How to Calculate Critical Marketing Key Performance Indicators | Digital Marketing Best Practices

It’s time to get to know the numbers in your business.
Ideally, we want to be able to run our business like it's a machine.
We want to know the quantifiable goals within our business and how to grow and sustain the business.
These are the essential numbers that you need to know to run your sales and marketing strategy.
This will help you know where to invest your time and money so that you can grow your business.
1) ROI
This stands for Return On Investment.
That's probably not a new term for you.
How much do you earn based on what you've spent.
2) KPI
Another thing that we're going to talk about is KPI and that's a key performance indicator, right?
These are all the important inputs and outputs that tell the health of your business.
You can track them throughout the day, week, year, etc.
3) CAC
This stands for Customer Acquisition Cost.
That is the dollar amount that it costs you to acquire any new customer.
This is important for so many reasons, especially if you're talking about advertising. It is also a super important factor in placing a valuation on your business.
Anybody that may want to buy or invest in your company is going to want to calculate the cost of adding a new customer.
4) CLV / ACV
This stands for Customer Lifetime Value. Exactly how much money do you make on a customer?
Sometimes it is more appropriate to look at this as Annual Customer Value, rather than lifetime.
Now that you've got the basic terms and principles down, we're going to put these into some ratios which will serve as an even simpler method of checking the health of our business.
But first, let's talk about how you would actually put these into action.
Let's say for example, you've got a stellar marketing strategy.
You've got the tactics in place, right?
You've got the channels plugged in.
Let's start with a traffic source.
Whether that's foot traffic or web traffic, you have to be able to get people's attention.
From there, a certain percentage of them will become leads.
It's going to be a smaller number. We'll say a thousand people = a hundred actual leads.
The next level down the funnel, some of them become a Prospect.
For every hundred leads we may get, say 10 prospects.
From there, some will become a customer.
And so you can see that some numbers and some ratios are already developing here.
For every 1000 people that come through your initial traffic source, 100 of them become leads. Ten of them become prospects and 1 becomes a customer.
Watch the full video to learn more.
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Hi, I’m Reade Milner.
During the course of my nearly 10-year career as a #digitalmarketingconsultant, I have generated millions of impressions, leading to thousands of leads, leading to hundreds of clients, leading to millions in revenue for my clients by improving their marketing effectiveness.
I’m 29 years old. I live in Barrow County, which is about 50 miles outside of #Atlanta. I’m out here with my wife, Nikki, and our two boys.
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