It’s important to continually learn about and improve your marketing initiatives. But before we can optimize our campaigns, we have to be able to measure and manage them. In this lesson we’re going to show you the 5 key digital marketing metrics you should be tracking. Here they are:

• The first key metric is Total Visits. Your website should be the primary target of new or existing customers, but you can also measure total visits to any location relevant to your campaigns, such as landing pages or social channels. Measuring your total number of visits will give you a “big picture” idea of how well your campaign is driving traffic.

• The second key metric is Conversion Rate. Whether it’s email subscribers, eBook downloads, or a pure lead generation conversion, every campaign has a goal. Once we understand how many people have visited our page in question, we need to determine what percentage of them actually did what we wanted them to do in the first place. If your goal is a white paper download, and you had 1,000 visitors to the page, and 100 of those did what you wanted them to (download a eBook, fill out a form, etc…) then your conversion rate for that goal would be 10%

• The third key metric is the Cost per Conversion. Using the previous example, where 100 people out of 1,000 converted and completed your goal, it’s important to understand how much you spent to get those 100 conversions. Let’s say you spent a total of $500 dollars on your campaign. Take the total amount you spent, divided by the total number of conversions to get the cost per conversion for your campaign.

• The fourth Key Metric is Cost of Customer Acquisition or CAC for short. CAC is an extremely important and versatile metric, which can be applied to both your on and offline activities. In the previous example we looked at conversions, which could be any goal you want to achieve. CAC however focus on customers and how much it costs us to acquire them. Let’s say you spent $10,000 dollars across all your marketing initiatives, from social media, and content, to SEM, SEO and Email. All these efforts helped you acquire 100 new customers. To determine CAC, you simply take the total amount spent across all initiatives, divided by the total number of customers acquired by those initiatives. In this example, our CAC would equal to $100, meaning it cost us $100 marketing spend to acquire 1 customer.

• The fifth key metric is Customer Lifetime Value (CLV). Customer Lifetime Value or CLV for short helps us understand the value of an average customer over their lifetime. There are a number of ways to calculate CLV depending on your business model, but the simplest formula is to take the (Average Order Value – Costs to Acquire a Customer) x (Number of Repeat Sales) x (Average Retention Time) For example, let’s say you’re selling magazine subscriptions for $20 per month, and on average it costs you $15 to acquire a customer, with the average customer subscribing for 3 years. Our CLV formula would look like this ($20 – $15) x (12 Months) x (3 Years) = $180. Now, compare your Customer Lifetime Value to the Cost of Acquiring a Customer. The ideal ratio of CLV to CAC is 3 to 1, and some companies like sales force use 5 to 1. The point is if your CLV to CAC ratio is too low, your business is not sustainable, if it’s too high you’re not investing enough in acquiring new customers.

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