I’m sure this has happened to you before. A great marketing campaign or a new web page is ready to be rolled out and the only thing missing are metrics. Now the discussion becomes heated.
What are the main issues?
First, the team is not clear on what the most valuable KPIs are. Secondly, which metrics can be tracked with the current customer management system? And is there a baseline that can be used to estimate metric goals?
Be a growth hacker and review metrics scrupulously. Make changes to your campaign as soon as you notice that your customers are not moving efficiently through the funnel. Or your customers leave your web page before taking any action.
The most valuable metrics for your project vary depending on your objectives. Pick the one or two that clearly show whether or not you are moving towards your objectives. If you like to dig more into metrics and see examples, see Dave McClure’s famous deck called Startup Metrics for Pirates (AARRR). He focuses on startups, but you can easily apply the metrics to different stages of the engagement funnel.
Here are some key concepts that you need to understand before defining your best metrics:
1. Activity: This tells you how long and often your prospects are visiting your campaign site. Do they come to your site for the first time without taking action? When they access your site for the second time, do they take any actions such as signing up for a newsletter or watching a video? How many of your customers go through all the stages of the funnel? How many drop off at which stage?
2. Frequency: Here you are tracking how many first time users you have. How many people visit your site, how many times? How many people come back a second time to purchase or call a sales rep? How often do people visit your site before they purchase?
3. Conversion rate: What is the percentage of people that progress from one step of the funnel to the next? If you notice a particular hurdle where many drop off, try to figure out how you can fix it. Test until it works.
4. Cohorts: A cohort is a group of people who share a common characteristic within a defined period. For example: all people that came from Twitter when they visit your campaign. Or are they existing customers that accessed your page right after they received a first email. See a great in-depth blog post with examples by Dan Martell.
5. Customer acquisition cost (CAC): CAC is the amount of money it costs you to acquire a new user or purchaser. You add up the total spent for customer acquisition such as marketing cost, PPC, content creation. It is a bit difficult to decide what exactly to include in the cost. However, the most important is to agree with it and keep it consistent throughout the campaign, so you can see the changes.
6. Customer lifetime value (CLV): This is the total monetary profit that an average customer produces for your business. To generate it you add up the customer acquisition cost and the retention cost (another one that is a bit funky to calculate). Again, crucial is to agree on the base cost for the entire campaign for a consistent basis. Combining CLV with cohort analyses shows you the type of customer that gives you the best CLV.
Looking at the concepts above, you can generate numerous metrics. Don’t get stuck. Choose one or two most important metrics and continuously track them. Check them regularly and make adjustments as soon as you understand what the issues are. And metrics are never black and white, so your experience and intuition need to be built in for ultimate success.
What are the metrics that you think are most important?