Have you ever felt like there are a million metrics at your disposal? Page likes, shares, retweets, comments, and the list for social media metrics goes on and on. Then, there are the website metrics: page views, unique number of visitors, page clicks, link-backs, references, etc. How do you know which metrics truly matter? To help you avoid a numeric mess, here are three metrics that you should always analyze.

1.) Customer Acquisition Cost
The Customer Acquisition Cost (CAC) can be calculated by dividing the total costs associated with acquisition by total new customers, within a specific time period. This metric should be used as a ratio with  your Lifetime Value (LTV) of a customer. Understanding your LTV:CAC ration, as well as the CAC timeline can help you answer the following questions:

• What channel helps you acquire your best customers?
• What campaign has consistently delivered the highest CAC results?
• What combination of campaigns and channels have resulted in the best LTV:CAC ratio?

Knowing your CAC will help you to continuously improve your marketing Return on Investment (ROI).

2.) Lifetime Value of a Customer
The lifetime value of your customer is then numeric value that is assigned to each customer over the lifetime of your business. This value refers to the value that each customer actually contributes to your company. This metric can be calculated in two ways:

1. Historic Lifetime Value of a Customer — the sum of the gross profit from all historic purchase for an individual customer.
2. Predictive Analysis of a Customer — predictive analysis of previous transaction history, combined with behavioral indicators to forecast the lifetime value of a customer.

Knowing the lifetime value of your customer will help you to more accurately determine the true benefits of your CAC metric(s).

3.) Cost Per Lead
Cost per lead is the average amount of money that you have spent on a specific digital marketing channel to attract a new lead for a specific spend. In other words, ad spend / lead = cost per lead. This powerful digital marketing metric can help you to better determine where to spend your marketing budget to receive the highest ROI.

By focusing on customer acquisition costs, lifetime value of a customer, and cost per lead metrics you will more accurately understand the overall health of your business. This information will help you to make informed marketing decisions that generate higher ROI.

Written by: Laura P. Parker
Laura P. Parker is a freelance writer and content marketing consultant who specializes in improving the marketing efforts of small-businesses through well-written, engaging, and ROI enhancing content.  laura@laurapparker.com www.laurapparker.com