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Marketing is so important to small businesses in this ad-cluttered modern world.
Successfully cutting through the noise and getting your product and service in front of the customer is the difference between soaring as a company and facing closure in a few months.
According to Vital, companies often spend 20 percent or more of their revenue on marketing. But if you aren't tracking the right metrics, you're basically just throwing that money into the darkness, hoping and praying it has the desired effect.
Most likely, it won't.
So if you need to put together a marketing campaign, or tweak the one you have, it's time to start tracking some critical metrics.
There are countless marketing KPIs (key performance indicators) you could be tracking, but we’ve boiled it down to a list of eight key metrics, with KPI examples, you absolutely must track in order to have a solid understanding of where your marketing dollars should be going.
A qualified lead or qualified prospect is a potential client who matches a seller's ideal customer profile, even though they have not contacted your company.
Every business has its own definition of a qualified lead, but in every case, it refers to someone who has a high chance of making a purchasing decision.
Qualified leads are so important to any marketing campaign because they are the leads most likely to pull the trigger and buy your product and service.
Campaigns can produce lots of leads, but may qualify very few, while other more successful campaigns find only a handful of leads, but are able to pull a much higher percentage of qualified leads.
Customer acquisition cost (CAC) is simply how much you spend convincing the average customer to buy a product or service.
CAC incorporates all the cost of reaching a customer and moving them through the sales pipeline, and provides a convenient number that you can compare to the average sale to determine how much profit you're pulling in.
For example, if your total marketing expenses for the year was $50,000 and you brought in 1,000 new customers, your CAC is $50.
A great sign that potential customers are interested in your product is their time spent on site.
If they're spending a significant amount of time not only reading the page that you sent them to, but also checking out other pages on the site, that's a sure sign that they have found something of value and are interested in what you have to offer.
The bounce rate is related to the time spent on site metric, but it's more specific. The bounce rate refers to someone who visits your home page and then immediately leaves.
It's often difficult to decipher the intentions and thoughts of people who visit your site, but someone who "bounces" is pretty clearly signaling they aren't interested in what you have to offer.
If you have a high bounce rate, this is a big indication that either your home page is poorly designed or you are focusing your digital marketing on the wrong people and need a shift in strategy.
Return on investment (ROI) is one of the most fundamental metrics that all businesses in all industries track.
It allows business owners to identify which marketing tactics are resulting in promising revenue returns and which aren't making any traction. This allows them to reallocate resources to more successful marketing tactics with a higher ROI and therefore more profit potential.
Customer lifetime value (CLV) refers to how much the typical customer will bring into your organization in terms of revenue over their lifetime.
Some customers will make a one-time purchase of $20 from you, while others will spend thousands of dollars over a period of years if they really love what you have to offer. By adding all the revenue you've collected together and dividing it by the number of customers you've ever had, you can come up with the CLV.
The conversion rate measures just what percentage of people who end up on your landing page end up turning into a customer.
This can be closely related to bounce rate: landing pages with high bounce rates typically have low conversion rates, although not always.
A low conversion rate is bad for an obvious reason: it means you're spending money on push marketing to send people to the page and not getting the sales you want out of it.
Organic traffic is fantastic for one very simple reason: it's free.
This traffic comes either from your site showing up in search engines or people who know your brand coming directly to your site. Regardless, it means your website is being seen and your reputation -- and therefore your band authority and trustworthiness with consumers -- is growing.
You can build organic traffic by developing a relationship with the paid traffic you bring in, as well as by creating informative, helpful, and well-researched content on your site that is relevant to your customer base.
Tracking the metrics is one thing, but executing is another -- and that’s where CRM software comes in. We've reviewed some of the best CRM software options that can help marketing professionals increase sales pipelines and boost conversion rates.
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