The Inbound Growth Blog

The Inbound Growth Blog covers all topics relating to an integrated marketing strategy. We write about inbound marketing, social media, integrated marketing strategies and the sales process.

5 Inbound Marketing Metrics That Matter

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Posted by John Beveridge on Oct 29, 2013 9:30:00 AM

5_inbound_marketing_metrics_that_matterAre you still measuring online marketing success with old-school metrics like page views or return page visitors? Stop. These metrics may give you an overview of web traffic, but they’re dangerously deceptive. As every marketing department knows, more visitors or page views do not translate into better sales prospects or more revenue.

Marketing’s “Holy Grail” is simple: use fewer cents to make more bucks. Effective inbound marketing is key to achieving this goal. To evaluate the effectiveness of your inbound marketing strategy, your business needs a combination of metrics, including pre-click measurements (CPC and CTR), post-click metrics (CVR and ROI), and revenue metrics (CAC). These five key metrics will help your business determine whether it is on track to achieve its inbound marketing goals.

Sound a bit like alphabet soup? Here’s what you need to know about the top five inbound marketing metrics:

1. Cost Per Click (CPC)

What it is: This is the amount you pay each time someone clicks on an ad within a targeted pay per click campaign. As an advertiser, your CPC will always be less than or equal to the maximum bid you pay for Google’s AdWords. Reducing CPC while maintaining (or even improving) the value of your web visitors is key. Your inbound marketing strategy plan should identify and target clicks that are both inexpensive and valuable.

Why it matters: When CPC decreases and CTR (click-thru rate) increases, your business has more prospects in its funnel. A high CPC means that your business is overpaying for prospects and should consider re-thinking its basic marketing strategy.

2. Click-Through Rate (CTR)

What it is: Click-thru-rate is a measurement of the percentage of clicks that an ad (or landing page) receives based on the total number of ad impressions. “Impressions” refer to the number of times that your ad (or page) is viewed. For example, if 100 visitors arrive on your landing page, but only two click on your “Free Trial Offer” button, then your CTR for this page is 2%.

Why it matters: In the world of Google AdWords, the higher the CTR, the higher your company’s “quality score”, which positively impacts your business’s position in AdWords bidding wars. More broadly, a high CTR means that your ads or landing pages are effective. If your website’s landing page is receiving hundreds of visitors but the “Free Trial Offer” button has a very low CTR, then something is “off” in your marketing funnel. It’s possible your page is attracting the wrong type of visitors or simply failing to “seal the deal” with prospectives. While a low CTR can’t tell you what is wrong, it is an indicator that something is wrong.

3. Lead Conversion Rate (CVR)

What it is: The Lead Conversion Rate is a post-click metric that measures the number of visitors who complete a specific marketing conversion goal, such as signing up for a free trial offer, downloading a white paper, or opting into an email list.

Why it matters: Increasing your conversion rate – the percentage of people who take a desired action – will increase your business’s marketing ROI while also decreasing CPL (cost-per-lead).

4. Return On Investment (ROI)

What it is: In simplistic terms, ROI is a performance indicator for evaluating the efficiency of an investment. While ROI is traditionally measured with hard numbers, when evaluating a marketing campaign’s ROI, it may also be beneficial to take into account “intangible” ROI, such as increased blog comments, content re-shares or re-tweets, and increased social media presence.

Why it matters: When ROI increases, marketing’s portion of CAC is reduced – improving marketing efficacy and creating more revenue from less investment. That’s the “Holy Grail” of marketing.

5. Customer Acquisition Cost (CAC)

What it is: This is your business's total sales and marketing cost for a fixed period, per customer. To find CAC, add up all your program advertising, salaries, commissions, and overhead, and then divide by the number of customers gained during this period. For example, if your business spent $20,000 on sales and marketing one month and gained 5 new customers, then your businesses’ CAC is $4,000.

Why it matters: CAC is the ultimate industry (and company) benchmark. When evaluating CAC, consider how your business stacks up against the competition as well as itself, including past quarterly and annual performance.

Summary

Savvy businesses are taking advantage of inbound marketing's inherent ability to measure the results of every element of a campaign. While there are many metrics to watch, the 5 metrics discussed in this article are the ones that move the needle on revenue growth. Keep an eye on these 5 metrics to keep your campaigns on track and to create an environment of continual improvement.

Download our eBook to learn the six metrics to measure the ROI on your marketing investment

Topics: Inbound Marketing

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