Imagine a tailor sewing apparels without measurements or a baker baking muffins by randomly throwing ingredients in a bowl. Only if one is a seasoned tailor or a five star chef, their end product will not turn out to be a disaster. The classic point we are trying to make here is, life becomes easier when you learn to quantify things. And marketing is no exception here. To track progress of everything, from your revenue to your user base, you need certain metrics. Or to put it the technical way, you need KPIs. Key Performance Indicators (KPIs) are essential for digital marketing and web analytics to keep a tab on your growth.
In this blog, we will plunge into a selection of some insightful metrics & their equations that can help with your comprehension of marketing strategies.
Your answers to questions like ‘What’s happening with my sales? Is my website doing a good job? How well have our content marketing attempts been working lately?’ are just a few marketing metrics and KPIs away. We have gathered a few important metrics here with their formulas that you can’t afford ‘not-tracking.’ So, let’s begin!
Conversion Rate (CR)
The conversion rate on a website is a percentage of visitors who take a desired action, such as making a purchase, signing up for a newsletter, filling out a contact form, or completing whatever goal that the website owner has defined. In simple terms, it measures the effectiveness of a website in turning visitors into customers or achieving specific objectives.
Conversion Rate = (Number of Conversions / Number of Visitors) * 100
Click-Through Rate (CTR)
The Click-Through Rate (CTR) of a website or a specific web page is a metric that measures the effectiveness of a call-to-action (CTA) or a link by indicating the percentage of users who click on that link compared to the total number of users who were exposed to it.
CTR = (Number of Clicks / Number of Impressions) * 100
Cost Per Action (CPA)
Cost Per Action (CPA), also known as Cost Per Acquisition, is a metric used in online advertising and marketing to measure the cost incurred by an advertiser for each specified action that is successfully completed by a user as a result of the advertiser’s campaign.
CPA = Total Cost / Number of Conversions
Cost Per Lead (CPL)
Cost Per Lead (CPL) is a metric used to measure the cost incurred by an advertiser for generating a new potential customer or lead. A lead is typically a user who has expressed interest in a product or service the advertiser offers by providing their contact information, such as their email address, phone number, or other relevant details.
CPL = Total Cost / Number of Leads
Return on Ad Spend (ROAS)
Return on Ad Spend (ROAS) is a metric used to evaluate the effectiveness and profitability of a specific advertising campaign. ROAS measures the amount of revenue generated for every dollar spent on advertising. It helps advertisers assess the overall performance of their campaigns and make informed decisions about where to allocate their advertising budget.
ROAS = (Revenue from Ad Campaign / Cost of Ad Campaign) * 100
Customer Retention Rate (CRR)
Customer Retention Rate is a metric that measures the percentage of customers a business can retain over a specific period of time. It’s a critical indicator of customer loyalty and the effectiveness of a company’s efforts to keep its existing customers engaged and satisfied. Retaining customers is often more cost-effective than acquiring new ones, making customer retention an essential focus for many businesses.
Customer Retention Rate = ((Number of Customers at the End of Period – Number of Customers Acquired During Period) / Number of Customers at the Start of Period) * 100
Customer Lifetime Value (CLV)
Customer Lifetime Value (CLTV or CLV), also known as Lifetime Customer Value (LCV), is a crucial metric that estimates the total monetary value a customer is expected to generate for a business over the entire duration of their relationship with that business. It considers not just the initial purchase but also the potential future purchases and engagement from that customer.
Customer Lifetime Value = Average Purchase Value * Number of Repeat Transactions * Average Customer Lifespan
Final Say!
With digital marketing comes the need to track metrics & analytics and look after the website. Your website deserves to be in the safe hands of a professional marketing agency like P&P that can efficiently look after the website’s health and keep it on brand with timely web analytics and web check-ups.
A healthy website assures accurate analytics and numbers that help you make the right decisions about where, how, and which business domain to target next for expansion.