The 7 marketing metrics every small business should be tracking

A challenge that many owners of small and midsize businesses (SMBs) face is a limited budget and bandwidth. As a result, they need clear proof of whether their efforts are working in order to get the most out of their budget.

A digital marketing strategy isn’t complete without a set of metrics to measure. Without them, you have no clear idea of your performance or whether you’re getting closer to achieving your marketing goals. These seven metrics will help you measure the success of your marketing campaigns and refine them over time.

1. Customer acquisition cost (CAC)

Customer acquisition cost (CAC) measures how much you have to spend on one customer before they make their first purchase. It’s a metric that shows how well you’re maximizing your budget.

Reducing your CAC should be the goal of every successful business. The smaller your CAC, the less you have to spend to get a new customer. You’ll then have extra revenue that you can use to reinvest in other areas of your company.

At the end of each marketing campaign, you have to measure the CAC of each channel that you used. Then, you can compare them and determine which channel has the lowest CAC, so you know where to invest more heavily in the future.

How to measure it:

To calculate your CAC, use the following formula:

CAC = Total marketing budget on channel/amount of new customers earned across a specific time

For example, let’s say you’ve spent over $10,000 in social media ads to promote your products. The ads helped bring in 2,000 new clients. Using the formula above, your CAC is $5.

2. Customer lifetime value (CLV)

Customer lifetime value (CLV) is the revenue each customer brings throughout their relationship with your company.

Your CLV is an essential metric to track for two reasons. First, the higher your CLV, the more sales you can get from each customer. Second, it’s an excellent indicator of how loyal your customers are and the quality of your brand experience — if customers frequently purchase your products, then they’re likely satisfied.

How to measure it:

To calculate your CLV, first calculate the following metrics:

• **Average revenue per customer: **Divide your total brand revenue over the course of a specific timeframe (generally a year) by the number of orders made during that time.
• Average purchase frequency rate: Divide the total number of orders by the number of customers who purchased.
• Customer value (CV): Multiply the average revenue per customer by the average purchase frequency rate.
• Average customer lifespan: Calculate how long a customer continues to purchase from you in years.
• CLV = customer value x average customer lifespan

Here’s an example to help you out:

• Average purchase value: $200,000 total revenue / 8,000 orders = $25 average revenue per customer
• Average purchase frequency rate: 8,000 orders / 80 customers = 100 average purchase frequency rate
• **Customer value (CV): **$25 average revenue per customer X 100 average purchase frequency rate = $2,500 customer value
• **Average customer lifespan: **4 years
• CLV: $2,500 customer value X 4 average customer lifespan = $10,000 CLV

3. Website traffic

Your website traffic is the total number of visitors who go through your website. It’s one of the most basic yet essential indicators of website performance — the more traffic you drive, the more eyeballs you’re getting on your products or services. Measuring website traffic also allows you to identify what type of content is performing best and which pages drive the most visits.

How to measure it:

Google Analytics is the best tool you can use to measure and analyze your website traffic. On top of being free to use, you can access granular data on your website’s weekly or monthly performance.

To get a complete picture of your traffic, Google Analytics allows you to identify your principal sources of traffic. These different traffic sources include:

• Paid search
• Organic search
• Direct traffic
• Referrals
• Email

4. Website conversion rate

A conversion rate is any desired action a visitor takes when they land on your website. That could be a visitor booking a call to learn more about your services, signing up for your newsletter, or purchasing a product.

While it’s vital to measure your website traffic, it’s not complete without your conversion rate. There’s no point in driving as much traffic as possible if you’re not then converting those customers.

If you’re driving lots of traffic but your conversion rate is low, it could be a sign that there’s something wrong with your user experience, web design, or even the subject matter of your content. For example, maybe your website doesn’t look good on mobile. Or visitors may find your website hard to navigate and can’t find what they’re looking for.

How to measure it:

To measure your conversion rate, first determine what you consider a conversion. For example, let’s say it’s when a customer makes a purchase.

Then, you use the following formula:

Conversion rate = conversions / visitors to your website X 100

Out of 10,000 visitors to your website, over 1,000 of them converted. Your conversion rate will be 10%.

5. SEO rankings

Ranking for relevant keywords is an essential part of a marketing strategy. It allows you to drive traffic from search terms your customers are typing into Google. The more relevant keywords you’re ranking for, the more people will become aware of what you’re offering through search.

If you realize that your SEO rankings are low, it means you need a better content strategy for your small business. You must update your company blog with authoritative content that targets relevant keywords in your niche, along with getting backlinks from other sites.

How to measure it:

The best way to measure your rankings is through an SEO tool like Google Search Console. The platform gives you data on which keywords your pages are ranking for and their search volume.

On top of analyzing how you’re performing on search engines, Ahrefs also provides data on other important metrics such as backlinks and social shares. You’ll get a complete view of where your website stands in terms of SEO.

6. Customer churn

Customer churn refers to the number of customers who either unsubscribe or stop purchasing from you.

While it’s normal to lose customers, a churn rate that’s too high is a sign that there’s something wrong with your customer experience. Having too many customers churn negatively impacts your bottom line since you must invest more money into acquiring new customers.

After calculating your churn rate, you can dive into the reasons customers are churning. Reasons can include not attracting the right customers or a poor pricing strategy.

How to measure it:

Here’s the formula you can use to calculate your churn rate:

Total number of customers at the start of a time period - number of customers at the end of the time period / total number of customers at the start of a time period

For example, let’s say that you had 100 customers on January 1 and 80 customers on March 31. In this case, you’d have a churn rate of 20%.

7. Lead attribution

Lead attribution involves identifying which marketing channels are responsible for bringing in new customers. It helps you get a clear view of which ad, campaign, or search term was the best for getting the lead.

Getting proper lead attribution data helps you improve your next marketing campaign. It will take away all the guesswork in your marketing and ensure you’re investing in the channels that drive the greatest ROI.

How to measure it:

With CallRail’s Call Tracking feature, you can keep track of online channels, such as emails or social media posts, to figure out where the lead is coming from.

Each CallRail user gets access to a Lead Attribution Report that shows which channels generate the most qualified leads at specific points in the customer journey. You can then share the insights with your team and compare the performance of each channel to determine which one converts the most prospects.

Measure your success with the right marketing metrics

Metrics help you understand whether your marketing is working or not, so you can continually refine it until you get the results you want. That way, you can optimize your company’s performance and keep stakeholders happy.

Learn more about how CallRail can help your small business track and optimize marketing initiatives. Try it out free today.