In the context of marketing, Key Performance Indicators (KPIs) are metrics that businesses can use to assess the effectiveness of their marketing activities and how they impact overall business growth. That is, KPIs are important to track in order to understand what’s working and what’s not in your marketing efforts.
With concrete data in front of you, you can repeat successes and reduce wasteful spending on the efforts that aren’t bringing results. This way, you’re able to use your marketing budget more wisely and improve profitability.
As an agency, you’re already aware of the importance of keeping track of KPIs and working with them to achieve specific business goals. And while every business will have its own digital marketing KPIs, there are some unique ones that agencies can focus on in order to work towards the holistic growth of their small business clients.
Here are the five unique marketing KPIs that agencies can track when working with small business owners to help them get the most out of their marketing efforts:
Table of Contents
1. Customer Acquisition Cost (CAC)
Customer acquisition cost is the money spent marketing your client’s business per each new customer acquired. For instance, if a sponsored social media post costs $100 and brings in 10 new customers, the CAC per customer would be an average of $10.
In other words, track what you spend on a marketing campaign in a certain time frame along with the number of recent customers you acquire during that time frame and divide your expenses by the number of new customers to get the CAC.
With CAC figured out, you can set goals for how many new customers you want to acquire and then allocate your marketing budget better.
2. Customer Lifetime Value (CLV)
Knowing how much a customer is worth to your client over the lifetime of their relationship is crucial to tailor content towards the ones who will most often help you achieve your revenue goals. Here’s a step-by-step approach to calculate customer lifetime value.
It’s a critical KPI as it costs less to keep existing customers than it does to acquire new ones, so increasing the value of existing customers is a solid way to drive growth. Knowing the CLV helps businesses build strategies that correctly balance new customer acquisition with existing customer retention in order to maximize profitability.
Ultimately, you don’t have to get bogged down in complex calculations – just be mindful of the value that a customer provides over their lifetime relationship, and work on bottom-of-the-funnel marketing to improve that.
3. Customer Churn
Also referred to as customer attrition, it is the percentage of customers that stopped using your client’s product or service during a certain time frame. Most businesses classify a customer as churned after a certain period of time when the customer has not interacted with or purchased from the business.
To calculate the customer churn rate, simply divide the number of customers you lost during a specified time period by the number of customers you had at the beginning of that time period. For instance, if you start your month with 400 customers and end at 380, your churn rate is 5% because you lost 5% of your customers.
Again, it costs less to keep existing customers than it does to acquire new ones and while some churn is unavoidable, minimizing this key metric is the difference between a successful business and a failed one.
There are many diverse factors that result in customer attrition– from offering a customer loyalty program to improving your website’s accessibility, there’s a lot you can do to reduce churn. An analytics tool can help you identify those issues so you can take the proper steps to minimize churn.
4. Website Conversion Rate
If the content and landing pages on your client’s website are not bringing in traffic and converting them, then the foundations of your digital marketing campaign are shaky. A good way to gauge whether the effectiveness of content and landing pages is to measure the number of people who visit them (website traffic) via search engines and whether the call-to-actions (CTAs) are converting them.
Landing pages are designed exclusively to guide website visitors into a sale or conversion. But if the content on your website (including blog posts) and landing page is poor quality, and not optimized for both humans and search engine crawlers, then the conversion rate would suffer.
5. Net Promoter Score (NPS)
The Net Promoter Score is a metric used to measure customer experience and predicts business growth. On a scale of 1 to 10, this KPI measures the willingness of customers to recommend a company’s products or services to others.
NPS sorts customers into three categories: Promoters, Passives, and Detractors. Using a short survey, feedback form, or by directly asking “How likely is it that you would recommend this business/brand to a friend or colleague?”, you can readily gauge the level of customer satisfaction.
Promoters will give a 9-10 score. They are very loyal to your company and its products and would love to recommend the brand to others in their network. Passives are in the 7-8 range and while they are happy with the business, they can be vulnerable to the influence other marketers have and stand a good chance of being swayed by the competition. Finally, Detractors score between 0 and 6 and are likely to generate bad word of mouth.
Once the customer base is surveyed, take the percentage of promoters and subtract from the percentage of detractors to reach your net promoter score. Now you know how happy customers are with your small business client. Consider reaching out to individual Promoters and encourage them to spread a good word, or reach out to Detractors to understand what’s lacking and what you can do to turn them into Promoters. If you’re looking for an NPS collection solution, GatherUp provides a seamless process for asking your customers how they feel about your business.
Over to You
With modern tracking and analytics tools like Google Analytics available at virtually no cost, you can readily gain access to all such crucial data that provide clear insight into the successes and failures of your marketing activities, and consequently, make more informed and impactful decisions. You can then track these insights effectively with your Cyfe marketing white label dashboard and share that with your small business owner clients.
And while there are countless KPIs you can track, the ones discussed above are critical to the long-term success of any business. So, as an agency, make sure to have a strong focus on them when working with your small business clients.