The business world is unpredictable, and it is hard to predict what variables affect business growth. Your business would oscillate between feast and famine modes at multiple times of the year. However, there are a few KPIs to analyse business performance. You can see the brand’s past performance and predict future performance.
So, you must be aware of 6 KPIs that give an objective picture of your campaigns.
1. Customer Lifetime Value (CLV)
The CLV KPI allows you to find the value a customer brings to your brand throughout the entire lifetime. Many brands will find that only a few customers contribute to the company’s growth. If they retain those customers, they can generate a steady income. Brands can ask a digital marketing company to track the CLV KPI and determine whether acquiring new customers is more expensive than retaining existing ones.
Customer Lifetime Value = Customer Value * Average Customer Lifespan
The first step involves determining the Average Purchase Value of your brand.
Average Purchase Value = Total Amount of Revenue/ Number of Purchases
Then you should divide the number of purchases made by the number of individual customers who purchased a product to get the Average Purchase Frequency. If you multiply the Average Purchase Value and Average Purchase Frequency Rate, you can arrive at the Customer Value. You might find it difficult to make these calculations, so hire a digital marketing company to track this KPI.
Average Purchase Frequency = Number of Purchases/ Number of Individual Customers
Customer Value = Average Purchase Value * Average Purchase Frequency Rate
You also should determine the Average Customer Lifespan in your brand. After that, you have all the variables to arrive at CLV.
2. Call-To-Action (CTA)
The CTA completes the buyer journey and leads the customer to a purchase. It is an important KPI to track, as it can tell you the effectiveness of your campaigns in convincing customers. You should also try different colors and find which colors are effective in conversions. Likewise, you can check whether a new copy results in more conversions through split tests. After you get the results, you can hire a digital marketing company to optimize your CTAs for conversions.
3. Customer Retention Rate (CRR)
With this KPI, you can determine how many people return to your brand. Not every customer will return to your brand, as they would like to explore other brands. But if you have more repeat customers than new customers, it’s a sign that customers are satisfied with your products and services. When you have a low score in the CRR KPI, you should work on retaining customers by improving customer service.
So, work with a digital marketing company in Delhi to give a better experience for customers who visit your site.
Customer Retention Rate = (Number of Customers at the end of the year – Number of acquired customers during that year/ Number of customers at the beginning of the year) * 100
4. Customer Acquisition Cost (CAC)
The CAC KPI helps to determine how much it costs to acquire new customers. With this metric, you can calculate your marketing and advertising costs. It will inform your strategy, and help you avoid going after new customers if it’s too expensive. In that case, you can focus on retaining customers or asking them for more referrals to increase revenue.
Customer Acquisition Cost = (Overall marketing costs on customer acquisition + Money spent to pay the salaries of marketing team + Money spent on marketing tools and software + Money spent on consultants and freelancers)
5. Cost Per Lead (CPL)
The CPL KPI allows your brand to determine the amount required to acquire the contact information of people interested in your product. It helps you determine whether you should try alternative lead generation techniques. The current lead generation techniques could be outdated and might not give you good returns. You can find out the cost of acquiring leads is expensive and change your strategy accordingly. A lead is not necessarily a customer, so this metric helps you cut expenses.
CPL = Cost of Advertisement/ Number of acquired leads
6. Return on Investment (ROI)
Almost everyone is familiar with this KPI, and we can hear people talk about getting good returns on their investments every day. The metric helps businesses to determine whether their marketing campaigns are performing well. If the ROI is low, brands can analyze various operations in the campaign to find things that need a fix. Also, they can quit campaigns in areas where their campaigns are not giving them good yield.
ROI = ((Profit- Cost of Investment)/Cost of Investment) * 100
Conclusion
The KPIs can’t give you the complete picture, but it gives you a general overview of business performance. You should update the data from time to time and let the software track your campaigns. Also, don’t stop with this list but go further and identify other KPIs more relevant to your business. When you study more about your business, you will get insights into the variables that affect your business.
Also read: The Best Things About Digital Marketing Agencies You Should Not Miss
