Being an enterprise marketer is no joke. The stakes are high, and so are the good or bad consequences of successes and failures. Expectations, too, are often high and yet there’s not much room for spontaneous innovations or experiments, neither for bold leaps characteristic of startups. Efficiency and success of CMOs are measured with precision in order to legitimise the budget of their department.
So CMOs, especially those that work in large enterprises, are often ‘victims’ of what an IBM whitepaper from a few years ago called the ‘Rude awakenings of the Modern CMO’. But that need not be so, because as inbound marketing continuously develops, CMOs have gotten their hands on some real metrics that they can use to demonstrate the profitability of their well-done job. Here are 7 hard marketing metrics that every enterprise marketer should follow closely.
1. Cost per Lead (CPL)
Cost per Lead is essential for a number of reasons. First of all, it’s directly tied into your ROI. If you’re not measuring this, it’ll be impossible to legitimise opting for one marketing strategy instead of another. Secondly, it will be impossible to measure which marketing strategy is more successful if you don’t know at what cost it attracted leads.
In other words, CPL varies according to where you acquired the lead from – whether it was through social media, email marketing, SEO or something else. Hence, not tracking CPL is equal to staying in the dark about marketing performance at a very basic level.
2. Customer Acquisition Cost (CAC)
The same goes for ‘cost per customer acquisition’. Once you’ve successfully attracted leads – what is the cost of nurturing and converting them? Acquiring customers at a cost-effective way is literally ‘vital’ for your business.
Cost-efficiency per acquisition is weighed against the lifetime value of your customers. If the customer acquisition cost exceeds the value of customers, your marketing strategy might be faulty. But you won’t know unless you track.
3. Lead Conversion Rate (CVR)
Closely tied in with the above is the rate at which leads convert, achieving a specific marketing goal, such as downloading an ebook from a landing page or subscribing to your email list. What is the rate at which they convert and what are the reasons, do you know?
Tracking lead conversion is important because you will be able to zoom into what happens during the various stages of the sales cycle, i.e. what you need to work on or what you can capitalise on. Increasing conversion rate is closely related to ROI and cost per lead. The more conversions, the higher the ROI and, effectively, the lower the cost per lead. If you find your lead conversion is low, working more closely with the sales team could resolve this issue.
4. Cost per Click (CPC)
If you’re doing targeted AdWords campaigns, you will need to take the cost-per-click into account, when calculating your customer acquisition cost. Hubspot’s article on How To Calculate Your Ecommerce Cost of Customer Acquisition is a great example of the importance of including relevant metrics in calculating your CAC.
Best case scenario is that your CPC decreases, while your Click-Through Rate (CTR) increases. This means you will successfully have targeted clicks that are inexpensive but of high value. If, on the other hand, your CPC remains high, but CTR does not grow significantly enough, so as to legitimise the high CPC, you might need to rethink your strategy. But, again, you won’t be able to tell unless you’re tracking that metric.
5. Click-Through Rate (CTR)
CTR is the amount of clicks for an ad, relative to the total amount of impressions that it has received. Same goes for landing pages – impressions are visits, but clicks are the actual downloads or sign ups that a landing page receives. As already pointed out, CTR, especially a high one, is a positive indication for AdWords, email marketing or other campaigns.
A low CTR, even with many impressions, will signal that something is wrong with your campaign. Maybe it’s the CTA, maybe it’s a technological issue or something else altogether – you’ll have to look into it.
Furthermore, CTR is also a great metric if you’re doing A/B testing (which is strongly advisable).
6. Customer Lifetime Value (CLV or CLTV)
A customer’s lifetime value is the estimation of how much customers are spending for your products or services, how often they do so and whether they are going to do so repeatedly. In another great article, Hubspot has broken down the measuring of CLV into the following formula:
(Average Order Value) x (Number of Repeat Sales) x (Average Retention Time)
Lifetime value is a good measurement because it will help you deduce information about your customers and how well they feel treated after they make an initial purchase. A happy customer is a returning customer, so high lifetime value signals that your nurturing efforts beyond the purchase are of good quality.
7. Marketing ROI (ROI)
And of course we can’t leave ROI out. ROI has often been a reason for rude awakenings of the CMO. It’s also been called the ‘Holy Grail’ of marketing. While intangible ROI in the form of greater brand awareness, user engagement or more traffic is great, budgets (for good or bad) are allocated against tangible ROI in the form of profit.
ROI is more or less the final metric, because it’s what you’re left with when you’ve taken into account all other metrics, such as costs, conversions and CLV. Demonstrate hard ROI and your execs will hand you the keys to the vault.
If you’d rather have sound sleep instead of rude awakenings, it may be wise to start tracking all these metrics in a persistent manner. They will help you get a clearer picture of every aspect of your inbound marketing campaigns, at every stage – from lead generation to conversion and beyond.
They are tools to fine-tune your marketing, because you cannot ignore the hard facts, even if you are seeing intangible benefits and results. Hence, they are a way to improve decision-making and performance.