Two people pointing to a chessboard, representing marketing metrics.
10 Essential Marketing Metrics Every Marketer Should Know
Two people pointing to a chessboard, representing marketing metrics.

10 Essential Marketing Metrics Every Marketer Should Know

Unless you have an unlimited marketing budget to burn, you’ll probably be asked to prove the effectiveness of your campaigns at some point. You could point to a wave of new customers and claim the credit for bringing them in, but that won’t get you far with most stakeholders. They’ll want to know how much it cost the marketing team to capture these new customers, and how they affect key business metrics like ROI, CPC, LTV, and more. If those acronyms don’t ring a bell, you might need to brush up on your marketing metrics.

Here’s a list of 10 crucial marketing metrics, how they’re calculated, and what marketers can use them for.

What are marketing metrics?

Marketing metrics are quantitative measurements that marketers use to quantify the success of their campaigns and strategies. They allow marketers to ensure resources are used efficiently, identify areas for improvement, and determine which tactics should be used in future marketing efforts. Marketing metrics can include anything from website traffic or leads generated to conversions or customer lifetime value. By tracking these key performance indicators (KPIs), marketers can gain valuable insight into what is working and what isn’t so they can adjust their strategies accordingly.

Marketing Metric #1: Return on Investment (ROI)

Return on investment (ROI) is a key metric for marketers that measures the profitability of their marketing efforts. It’s a simple calculation that helps marketers understand how much they’re getting out of their marketing initiatives, compared with what resources they put in. It’s calculated with this simple formula:

ROI = (Net Return on Investment ÷ Cost of Investment) x 100

This return is typically represented in dollars earned for the business, but marketers can also use signups, new leads, or any other metric that represents success for the business. By tracking ROI, marketers can make informed decisions about which marketing efforts to focus on and where to allocate resources for maximum impact.

Marketing metric #2: Cost per Acquisition (CPA)

Similar to ROI, marketers use cost per acquisition (CPA) to gauge the success of their marketing efforts. But where ROI compares the value of a campaign’s result to the resources put in, CPA drills down further to determine how much each new customer cost to acquire. Here’s the formula:

CPA = Total Cost of Marketing Initiative ÷ Number of New Customers Acquired

Say, for instance, that you spent $100 on a new social media advertising campaign that earned you 20 new customers. Dividing the $100 by 20 new customers means that each new customer cost $5 to acquire. Depending on the price of your product, this number can tell you how successful this campaign was and help you decide if it’s worth replicating in the future.

Marketing metric #3: Conversion Rate

Conversion rate is one of the most important marketing metrics for marketers to measure and understand. It measures how successful a campaign or strategy is in terms of turning leads into customers, and it’s essential for any marketer who wants to make sure they are getting the best return on their investment. While ROI or CPA are used to measure the overall success of a marketing initiative, conversion rates tell you one thing; how many visitors became customers.

Marketing metric #4: Click Through Rate (CTR)

Click through rate (CTR) is an important marketing metric that measures the number of people who click on a link or advertisement. It’s a key metric for measuring the success of campaigns and strategies, as it tells marketers how many people are engaging with their content. By understanding CTR, marketers can better identify which campaigns and strategies are effective in terms of generating engagement and driving traffic to their website or landing pages. Here’s how it’s calculated:

CTR = Total Clicks ÷ Impressions

#5: Customer Lifetime Value (CLV)

Customer lifetime value (CLV) is a crucial metric for marketers, salespeople, and other teams. At its core, it communicates how much revenue you can expect from an average customer before they stop buying your product or service. Here’s how you calculate this marketing metric:

CLV = (Customer Value x Average Customer Lifespan)

This formula will give you the CLV for a specific customer, but you can easily average it out to your whole customer base by using average customer value rather than the value of a specific customer.

By calculating CLV, you can gauge how much you should invest in marketing to existing customers — or cross-selling. It’ll also help you determine if the CPA of a specific initiative is acceptable or too expensive. For example, if your company’s average CLV is $200 and your CPA for a marketing campaign is $250, you’ll know you’re spending more on that campaign than you’ll get from new customers.

Marketing metric #6: Average Order Value (AOV)

Where CLV tells you how much the average customer is worth over their entire time with your company, average order value (AOV) measures the average amount of money a customer spends per transaction. With this metric, you can determine how valuable a single sale is, which can help inform future marketing strategies. Should you be upselling customers? Increasing your prices? Or just bringing in new business? Here’s how you calculate this metric:

AOV = Total Revenue ÷ Total Number of Orders

A higher AOV means you can invest more resources into getting a single sale, whereas lower AOV means you have to use strategies that can guarantee a lower CPA.

#7: Bounce Rate

A bounce rate measures how many visitors leave your website after viewing only one page. It’s essential for marketers to determine how effective their website’s content is. This marketing metric is usually calculated automatically by analytics tools, but here’s how you can calculate it manually:

Bounce Rate = Total Number of One-Page Visits ÷ Total Number of Entries

If your website’s bounce rate is pretty high across the board — over 70% — then you might have cause for concern. Are you bringing in traffic that doesn’t fit your product’s target audience at all? Maybe that traffic isn’t landing on the right page? You can also compare a specific page’s bounce rate to your website’s overall bounce rate to determine if it’s doing its job.

Marketing metric #8: Engagement Rate

Engagement rate is a marketing metric that’s used in social media marketing to determine how effectively a brand is connecting with their audience. After all, having a high follower count doesn’t always mean your social media platforms are an effective marketing channel. Here’s how engagement rate is calculated:

Engagement Rate = (Total Number of Interactions ÷ Total Number of Followers) x 100

“Interactions” refers to likes and comments, essentially whenever someone interacts with one of your posts. By measuring and tracking engagement rates, marketers can tailor their social media marketing to capture as much attention as possible. 

Marketing metric #9: Cost Per Click (CPC)

Cost per click (CPC) is a marketing metric that measures how much it costs to get someone to click on an advertisement or link. Marketers need to know this metric because it’s usually part of the pricing structure for advertising platforms, from Google Ads to Facebook ads. By tracking CPC on their initiatives, marketers have a better idea of how much they’re spending to acquire customers, and can compare this with the prices offered by other advertisers.

Using CPC in conjunction with CLV can tell you how much you should spend on advertising, based on how much money you can expect to bring in with each new customer.

#10: Churn Rate

Churn rate helps marketers understand how many customers they’re losing over time. It’s used in broader business strategies to help determine which departments should get resources — and for what initiatives — but marketers can use it too. Churn rate is a great metric to measure the success of a marketing initiative aimed at retaining customers. Here’s how it’s calculated:

Churn Rate = (Customers Churned ÷ Total Customers) x 100

Marketers can also use churn rates to get insights about their product. For example, a high churn rate, can mean that the cost of the product or service is too expensive or that an essential feature is missing.

Marketing metrics for the marketer in all of us

Understanding marketing metrics is essential for quantifying the impact of your marketing initiatives on the business at large. By tracking and analyzing these 10 key marketing metrics marketers will be able to make more informed decisions regarding their strategies and campaigns. With a better understanding of how effective their efforts have been at driving sales or leads for their business, they can then adjust accordingly if needed. Ultimately this data-driven approach allows them to maximize ROI and ensure their campaigns help grow the organization’s bottom line.