Analytics: The ABCs & 123s of Your Business
And just like that, it’s school time. The most wonderful time of the year, as a memorably accurate Staples ad in the 90s once put it.
I love this time of year, and not just as a parent. As a kid, I always looked forward to the return to the books, the excitement of learning new things, and even – wait for it – the report cards. (Yes, I’m a nerd and proud!)
But seriously, there is something exciting about seeing your growth (or “areas for improvement” – ahem, sorry, Mom, for all those “needs to apply herself better” comments) on one neat, handy, at-a-glance chart.
A Marketing & Sales Report Card
I’ve taken my love for assessments with me into adulthood, and I find that quick-but-meaningful metrics are still the name of the game, especially in business. There are hundreds of ways to measure the progress of your business and an equal number of platforms and services offering to provide them for you.
Sometimes just wading through them all, or even learning what they mean, can seem daunting. Worse, you can get lost in all those numbers and not see the forest for the trees. So, although it’s essential to have a handle on many measures of success, I’ve realized that a consistent form documenting the most meaningful metrics at a glance is incredibly useful.
A report card, if you will.
And just as different subjects in school require different components of mastery, so too will your business’s report card require a level of customization for each subject. Because it’s my bread and butter, I’ve focused on marketing and sales here. Over time, I’ve come to favor these five metrics as the ones that most quickly impart the best information about my marketing efforts. Checked frequently, this report card provides me with a thumb on Spring Insight’s pulse, and it can do the same for your business, too.
The Key Analytics Metrics to Track
1. Web Visits & Conversions
Okay, so this is sorta two metrics, but I look at them as a pair, so let’s do that. Web visits = the number of unique viewers of your site, and conversion rate is the number of those who actually follow through and do what you want them to do on your site, whether that’s purchase a product, download an item of software or subscribe to your newsletter. Any ratio is just a division problem, so you get this number by dividing the number of conversions by the number of absolute visitors. If 500 people visit your site and 10 convert, your metric is 10/500 = .02 or 2%.
2. Social Media & Email Touch Points
While it’s a somewhat silly phrase, “touch points” get across the idea of your message actually reaching a customer. This can be through email, an online advertising campaign view, social media views, blog posts, newsletters, or any other interaction you have with a potential customer.
The question is, how many times have you interacted with – touched – the customer. This basic metric is akin almost to the attendance tally on a report card. It is important not just in terms of absolute number – i.e., I made 1,000,000 touches last month through my various campaigns – but also in terms of how many times each potential customer is touched. It’s important to know how many times you’re touching a potential customer before they convert to an actual customer.
3. Customer Acquisition Costs
This brings us neatly to our third metric. This one is the culmination of the previous few. The CAC is the cost you spent to attain your customer – the cost of all those touches – including website development, blog posts, networking, billboards, and dividing it by the number of customers you actually attained.
This one is much harder to gauge accurately than the prior ones because the inputs can be kind of wonky. (Does every networking event count? What happens when you meet someone at a reunion? What all is counted as marketing?) I just create a “good enough” formula and keep using that.
4. Customer Lifetime Value
If you’re thinking, “But wait. My customers are actually long-time subscribers. Shouldn’t that factor into my measurements?” then you get an ‘A’! The Customer Lifetime Value (CLV) is an incredibly important number. It’s also pretty easy to determine, thanks to CLV calculators you can find easily with an online search.
The number reflects the fact that one purchase doesn’t necessarily capture the relationship you have with a customer. If a one-time purchaser becomes a loyal repeat buyer or even a monthly subscriber, the total value of their interaction has to be taken into account for you to determine whether your marketing efforts are worth it – whether your customer acquisition costs are worth it.
5. Pipeline Strength Analytics
Finally, I look at Pipeline strength. (Again, with the funny terms.) The pipeline we’re talking about is what your business has to come in down the road. Given your capacity now, the expected changes in your customer base moving forward, and factoring in some potential unexpected shifts, does your business have a healthy flow of business moving in and out?
If you have the capacity for fifty clients, ten potential clients are in the last-stage recruitment phase, and you know that several will phase out over the next few months, your pipeline is probably healthy. If no new prospects are headed toward conversion, you know you need to devote more energy to marketing to keep that pipeline strong. Like Customer Acquisition, this is one that doesn’t have a straightforward calculation. I am embarrassed to say that I have calculated this before by hash marks on a whiteboard.
Keep It In Context
These are the numbers I constantly evaluate – at least monthly, and when it comes to the pipeline, weekly. Just as with those good ol’ report cards from high school, these numbers don’t stand alone. They’re only meaningful when compared against each other over time. That’s why the quarterly grades are all neatly lined up against one another on a school grade sheet, and it’s why you should always be referencing the past – and your goals for the future – when reviewing any numbers now.
5,000 website visitors sound incredible – unless you had 10,000 last month. The numbers are also important in reference to one another. An increased Customer Acquisition Cost may be offset by an increased Customer Lifetime Value. By keeping these five numbers in my own tracking system and comparing them over time, you can have a better idea of where your business is headed and what steps to take next.
You may not be the rare bird like me who eagerly anticipated parent-teacher conference night. But if you want your business to stay on track, take a cue from your old teachers and create a report card specific to your business, to highlight your progress, and those pesky areas of improvement, in one easy-to-digest compendium. When you are a marketing client with Spring Insight, you get all of these reports every single month, and we tell you what those metrics mean in laypersons terms so you can focus on running your business effectively. So contact us today and learn more.