc.). It divides it by the number of new customers acquired during a specific period. This gives you the average cost to acquire a new customer.
Customer Lifetime Value (LTV)
The Customer Lifetime Value (LTV) represents the projected total income a company anticipates receiving from an individual client account. This measure takes into account the financial contribution of a customer and juxtaposes it with the estimated duration of their relationship with the business. This metric is instrumental for firms in pinpointing key customer groups that offer the greatest value to the organization.
Different industries have different methods for calculating LTV. For example, for SAAS businesses, the formula for LTV is as follows:
Note: You need to calculate Recurring Revenue & Churn Rate for the same time period (e.g. Monthly, Quarterly, Annual, etc.)
LTV: CAC Ratio
The LTV: CAC ratio is a measurement of the value of a customer compared to the cost of acquiring that customer. A ratio of 1:1 means you are spending as much to acquire a customer as they are worth, which is not a good position to be in. A ratio that is 3:1 or higher is deemed healthy and signifies a sustainable business model.
The formula for calculating the LTV: CAC ratio is:
This formula divides the Customer Lifetime Value (the total net profit a company makes from any given customer) by the Customer Acquisition Cost. This ratio tells you how much value a customer brings to your business compared to the cost of acquiring them. A higher ratio indicates a more profitable customer.
Marketing Metrics By Channels
Marketing metrics can be broken down by channels to provide more granular insights into the performance of each marketing channel. Let's take a look at some key metrics for email marketing.
Email Marketing Metrics
Utilizing email marketing can be an effective means of directly connecting with customers and fostering a personal relationship. Here are some key email marketing metrics to track:
Email Open Rate
The email open rate is a metric used to determine the percentage of people who open or view a specific email campaign from an email list. The open rate can be determined by dividing the count of emails that were opened by the total quantity of emails dispatched, not taking into account those that were returned undelivered. A high open rate suggests that your audience is engaged and your subject lines are compelling.
The average email open rate across all industries is 21.5%. However, the average unique open rate varies by industry, ranging from 16.22% for government-related emails to 28.77% for hobbies emails. Campaign Monitor's 2022 Email Marketing Benchmarks Report shows that the average open rate for media, entertainment, and publishing is 23.9%, while for nonprofits, it is 26.6%.
The formula for calculating the email open rate is:
The click rate, or click-through rate (CTR), is a metric that shows how many individuals clicked on the links in your email. To calculate it, divide the number of clicks by the number of emails delivered. A high click rate indicates your email content is relevant and appealing to your audience. The average click rate across all industries is 2.62%.
The formula for calculating the click rate is:
Click-to-Open Rate (CTOR)
The click-to-open rate (CTOR) is a more specific metric that measures the effectiveness of the email content. It's calculated by dividing the number of unique clicks by the number of unique opens. This metric enables you to understand how engaging your email content is once a subscriber opens the email. The average CTOR across all industries is 14.10%.
The formula for calculating the Click-to-Open rate is:
The unsubscribe rate refers to the proportion of subscribers who choose to leave your email list after receiving one of your emails. It's calculated by dividing the number of unsubscribes by the number of emails delivered. A high unsubscribe rate could indicate that your content isn't meeting your subscribers' expectations or that you're emailing them too frequently. The average unsubscribe rate across all industries is 0.17%.
The formula for calculating the unsubscribe rate is:
The bounce rate refers to the percentage of emails you have sent that were unable to reach the recipient's inbox. There are two types of bounces to track: "hard" bounces and "soft" bounces. Hard bounces result from permanent reasons, like a non-existent email address.
In contrast, soft bounces result from temporary issues, like a full inbox or a problem with the recipient's server. The bounce rate is an important metric to track, as a high bounce rate can hurt your email deliverability. The average bounce rate across all industries is 0.69%.
The formula for calculating the bounce rate is:
Paid Advertising Metrics
Paid advertising is a crucial part of many marketing strategies. There are various platforms to look into, better targeting options with audience demographics, methods like a/b testing and remarketing that helps businesses reach the target audience more efficiently. Here are some key metrics to track:
Reach is the metric that indicates the aggregate count of unique individuals who have been exposed to your advertisement. It's a valuable parameter to monitor as it provides a glimpse of the potential audience scale.
The average reach percentage varies by industry and platform. For example, the average Facebook reach is 6.4%. However, the reach percentage can vary depending on the targeting options, ad format, and other factors.
Impressions signify the tally of instances your advertisement has been shown, irrespective of whether it was interacted with or not. This parameter provides insights into the exposure level of your advertisements.
The average impression percentage varies by industry and platform. For example, the average Facebook impression is 8.1%
Cost per Thousand (CPM)
Cost per Thousand, also known as CPM, is a metric that indicates the expenditure for every 1,000 ad impressions. It is determined by dividing the entire cost of an ad campaign by the total number of impressions, then multiplying by 1,000. This metric is typically used in advertising to assess the economic efficiency of a campaign.
The average CPM varies by industry and platform. For example, the average Facebook CPM is $7.19.
The formula for calculating the CPM rate is:
Clicks denote the count of instances users have interacted with your advertisement. This parameter is simple yet crucial, as it directly quantifies user engagement with your advertisement.
Click-Through Rate (CTR)
Click-Through Rate, or CTR, is the ratio of clicks obtained from impressions expressed as a percentage. It's computed by dividing the number of clicks by the number of impressions. A greater CTR implies a higher level of engagement from the viewers of your ad.
The average CTR varies by industry and platform. For example, the average Facebook CTR is 1.61%.
The formula for calculating the click-through rate is:
Cost per Click (CPC)
Cost per Click, or CPC, is the expenditure incurred each time a user interacts with your advertisement. It's calculated by dividing the total expense of your clicks by the overall count of clicks. This metric is vital for comprehending the cost you incur for user engagement. The average CPC varies by industry and platform. For example, the average Facebook CPC is $0.97.
The formula for calculating the CPC rate is:
Cost per Lead (CPL)
Cost per Lead (CPL) is the amount you pay to acquire a lead. It's calculated by dividing the total cost of your campaign by the total number of leads. This metric is crucial for understanding the cost-effectiveness of your lead generation efforts. The average CPL varies by industry and platform. For example, the average CPL for Facebook is $47.44.
The formula for calculating the CPL rate is:
Cost per Acquisition (CPA)
Cost per Acquisition (CPA) is the total cost of acquiring a new customer. It's calculated by dividing the total cost of your campaign by the number of conversions. This metric is vital for understanding the profitability of your advertising campaign. The average CPA varies by industry and platform. For example, the average CPA for Facebook is $18.68.
The formula for calculating the CPA rate is:
Conversion and Conversion Rate
A conversion occurs when a user completes a desired action, such as making a purchase or filling out a form. The conversion rate refers to the percentage of users who successfully perform a specific action after clicking on your advertisement. For example, the average Facebook conversion rate is 9.21%. It's calculated by dividing the number of conversions by the total number of clicks.
The formula for calculating the conversion rate is:
Return on Ad Spend (ROAS)
The Return on Ad Spend (ROAS) is a key performance indicator for a digital advertising campaign, quantifying its financial effectiveness. It's derived by taking the revenue produced from the campaign and dividing it by the campaign's expenses. A greater ROAS signifies a more profitable campaign. The average ROAS varies by industry and platform. For example, the average Facebook ROAS is 4.84%.
The formula for calculating the ROAS is:
Social Media Metrics
Social media is a powerful platform for connecting with your audience. Here are some key metrics to track:
Audience Growth Rate
Audience Growth Rate is the rate at which your social media following increases. It's calculated by subtracting the number of followers at the start of a period from the number at the end, dividing by the number at the start, and multiplying by 100 to get a percentage. This metric helps you understand how quickly you're gaining new followers.
The average audience growth rate varies by industry, ranging from 2.5% for healthcare to 13.8% for media and entertainment.
The formula for calculating the audience growth rate is:
Engagement Rate measures how much your audience interacts with your content. It's calculated by dividing the total engagement (likes, comments, shares, etc.) by total followers, then multiplying by 100 to get a percentage. A higher engagement rate indicates that your audience finds your content valuable.
The average engagement rate varies by industry, ranging from 0.09% for finance to 1.61% for non-profits. However, the average engagement rate across all industries is 0.09%.
The formula for calculating the engagement rate is:
The Amplification Rate refers to the extent to which your content is shared by your audience. It's calculated by dividing the number of shares by the number of followers, then multiplying by 100 to get a percentage. This metric helps you understand how effectively your content is being spread across social media.
The average amplification rate varies by industry, ranging from 0.47% for healthcare to 1.64% for media and entertainment.
The formula for calculating the amplification rate is:
The Virality Rate is the level of engagement a particular post is with your audience. It’s calculated by dividing the number of people who shared the post by the number of unique views, and then multiplying the result by 100 to obtain a percentage. This metric helps you understand how viral your content is.
The average virality rate varies by industry, ranging from 0.31% for healthcare to 1.24% for media and entertainment.
The formula for calculating the vitality rate is:
Some of the most common and important video metrics are:
Video views are a straightforward metric that measures the number of times your video has been viewed. This metric helps you understand how popular your video content is. On Facebook, a view of 3 seconds or more or 97% of the video length is considered a view, while on YouTube, a view of more than 30 seconds or if a user intentionally watches a video is considered a view.
The average view count varies depending on the platform, industry, and video type. For instance, if you have 10,000 followers and get around 1,000 video views on average, this might indicate room for improvement. Conversely, if a brand with 2,000 followers receives the same number of views, it could be seen as a positive indication of engagement.
Video Completion Rate
The Video Completion Rate refers to the percentage of individuals who have viewed your entire video. This metric offers valuable information about the extent of involvement that your video content is generating. The average video view completion rate varies depending on the platform, industry, and video type. On Facebook, the average completion rate is 25%, while on YouTube, it is 50%.
The formula for calculating the video completion rate is:
Customer Relationship Metrics
Customer relationship metrics help you understand how satisfied your customers are with your business. Here are some key metrics to track:
Customer Satisfaction (CSAT) Score
The Customer Satisfaction (CSAT) Score gauges the level of satisfaction that customers have with a particular product or service. It is determined through a rating system where customers rate their satisfaction level on a scale. The score is then calculated by taking the average of those ratings. The average CSAT score varies by industry, but a score of more than 50% is considered positive. A CSAT score over 90% indicates a company's strength. A higher CSAT score indicates higher customer satisfaction.
The formula for calculating the CSAT score is:
Net Promoter Score (NPS)
Net Promoter Score (NPS) measures how likely your customers are to recommend your business to others. It's calculated by asking customers to rate their likelihood to recommend on a scale from 0 to 10, then subtracting the percentage of detractors (those who scored 0-6) from the percentage of promoters (those who scored 9-10). The average NPS score varies by industry, but a score above 0 is considered good, and a score above 50 is excellent. A higher NPS indicates a more loyal customer base.
The formula for calculating the net promoter score is:
Customer Retention Rate
The customer retention rate refers to the percentage of existing customers that a business retains over a specific time frame, excluding new customers. It's calculated by subtracting the number of new customers during that period from the total number of customers at the end of the period, then dividing by the number of customers at the start of the period, and multiplying by 100 to get a percentage. The average customer retention rate varies by industry, but a rate of 80% or higher is considered good. A higher retention rate indicates that you're keeping more of your customers.
The formula for calculating the customer retention rate is:
Website and SEO Metrics
Website and SEO metrics provide insights into how your website performs in search engine rankings and how users interact with your site. Businesses can track them in Google Analytics and Search Console. Here are some key metrics to track:
The Bounce Rate signifies the proportion of users who exit your website after exploring just a single page. A considerable bounce rate might suggest that your website isn't user-centric or that its content fails to captivate the audience. The average bounce rate for a website is between 40% and 55%.
However, the ideal bounce rate varies by industry and website type. For example, a blog may have a higher bounce rate than an e-commerce site. The average bounce rate for a blog is 70-90%, while for an e-commerce site, it is 20-45%.
The formula for calculating the bounce rate is:
The term Organic Traffic is used to denote the number of users who arrive at your website via non-paid search outcomes. A high volume of organic traffic is typically the outcome of efficient SEO techniques and superior content. The average organic traffic for a website is 47.5%. However, the average organic traffic for an e-commerce site is 22.6%, while for a blog, it is 67.5%.
Referral Traffic constitutes the fraction of users who reach your website by means of a different source, such as a hyperlink on a different site. Evaluating your referral traffic can assist you in determining the origins of your audience and the other websites with which they interact.
The average referral traffic for a website is 5.5%. However, the average referral traffic for an e-commerce site is 7.5%, while for a blog, it is 2.5%.
Keyword Rankings refer to your website's position in search engine results for specific keywords. High keyword rankings can drive more traffic to your site and are often a result of effective SEO strategies. The average keyword ranking for a website is between 10 and 40. However, the ideal keyword ranking depends on the competitiveness of the industry and the website's goals.
Backlinks, also known as inbound links, are hyperlinks from one webpage to a different page on another site. Search engine giants like Google perceive these links as endorsements for a specific page. Webpages that garner a significant amount of these backlinks often secure higher positions in organic search engine rankings. The average number of referring domains for a website is between 20 and 100. However, the ideal number of backlinks depends on the competitiveness of the industry and the website's goals.
How to Choose the Marketing Metrics to Track
Choosing the right marketing metrics to track depends on your business goals and industry-specific considerations.
Aligning Metrics with Business Goals
Your marketing metrics should align with your business goals. If your goal is to increase brand awareness, focus on metrics like reach and impressions. If your goal is to boost sales, focus on metrics like conversion rate and ROI.
Considering Industry-Specific Metrics
Different industries may require different metrics. For example, an e-commerce business might focus on the shopping cart abandonment rate, while a SaaS business might focus on the churn rate. Understand what metrics are essential in your industry and track those.
How to Track Marketing Metrics
Collect Marketing Data
Collect Advertising Cost Data
Collecting advertising cost data is crucial for understanding the ROI of your marketing campaigns. This includes data on how much you're spending on different channels, the number of impressions and clicks you're getting, and the number of conversions.
Track Website User Behaviour
Tracking website user behavior helps you understand how users interact with your site. This includes data on which pages users visit, how long they stay on each page, and what actions they take.
Load Marketing Data into Data Warehouse
Loading your marketing data into a data warehouse allows you to store, analyze, and report on your data in one place. This makes it easier to track your marketing metrics and gain insights from your data.
Prepare Data for Reporting
Merge Events into Sessions
Merging events (or hits) into sessions allows you to understand a user's journey on your site. This can provide valuable insights into how different marketing strategies are performing.
Blend Advertising Cost Data
Blending advertising cost data allows you to see the cost and performance of your marketing campaigns side by side. This can help you understand the ROI of your campaigns.
Attribute Value to Clicks
Attributing conversion value to clicks helps you understand the incremental value of different marketing channels. Allocating your marketing budget effectively can be made easier with this helpful tip.
Reporting and Presenting Marketing Metrics
Build Marketing Reports
Building marketing reports allows you to present your marketing data in a way that's easy to understand. This can help you and your team make data-driven decisions.
Build Dashboards in Looker Studio
Building dashboards in Looker Studio allows you to visualize your marketing data. This can make it easier to understand your data and gain insights.
Share with Stakeholders
Sharing your marketing reports and dashboards with stakeholders allows them to understand the performance of your marketing efforts. This can help them make informed decisions about marketing strategy and budget.
Challenges and Pitfalls in Using Marketing Metrics
While marketing metrics are incredibly valuable, they can be challenges and pitfalls.
Incomplete data can lead to inaccurate insights and misguided decisions. It's crucial to ensure that your data collection methods are robust and comprehensive to avoid gaps in your data.
Lack of Trust in Data Accuracy
If there's a lack of trust in the accuracy of your data, it can undermine your marketing efforts. Using reliable tools and methods to collect and analyze your data is important to ensure its accuracy.
Lack of Understanding of Data
Data is only as valuable as your understanding of it. If your team lacks the skills to interpret and use your data effectively, it can limit the value you get from your marketing metrics.
Track Marketing Metrics with OWOX: Drive Results with Data
OWOX BI offers a comprehensive solution for tracking marketing metrics. With features like seamless data collection, accurate user behavior tracking, data preparation for analysis, customizable dashboards, advanced analytics, and automated reporting, OWOX BI makes it easy to drive results with data. Take control of your marketing data and make data-driven decisions with OWOX BI. Book a demo today!
Marketing metrics are essential for any business looking to improve its marketing efforts. By tracking the right metrics, businesses can gain valuable insights into their marketing performance, make data-driven decisions, and drive better results.
How can I collect and analyze marketing data effectively?Collecting and analyzing marketing data effectively requires the right tools and strategies. This includes using tools like OWOX BI for data collection and analysis, setting clear goals for what you want to achieve with your data, and regularly reviewing and updating your metrics to ensure they remain relevant and valuable.
What are vanity metrics, and why should I be cautious about them?Vanity metrics might look good on paper but don't necessarily provide valuable insights or contribute to business goals. Examples include likes on a social media post or page views on a website. While these numbers can be high, they don't necessarily translate into more sales or revenue.
How do I choose the right marketing metrics for my business?Choosing the right marketing metrics for your business depends on your specific business goals, the nature of your industry, and the channels you use for your marketing efforts. Choosing metrics that provide meaningful insights and help you make informed decisions is essential.
What are marketing metrics, and why are they important?Businesses use marketing metrics to measure the success of their marketing campaigns. Analyzing these metrics can offer businesses valuable insights into the effectiveness of their marketing strategies. This can help them make informed decisions and improve their marketing efforts.