3 Digital Marketing Metrics Every Marketer Should Know
Digital marketing has revolutionized the ways businesses reach and engage with their audiences. From multi-million dollar corporations to solo entrepreneurs, this modern marketing strategy has become a powerful tool in the armory of any business, and one which shows no sign of relenting.
According to the latest figures, 72% of overall marketing budgets are directed towards digital marketing channels and in 2021 the total digital advertising spend was $436 billion compared to $196 billion in offline advertising.
In order to reap the benefits that digital marketing offers it is essential that marketers understand some key metrics. This article will take a look at some of the most important terms that are used within this field, helping you to make informed decisions and maximize your digital marketing efforts.
Cost per Acquisition (CPA)
CPA is an important digital marketing metric that allows marketers to measure the cost to acquire one new lead or customer. CPA is calculated by dividing the total cost of the media spend or campaign by the number of conversions, which is the number of new customers or leads gained.
This means that if a company spends a total of $1,000 on an online advertising campaign from which they generate 100 conversions, or new customers, the CPA would be $1,000 divided by 100, which equals $10.
The average cost to the company for acquiring each new customer is, therefore, $10. With this information, marketers can determine if this cost is too high and make tweaks to their marketing strategy to optimize their budget.
B2B Conversion Rates
B2B conversion rates refer to the percentage of B2B visitors or leads that perform a desired action such as subscribing to a newsletter, filling out an online form, registering for a webinar, or making a purchase. The B2B conversion rate is calculated by dividing the number of conversions by the number of visitors. This number is then multiplied by 100 to get a percentage.
This important metric helps businesses measure how effective their B2B marketing efforts are in converting potential customers into actual customers. They can then make data-driven decisions to optimize their strategies and improve their return on investment.
Customer Lifetime Value (CLTV)
CLTV is a metric that measures the total revenue that a customer will generate for a business over the lifetime of their relationship. While there are various ways to calculate CLTV, one of the simplest is Lifetime Customer Revenue minus Lifetime Customer Costs.
For example, if a customer buys $1,000 worth of products from a business over the lifetime of their relationship, and the business incurs $300 in total costs serving that customer, the CLTV would be $700.
Understanding CLTV enables marketers to make informed decisions relating to customer retention and helps them allocate their resources towards areas with a high CLTV. This may include creating loyalty programs to reward high-value customers, spending more of their budget in re-targeting these customers, or focusing on personalized marketing campaigns designed to nurture and engage with them throughout their lifecycle. By doing so businesses can increase their CLTV and improve their long-term growth.
These are just a few of the key metrics every digital marketer should know to help drive success in their marketing campaigns.