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Today, sales and customer acquisition are more important than ever for small businesses. In order to gain more customers and boost your sales, you need to have good marketing campaigns in place, and just as importantly, you need to be able to measure the performance of those campaigns. By identifying which marketing KPIs are most relevant to your marketing strategy, you will get a sense for how your efforts are resonating with customers.
If you’re not sure which KPIs are most relevant to your business, then keep reading for useful insights on this important factor in your marketing strategy.
Why your marketing KPIs are so important
If you are looking to drive sales, then it is important to continuously monitor the effectiveness of your marketing strategy so you can make any needed improvements and know just how many customers each channel is bringing in. This is where key performance indicators (KPIs) come into play.
With approximately 47% of small business owners handling their marketing efforts on their own, it's especially vital to measure the outcomes of these efforts to recognize what is or is not working and ultimately achieve your goals.
5 small business marketing KPIs you need to start tracking
Small business marketing teams are all looking for more efficient ways to keep track of their marketing efforts, and KPIs are an essential part of this process. Marketing KPIs help you keep track of which marketing channels are driving the most sales and attracting the most customers, as well as which channels are not working well.
While there are many different marketing KPIs that can help you track the effectiveness of your marketing strategy, the following five are absolutely essential for your small business to ensure you're getting the most out of your efforts:
1. Cost Per Acquisition (CPA)
Your CPA measures how much it costs on average for someone to take an action that leads to a conversion. This is an important KPI to track, because it shows you if you're spending too much money on lead generation or advertising, or if you’re not spending enough. Then, you can make any necessary improvements to your marketing strategy to get your costs down.
The average CPA varies by industry, but Wordstream found that their client's average CPA was approximately $48.96 for search and $75.51 on display in 2018.
2. Customer Lifetime Value (CLV)
Your CLV measures the average revenue generated by a customer in total across all of the purchases they make from your business. This KPI helps you identify whether your customers are spending more or less than desired and lets you calculate your customers' value to your business.
According to Shopify, you can calculate your average CLV using the following formula:
CLV = (average value of a purchase) X (number of times the customer will buy each year) X (average length of the customer relationship in years)
3. Traffic-to-lead ratio
Your traffic-to-lead ratio is the number of unique visitors it takes to generate a lead. This ratio is important because it shows you how well your website is converting traffic, which will help you determine your overall marketing ROI.
You can calculate this ratio by dividing the total number of visitors to your website over a set amount of time (such as one month) by the number of unique leads generated over the same amount of time. Then, multiply that number by 100 to get a final percentage.
4. Lead-to-customer ratio
The lead-to-customer ratio is the number of leads it takes to generate a sale or a paying customer.
This ratio is important to calculate, because if you have a low lead-to-customer ratio, you may need to improve your lead generation efforts.
To calculate this ratio, take your number of qualified leads that resulted in a sale (over a month or another set period) and divide it by the total number of unique qualified leads generated over the same period. Then, multiply that number by 100 to get your final percentage.
5. Audience growth rate
Your average audience growth rate is usually a social media KPI that helps you determine how many new people are joining your community.
Your average audience growth rate may be calculated by dividing the total number of people in your community by the number of unique new members. You then multiply that number by 100 to get your final percentage.
Improve your small business marketing strategy with more tips from the BBB
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