Business 101: The 12 Core Marketing Metrics – How to Gauge the Effectiveness of your Marketing Funnel

Want to know what part of your sales process needs fixing? Is it lead generation or conversion? Do you need to increase your new customer acquisition spending or focus on marketing to your existing customer base? Are you trying to sell what your customers want to buy?

These questions can be answered by looking at 12 core metrics of your marketing funnel. Your marketing funnel is simply all the potential customers (or sales leads) generated by your marketing funneled down into the warm leads that further engaged funneled down into the actual customers who purchased from you.

Web Traffic Metrics

The top end of your funnel, web traffic is simply a lead generation tool. By clicking a link, searching for your key words or visiting your site directly, web visitors are indicating an interest in your business. Examining your web traffic will help you determine if your web site is generated enough leads (quantity) or the right kind of leads (quality).

#1: Key word searches – What search terms are web visitors using to find your site? Use key word information to determine if you need to rethink your search engine optimization and key word strategy.

#2: Web traffic sources – How are your web visitors finding your site? Is it via Google, social media or a third-party site like an online directory or news site?

#3: Traffic stickiness – What are your bounce rates, page views and time on site from the various sources? Use this information to determine which sources yield higher quality traffic and improve on the less sticky sources.

Conversion Metrics

The funnel narrows as prospects go from being a somewhat interested passerby to a subscriber and finally to a paying customer. Understanding your conversion metrics will help you determine if you need to tighten up your conversion program. Is your offer missing the mark or are you trying to sell what people aren’t interested in buying?

#4: Opt-in conversion – What percentage of web visitors are ‘opting in’ to receive your email newsletter, download your free report or sign-up for a free consultation? Knowing your conversion rate will help you determine how many leads you need to generate to build your subscriber database or troubleshoot a poor converting page.

#5: New customer leads – How many new subscribers signed up for the next step after subscribing to your newsletter? Consider these prospects your hot leads, worthy of a personal follow-up from you.

#6: Sales conversion – What is your close ratio, the number of offers to converted sales? For example, a consulting business would use the number of proposals submitted to projects. Knowing your conversion rate will help you forecast your sales based on the number of leads generated which is essential when planning a marketing campaign.

Customer Acquisition Metrics

Your customer acquisition metrics looks at the cost of acquiring a new customer versus the lifetime value of that customer. Knowing both of these costs will help you determine your marketing budget for advertising, direct mail and other lead generation programs.

#7: Customer acquisition costs – What does it cost you to close a new customer? For example, if you spent $100 on a campaign that resulted in 5 new customers, your cost would be $20 per customer.

#8: Lifetime customer value – What is the lifetime value of a customer? Use your historical sales data to determine the lifetime value. Knowing what every customer is worth over the lifetime of their relationship with your company sets the threshold for what you can spend to acquire them.

#9: Loyal customer referrals – How many new customers do your loyal customers refer? Use that to design your affiliate and referral reward programs.

Database Marketing Metrics

The bottom end of your funnel, database marketing is the final step of converting your warm leads (subscribers) to paying customers. Understanding your database marketing metrics will help you determine the effectiveness of your headlines and offers.

#10: Newsletter open rate – How many of your subscribers are opening your email newsletter? Knowing your open rate helps determine engagement and troubleshoot boring subject lines.

#11: Offer click-throughs – How many people are clicking to get more information on your offers? Use your click-through rate to determine if your offer is enticing enough to get people to take action.

#12: Customer buying patterns – What do your customers spend (on average) every month, quarter or year? Understanding their buying pattern will help you time your product launches.

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