Seven Marketing Metrics Worth Obsessing Over

Leads and sales revenue are important, but they’re not good measures of what could be.

February 4, 2013

Marketers need to measure a lot of things in order to get better. Not everyone does—and those who do sometimes measure the wrong things.

The obvious things to measure, such as leads and sales revenue, are important. But they’re quite often just a measure of what is, and not an accurate measure of what could be or, perhaps more importantly, what’s causing what is.

Until you can grasp the things that impact your organization’s true health you’ll be stuck treating symptoms instead of treating the disease.

There are many ways to grow a business, including injecting lots of money into generating awareness and interest. But the most profitable way to grow is to take what a business does well and grow organically through the base of your success.

I’ve used the following seven metrics to gain a crystal clear picture about the health, growth potential, and challenges facing businesses interested in growing organically.

I present these as seven metrics worth obsessing over:

1. Total community membership. To me, this is a measure of all the social stuff: Email subscribers, Twitter followers, Facebook likes, Blog readers, and so on.

I know a lot people tout quality over quantity, and there’s certainly some truth to this, but what about quantity and quality. The size of your community does matter in terms of social proof, referrals, word of mouth, sharing, trust, and awareness.

A recent survey of small business marketers conducted by Vocus showed that marketers attributed more success to social media the larger their fan base was. Measuring the size of your following and working on ways to build the numbers is an important place to start.

2. Average revenue per customer. This is a measure of total revenue divided by number of customers. When you stop to calculate this number, you can focus on doing more business with existing customers or at least increasing the average dollar per sale.

This focus has to start with the improvement of your customer touch points, service, and pricing. These are great places to look for opportunities to grow your business.

3. Percentage of leads converted. This is perhaps the least-appreciated metric there is. Everyone wants to know how to get more leads, but the gold is in converting more leads to customers.

Get very, very serious about establishing a baseline on this number so you can take every element of your marketing, sales, and service apart in an attempt to impact it in positive ways. For some businesses, a 5% or 10% bump in this number means doubling revenue.

4. Percentage of business by referral. This may be one of the best ways to get a sense of how healthy a business is. You can always do more to increase referrals, but if you’re not even getting accidental referrals there are some other things that might need fixing first.

Keep an eye on this number and you’ll have the viewfinder for how your marketing campaigns and your point of differentiation are being received and executed.

5. Percentage of repeat business. This is another measure of satisfaction, but it’s also a bellwether of opportunity. If you are getting referrals but not a lot of repeat business, it may be simply a matter of extending your offerings and growing organically.

6. Cost to acquire a new customer. To me, this is the ultimate measure to use for creating a budget. If you know this number you can start to bring it down while understanding how to buy new business.

This, of course, assumes that the lifetime value of a customer is significantly higher than the cost to acquire the customer.

7. Percentage of customers likely to refer. This is a shout out to the use of the Net Promoter concept put forth in “The Ultimate Question” books by Fred Reicheld. This is something that is easy to measure and should be done on a rolling basis with every customer.

A lot of people want to measure this just so they can promote how high their score is. I see it as a way to get referrals, testimonials, and a second chance.

When you ask every customer on a scale of 1 to 10 how likely it is they would refer your business, you will get simple feedback that will allow you to take action in a number of positive ways—all good things.

So, get to work digging into at least a couple of these metrics and create processes to extract and understand this data so you focus squarely on the right numbers.

JOHN JANTSCH is the founder of Duct Tape Marketing and author of “Duct Tape Marketing,” “The Commitment Engine,” and The Referral Engine. This article is reprinted with permission.