Gauge Your Engagements & Monitor Your Metrics

Image courtesy of @elisamichelet via Unsplash.

The only way to know whether your business is successful is by monitoring your metrics.

What are metrics?

Business Dictionary defines them as:
“Standards of measurement by which efficiency, performance, progress, or quality of a plan, process, or product can be assessed.”

So essentially it’s how you assess the success of your business efforts.

But, if you’re a fledgling marketer or a solo entrepreneur with a start-up, it’s confusing to know which metrics you should be tracking.

Never fear, I’ve created this comprehensive guide to metrics so you can track everything you want to track and you can continue to grow.

The metrics are split into sections so you can pick and choose which metrics you think would work best for you.

I’m not suggesting that you track and report on every metric listed below -- unless you have the capacity (!) -- but it’s ideal to choose one or two from each section.

Ready? Let’s get stuck in.

Revenue

Considered the most important metric for most companies, the revenue is essentially your business’ income.

Not to be confused with profit, however - revenue is the total amount of income that your business generates, and you can split it further in a variety of different ways, depending on what you wish to track.

For example, you can track revenue by product, territory (country, county, state, or continent), employee (useful if you have a team of salespeople), or even across the whole company.

Tracking your revenue is useful to make predictions on how much you’re likely to make in the future, and for setting yourself realistic business objectives.

Profit

Profit is another metric that every business should be tracking - and probably is, maybe without knowing it.

It’s calculated with your revenue (total amount earned) minus your investments (company expenses or costs).

Revenue - Investment = Profit

Return on investment (ROI)

ROI is an acronym that’s thrown around a lot in the business world.

Simply put, your ROI is a percentage or ratio of how much you have gained (or lost) on your investments, or costs.

Here’s the formula:

(Revenue - Investment) / Investment = ROI

This helps you gauge how effective specific investments are -- whether they’re marketing efforts, trade shows or other events, members of staff, or development of new products.

Number of customers

A very simple, but very useful metric, for determining the success of marketing campaigns or other experiments and for tracking the growth of your business in general.

You can also further filter this down to territories, products, and salespeople, to determine their effectiveness and individual growth.

Customer retention rate

Customer retention is something that doesn’t have as much focus as it needs to in the business world.

Customer retention is essentially keeping customers buying your product or service (particularly useful for businesses with membership or subscriptions), which can be improved with customer communication, customer service, and loyalty schemes.

The customer retention rate is a metric you can use to measure your customer retention, and attribute a percentage to it -- 100% being all of your customers continuing to purchase, 0% being none of them making a repurchase in a specific time period.

It’s another formula which looks more complicated than it actually is:

((Customers at the end of the time period - New customers in the time period)/Customers at the start of the time period) x 100

For example, your total customers at the start of a time period could be 120, total customers by the end of the month could be 100, with 10 of those being new customers, and your customer retention rate would be:

100 - 10 = 90
90 / 120 = 0.75
0.75 x 100 

It’s a useful formula to set your business customer retention goals -- loyal customers are the best kind.

Conversion rate

The conversion rate can be used in both a sales and marketing capacity, but essentially calculated using the same formula.

For sales teams, the conversion rate is usually dependent on leads given to specific salespeople (often from marketing efforts), versus the actual number of sales made from those leads -- how many converted from leads to customers.

Customers / Leads = Conversion rate (multiplied by 100 for a percentage)

For example, if you had 400 leads passed over from marketing efforts, and 50 of those converted to sales, the conversion rate would be:

50 / 400 = 0.125
0.125 x 100 = 12.5
12.5%

Once again, this metric is handy for setting monthly or yearly goals for your business, or even for individual salespeople or territories.

Leads

Every business needs leads to grow and thrive.

A lot of marketing efforts will be into producing more leads, which can then, in turn, be converted to paying customers.

You can track the total leads in a week, month, or year, which are then added to your records, or you can split your leads those generated from specific marketing efforts, such as content marketing.

For more on lead generation, check out our comprehensive guide, Lead Generation for Beginners.

Qualified leads

Qualified leads are the next step from new leads.

You would reach out to the new leads from a marketing perspective in order to further qualify them before they become leads for your sales process.

This is often done by sending emails, or encouraging another type of engagement from that lead, and if they bite, you can then classify them as a qualified lead.

You can use the total number of qualified leads as a metric, or you could calculate your qualified lead rate:

(Qualified leads / Total leads) x 100 = Qualified lead rate

For example, if you had 100 leads and 25 of those became qualified leads, then your qualified lead rate would be:

(25/100) x 100 = 25%

Return on marketing investment (ROMI)

The return on marketing investment (ROMI) is much the same as the traditional return on investment (ROI), but specifically for marketing efforts, rather than business efforts in general.

It can be used for specific marketing campaigns and for all marketing efforts.

For example, if you are running an advertisement on social media, like LinkedIn, and you invest £100 into the ad, but can attribute £1000 in sales from that ad, your ROMI would be:

£1000 - £100 = £900
£900 / £100 = 900%

Referrals

Referrals are a fantastic marketing metric, and once again, something that more businesses should be tracking and promoting.

Word of mouth is the most effective lead generation and conversion tactic -- according to Nielsen, 92% of consumers surveyed said that they trust word of mouth over other marketing activities.

You should be tracking referrals, and using them as a metric with a referral rate:

Total number of customers / Number of referrals = Referral rate

Plus you can go even further to also calculate how many of those referrals became actual purchases:

Number of referrals / Sales from referrals = Referral conversion rate

For example, if you had 100 customers, and 10 of them referred a friend, your referral rate would be:

100 / 10 = 10%

And if 5 of those referrals ended up purchasing, your referral conversion rate would be:

10 / 5 = 50%

You should always aim to increase these figures because you’ll see that word of mouth marketing really is as effective as we say it is!

Testimonials/reviews on third party sites

Testimonials and reviews on third party sites are similar to customer referrals, just on a larger, and perhaps more diluted scale.

While they’re still a form of word of mouth marketing, it would likely take more positive reviews to convince a customer to purchase from you.

You should be doing whatever you can to get positive reviews -- both on your own website and on third party sites.

Testimonials and reviews as a metric are simple to track -- literally the number of reviews from your customers.

From there, you can dive further into your median rating (if your reviews/testimonials are rated numerically) by adding the total review ratings and dividing by the number of reviews.

I’ve explored the topic of customer feedback in more depth in the article Listening: The Unappreciated Skill of the Marketer.

Cost of customer acquisition (CAC)

Similar to ROI and ROMI, the cost of customer acquisition is specific to individual customers, or the average customer.

It’s essentially one step further in the ROMI calculation -- looking at how much it costs, on average, to convert a lead into a customer:

Amount spent on lead generation / Number of new customers as a result of lead generation = Cost of customer acquisition

For example, if you spent £1000 on a Facebook advert, and garnered 200 new customers from that advert, your cost of customer acquisition would be:

£1000 / 200 = £5

Customer lifetime value (CLV)

The customer lifetime value is important to gauge how much revenue each customer means for your business.

This helps you to determine how many customers your business needs to stay afloat and to continue to grow.

It’s a bit of a trickier formula, but a useful process nonetheless:

Total revenue in a year / Number of purchases in a year = Average purchase value

Number of purchases in a year / Number of customers who made purchases in a year = Average purchase frequency rate

Average purchase value x Average purchase frequency rate = Customer value

Average number of years customer purchases x Customer value = Customer lifetime value

For example, if you made £100,000 in a year, with 50,000 purchases in a year, your average purchase value would be:

£100,000 / 5,000 = £20

Then if you had 10,000 unique customers purchase in that year, your average purchase frequency rate would be:

50,000 / 10,000 = 5

From that, you can calculate your individual customer value for the year:

£20 x 5 = £100

Then you take the average number of years that a customer would purchase from you -- in this example, we’ll say 20 -- and you’ll get your lifetime customer value:

20 x £100 = £2,000

From that, each customer you have is worth £2,000 to you in their lifecycle.

Then you can attribute reasonable amounts to lead generation, customer conversion and customer retention, to make sure that you don’t exceed that amount -- otherwise, your spend will be more than your revenue.

Traffic

Traffic is the amount of users you have visiting your website.

There are lots of different types of website traffic, most (or all) of which you can track on Google Analytics or your website provider’s analytics page (such as Squarespace or Wordpress).

A few different types of traffic you can monitor are: SEO traffic, external traffic, direct traffic, traffic from different devices (such as desktops, phones or tablets), sources (from other websites, links from emails and social media) and channels.

Search ranking

Your search ranking is where you appear for key search terms relevant to your website and business.

You should be tracking these regularly as part of your SEO strategy, so you can create more content relating to your top keywords and potentially invest in PPC campaigns.

For those of you keen to boost your SEO knowledge, here’s my handy guide: 8 SEO Basics You Should Know.

Time on site

Also available in Google Analytics or your platform provider’s own analytics, this is the average time that a user spends on your website -- or even on specific pages.

It’s useful to look at in relation to your conversion rate -- often, you’ll find that the longer a user spends on your website, the more likely they are to purchase from you.

Conversion rate

The conversion rate in this sense is really only applicable if customers can purchase directly from your website.

It looks at the amount of users visiting your website (or page) divided by how many people purchase:

Website/page visitors / individual purchases = Conversion rate.

For example, if you had 100 people visit your website and 20 of them purchase, your conversion rate would be:

100 / 20 = 20%

Total site visits/unique visitors/repeat site visits

These statistics are quite generic, but useful when looking at conversion rates or lead generation metrics.

Easy to find on Google Analytics (usually on the main dashboard) and on your website provider’s own analytics.

Bounce rate

The bounce rate is how many people visit your website, then leave it without interacting with it.

Google Analytics describes it as “a single-page session on your site” -- someone has visited your web page, perhaps not seen what they wanted to, or been dissuaded by a pop-up or even just not liked an image (whatever reason), and then they leave your site with no further clicks.

Your bounce rate should change as you make changes to your key pages that show up on search results, like your homepage or primary pages like category pages.

Followers/likes/new followers

If you’re on social media, in some form or another (and you should be), you’re likely keeping an eye on your followers on that platform.

It’s also worth exporting reports on your followers from your different social media platforms -- they often show you how many new followers you’ve gained daily, weekly, monthly and annnually.

Useful to track, particularly if you’re a new startup looking to grow your awareness and leads.

Engagements

Engagements on social media are so valuable -- the more people engage with your posts and your profile, the more likely other people will see your profile.

Engagements are likes, comments, and shares -- any way that a person interacts with your post.

You should always be crafting social media posts to boost your engagements.

If you’re not sure where to start with getting engagements and making the most of your social media platforms, check out my article, 18 Social Media Tips for Small Businesses.

Hashtags

There’s not really any point in creating your own hashtags unless you’re tracking them as a metric -- you won’t know how effective they are unless you see how often people are using your hashtags.

If you’re new to the world of hashtags and want to get the most of them, have a browse of this quick guide: Your Hashtag Cheatsheet.

Open rate (OR)

The open rate of an email is how many people in your mailing list opened the email.

It won’t factor in how many times some people may have opened the email -- just the number of unique opens versus the amount of people it was sent to:

(Unique email opens / Number of email recipients) x 100 = Open rate

For example, if you sent an email to 10,000 contacts, and 2,000 of them opened it, your open rate would be:

2,000 / 10,000 = 0.2
0.2 x 100 = 20%

Usually, you won’t have to do this calculation, as most email marketing providers will automatically generate this metric for you -- but it’s useful to track and keep an eye on -- always work towards increasing your open rate!

If you want to find out more about how to use your email marketing to its fullest, read my article, Maximise Your Email Marketing.

Click-through rate (CTR)

The click-through rate is the next stage from open rates in email marketing -- how many of those that opened your email clicked a link within that email.

Click-through rate is usually calculated by dividing the amount of times that email was clicked by unique recipients by your unique opens:

(Clicks by unique recipients / Unique opens) x 100 = Click-through rate

It’s worth trying different techniques, like those mentioned in Maximise Your Email Marketing, to work to improve your CTR.

Bounce rate

The bounce rate is how many of your email recipients have not received your email -- this percentage should be low.

Some reasons for email bounces are deleted email accounts, firewalls or virus protection softwares, full mailboxes, auto-replies, or they may have even blocked your email.

It’s worth getting in touch with your bounced emails regularly to see if they’re still interested in your services, and try contacting them in a different way, if you have other contact details.

Stand traffic

If you’re exhibiting at an event, or you have a physical shop, traffic is an important metric to be monitoring.

From this, you can calculate how effective your in-store or on-stand efforts are to work towards generating new leads or even converting people to purchase.

It’s a more manual metric to track, but is of vital importance to gauge whether your physical marketing efforts are effective.

A few ways you can measure your physical traffic is with badge-scanning software (you can usually purchase this from larger events), or even using an old-fashioned handheld tally counter.

You’ll be glad you did.

Sales during event

A much easier metric to track, but worth keeping a sheet or track of, or assigning specific codes to, if you’re using a system like SAGE or Salesforce to record your customer purchases.

Budget vs. actual

Essentially, this metric is how you compare what you have budgeted versus what you have actually spent, and what you have predicted to earn versus what you have actually earned.

You can then see where you need to boost your revenue, and perhaps cut down your other costs.

Employee retention

Useful for HR teams, employee retention is something that should be the business focus of all companies.

Simply put, it’s more financially and time-efficient to keep employees working for you.

Keeping your employees happy is a huge part of employee retention, and happy employees who believe in your company values will make more sales, and will work harder to help you achieve your company objectives.

Employee happiness is such a vast subject, so we’ve written an article on how you can work to get happier employees: Inside Out: Internal Marketing.

Those are our key metrics that you should be tracking in your oranisation -- for more on how to set yourself business goals, check out our guide on KPIs (Key Performance Indicators).

Let us know which metrics you find most useful for your business in the comments -- we’d love to hear from you!