Small business owners are often drowning in data and starving for insight. Analytics dashboards show them hundreds of metrics. They watch follower counts and page views and impressions and reach and engagement rates without being clear on which of these numbers actually connects to revenue.<\/p>\n
Here are the metrics that actually matter \u2014 and why most of the others are distractions.<\/p>\n
Cost per lead. How much does it cost you \u2014 in time, money, or both \u2014 to generate a qualified lead? This is the most fundamental efficiency metric in marketing. Everything else is in service of improving this number. Calculate it for each traffic source separately and you’ll quickly see which channels are generating leads at a reasonable cost and which are expensive vanity.<\/p>\n
Lead to client conversion rate. Of the leads you generate, what percentage become clients? This number tells you how well your sales process and offer are working. A low conversion rate on good leads usually indicates a pricing, positioning, or sales process problem. Improving this number without increasing lead generation has the same effect on revenue as doubling your lead volume.<\/p>\n
Average client value. What is the average revenue generated per client over their relationship with you? This number determines how much you can afford to spend to acquire a client. If your average client generates $5,000, you can afford to spend meaningfully to acquire each one. If your average client generates $200, your acquisition cost needs to be very low.<\/p>\n
Client lifetime value divided by acquisition cost. The ratio of how much a client is worth to how much they cost to acquire. A healthy ratio is generally 3:1 or better \u2014 the client generates at least three times what it cost to get them. Below that you’re marketing inefficiently. Above that you may have room to invest more in acquisition.<\/p>\n
Referral rate. What percentage of your clients come from referrals from existing clients? This is a proxy for client satisfaction and for the quality of the relationship you’re building. High referral rate means your existing clients are so satisfied that they’re doing your marketing for you. Low referral rate is a signal worth investigating.<\/p>\n
These five numbers \u2014 cost per lead, conversion rate, average client value, LTV\/CAC ratio, and referral rate \u2014 tell you almost everything you need to know about the health of your marketing and your business.<\/p>\n
Everything else is context. These five are the signal.<\/p>\n","protected":false},"excerpt":{"rendered":"
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