"You Can’t Manage What You Don’t Measure." True! But quick availability and easy access to data in inbound marketing has led to a veritable flood of performance metrics. It’s easy to become overwhelmed by this wave of information.
Focusing on key indicators saves time and money. At the same time, their informative value as a basis for future decisions depends on the quality of the indicators.
For a targeted selection of the most important inbound marketing metrics, it’s prudent to first separate these into two categories. On the one hand, KPIs and metrics that are useful within the marketing team for making decisions on how to proceed with inbound marketing campaigns and content marketing strategies. On the other hand, key figures and indicators that can be utilized at the management level and form the basis of progress monitoring and strategic decisions.
The 5 Most Important Inbound Marketing Metrics for Daily Business
Let's get started and look into five key metrics that will help you get control over your inbound marketing activities on a day-to-day basis.
1. Keyword Ranking – SEO
When optimizing content for search engines, a variety of indicators must be taken into account, including the number of visits, page views, session length and bounce rate. However, the most important metric for SEO continues to be keyword ranking. With a keyword search tool, it’s easy to find the right terms that can then be used to optimize content and track your ranking results.
2. Cost of Customer Acquisition – PPC
Depending on the value of the keywords you are using, the cost of using pay-per-click campaigns can vary greatly. However, the ability to precisely calculate customer acquisition cost is a significant advantage. With a set budget, the expected leads can be determined. The cost of customer acquisition/cost of generating leads can be calculated exactly with a pay-per-click campaign, allowing you to keep an eye on the return of investment.
3. Click-Through Rate – Email
The click-through-rate is the most informative KPI in the evaluation of email campaigns. While the open rate is distorted by the automatic opening of mail clients such as Outlook, the click-through-rate indicates a clear interaction with the content of your email campaign. Evaluating the clicked links provides additional valuable insights for the optimization of future campaigns.
4. Lead Quality – Lead Generation
When generating leads, quality has the highest priority. A large number of leads generated at a low price is often good for statistics, but has no lasting impact on your sales results. Lead quality is therefore crucial as an indicator of measurable success. With lead scoring tools, leads can be evaluated over the entire lifetime of the customer relationship.
5. Post Engagement – Social Media
Inbound marketing activities on social media often aren’t easy to quantify with metrics. Increased attention to one’s own brand, business or product is a goal of social media presence. The measurable indicators of success in this area can be page likes, post likes or post engagement. However, post engagement carries the most importance as a performance indicator. The more interactions a post generates, the more likely it is that other followers will see it.
The 5 Most Important Inbound Marketing Metrics for Management
Business leaders are grateful for accurate and targeted metrics that allow them to quickly and decisively evaluate a marketing campaign. Detailed KPIs are evaluated, processed and condensed to the most fundamental findings within the marketing department. For board members and managers, the cost-benefit ratio is the most important indicator for measuring the success of marketing activities and the company as a whole.
1. Customer Acquisition Cost – CAC
How much does a new customer cost? The head of a marketing department must be able to answer this question for company leadership accurately and supported by facts. Based on the customer acquisition cost (CAC), the total cost for marketing and sales activities is compared to the number of new customers gained. The reference period may be based on monthly, quarterly, semi-annual or annual values.
If, for example, the quarterly cost for marketing and sales amounts to 100,000 euros, and 200 new customers were acquired during the same period, this results in a CAC of 500. For each newly acquired customer, the company initially spent 500 euros.
2. Customer Value to Customer Acquisition Cost Ratio – LTV:CAC
Whether an acquisition cost of 500 euros is a good or a bad value for each new customer is determined in relation to the value each new customer represents for the company. To determine this, the lifetime value (LTV), so the customer value created over the entire duration of the business relationship, is compared to the CAC. The LTV is calculated by dividing the revenue generated by the customer (minus the gross margin) over a defined period by the known churn rate of that customer type. But beware: The interpretation of the LTV:CAC ratio varies depending on the industry, company phase and desired growth dynamic. It’s best to first calculate the LTV:CAC indicator for past fiscal years, quarters and months so you can assess the success of your content and inbound marketing programs based on these past values.
3. Amortization Period of the CAC
In the cost-benefit analysis for management, the time it takes before a new customer pays off for the company is an exciting indicator. Especially for companies with lower liquidity, the shortest possible amortization period is desirable. The amortization period is calculated by dividing the CAC by the average turnover (minus the gross margin) per month. As a result, you get the value in months at which point a new customer becomes profitable for the company.
4. Percentage of New Customers Won by Marketing
The direct contribution of a marketing department and its content and inbound marketing activities to the overall sales success can be easily assessed based on this indicator. The metric is straightforward: The higher the percentage of new customers gained through content and inbound marketing, the more successful the marketing was compared to other acquisition tools.
5. Marketing Percentage of CAC
For an even more detailed look at the cost of acquiring new customers, the CAC is compared only to the total marketing cost. The indicator M%-CAC not only offers insight into the percentage of marketing spend during the company’s acquisition process, but also provides valuable information about the effectiveness of the measures compared to other sales tools.
Focusing on these 10 basic metrics will help you understand the developments, processes and achievements of your inbound marketing activities within your own marketing team as well as in front of the management board. Based on these informative KPIs, ongoing and future campaigns can be effectively managed and optimized.