Are you tracking and measuring the results of your marketing efforts?
As a marketing agency that has been working with small businesses for more than two decades, we can tell you that most small businesses—even the ones that prioritize having an effective marketing strategy—fail to complete a critical step: tracking and assessing their marketing’s performance.
Which is a major problem.
If you want your marketing to help take your small business to the next level, you need to know what’s working and what isn’t so you can invest your resources wisely, make adjustments accordingly, and—ultimately—experience the business growth you deserve.
That’s why on this episode of Priority Pursuit, we are diving into the different marketing metrics every small business should be tracking.
Marketing Metrics Every Small Business Should be Tracking
We understand that metrics can be overwhelming for small businesses. But, the fact of the matter is that you need to keep a close eye on these numbers—or have someone, like a marketing agency or a fractional CMO, do it for you—in order to maintain business growth and profitability.
That being said, let’s talk numbers!
Revenue & Profitability Metrics
First and foremost, you need to be sure that you are tracking your revenue and profitability metrics. This simply includes your gross revenue, your net profit, and your marketing expense ratio. If you are using QuickBooks, a similar accounting system, or a bookkeeper, you should easily be able to find these numbers in a profit and loss statement.
In theory, your numbers from last year should be finalized so that you can easily look at your profit and loss statement from 2023 and get a good handle on many of these metrics, including:
- Gross Revenue: The total number that your business brought in over a year, quarter, or whatever period of time you care to assess. At Treefrog, we conduct at least quarterly reviews for both our clients and our agency.
- Net Revenue: The total your business has earned after all expenses have been deducted—including payroll, materials, supplies, software, rent for office space, taxes, and whatever other business expenses you’ve acquired. Basically, this is what your business has left at the end of a year or designated period of time.
- Marketing Expense Ratio: The total marketing expense percentage in relation to your gross revenue. In other words, review your profit and loss statement—which should include an itemized number for marketing and advertising expenses. Then, divide that number by your gross revenue to determine the ratio or percentage that you’re investing in your marketing.
Again, these are big-picture numbers. We’re going to get into more nitty, gritty numbers in a moment, but you need to know your revenue and profitability metrics so that you can get a big-picture view of the overall health of your business and marketing efforts.
You also need to assess your customer metrics in relation to your marketing efforts, which include your customer acquisition cost and your customer lifetime value.
- Customer Acquisition Cost (CAC): How much it costs to acquire a new customer. To calculate this, you’ll need to divide whatever you spent on marketing over the course of the year by the number of new customers you acquired.
For easy math purposes, let’s say you spent $100,000 on marketing, and you served 20,000 new customers this year. This would make your CAC $5.
- Customer Lifetime Value (CLTV): An estimate of the total revenue your business can expect from a single customer. This gives you an idea of how much revenue each customer will generate for your business over time.
To calculate your CLTV, you simply need to multiply the average purchase value (which is the average amount of money a customer spends in a single transaction) by the purchase frequency (which is how often a customer makes a purchase) by the customer lifespan (which is the average number of years a customer continues to make purchases from you).
For example, let’s say you’re an auto detailer. The most popular package you sell is $500; most of your customers bring their vehicles to you twice a year; and you estimate that they will continue patronizing your business for 10 years. When you multiply these numbers, you can conclude that the CLTV of your average customer is $10,000.
It’s important to know both your CAC and your CLTV so that you can determine how much money you need to spend—or are willing to spend—to gain a customer that will return to you again and again.
Growth & Marketing Metrics
Now, we need to get into more marketing-specific numbers and discuss growth and marketing metrics you should be tracking, including your lead conversion rate and your return on advertising spend.
- Lead Conversion Rate: The percentage of leads that become paying customers. This allows you to measure the success of your marketing efforts. Basically, you just need to divide the number of paying customers you have by the number of leads you receive.
For example, if you have 1,000 leads, and 100 of them purchase from you, your lead conversion rate would be 10%.
Now, how you determine the total number of leads you have depends on your goals. For example, if you host a webinar in an effort to sell your new online course, your number of leads would be the number of people who attended or watched the webinar.
- Return on Advertising Spend (ROAS): This number evaluates the effectiveness of advertising campaigns (whether they be annual or on a campaign-by-campaign basis) by comparing the revenue generated to the amount spent. This is calculated by dividing your campaign-based revenue by the cost of the marketing.
For example, let’s say you own a plumbing company that wants to push water softeners in Q3. You spend $10,000 specifically marketing your water softener services, and you generate $50,000 in water softener sales. When you divide your revenue by your advertising budget, you can conclude that for every $1 spent on marketing, you were able to generate $5 in sales.
Metrics to Track the Success of Your Marketing Tools
Your lead conversion rate and ROAS are great tools to help you see the health of your marketing as a whole, but we now want to quickly get into marketing metrics that are important to track on a tool-by-tool basis.
On your website, you want to track:
- The total number of visitors your site receives over a given time period
- The number of new vs returning visitors
- Your site’s bounce rate, which measures the percentage of visitors who leave your site after viewing only one page
- Your site’s most popular pages
- Your organic search rankings, meaning where your website ranks on Google for your desired keywords
If you have Google Analytics set up on your website, you can access almost all of this information with just a few clicks via your Google Analytics account.
When it comes to email, you want to be sure to track your:
- Average open rate
- Average click-through rate, which is the percentage of recipients who click on a link within your email
- Conversion rate, which is the percentage of recipients who perform the desired action, like making a purchase or doing whatever it is you’re asking them to do
- Unsubscribe rate
- List growth rate
All of this information should be easily accessible through whatever email marketing system you’re using. For example, at Treefrog, we use MailChimp for both our clients and for our own marketing efforts.
When it comes to content marketing pieces like blogs, podcasts, downloads, and more you should be tracking:
- Average time spent on page
- Engagement rates—such as likes, comments, and shares
Both Google Analytics and your social media platforms should be able to give you this data.
For social media, it’s important to document:
- Follower count and growth
- Engagement rate
- Click-through rate
- Website traffic generated
Your social media platforms should have this information.
Then, for paid media—such as social media or Google ads—you should be tracking:
- Return on ad spend, which we’ve already discussed
- Click-through rate
- Cost per click
- Ad impressions
Chances are, whatever ad platform you’re using will make this information readily available.
Metrics and Your Small Business
Tracking marketing metrics is pivotal for business growth. Once you've gathered the data, record it consistently for year-to-year comparisons. Analyze these numbers against industry standards to identify underperforming areas.
For example, low email open rates might signal ineffective subject lines, while poor social media ad performance could mean it's time for A/B testing graphics and copy. Detecting these red flags allows for targeted improvements and nurturing business growth.
Now, we understand that as a small business owner, your schedule is likely already very full. With that in mind, there are two paths you can take to manage your business’s metrics.
First, if you have an internal marketing team, consider entrusting them with tracking these metrics as they're crucial for making smart marketing decisions. Often, small business marketing teams do a lot but miss out on measuring results, which hinders growth.
Alternatively, you can opt to have these metrics handled externally. At Treefrog, we conduct thorough metric analyses, providing insightful suggestions to our clients.
Whether managed in-house or outsourced, understanding these numbers is key. It empowers informed choices, enabling tweaks and resource allocations that drive effective marketing and, ultimately, spur business growth.
Links & Resources Mentioned in This Episode
- Receive 50% Off Your First Year of HoneyBook
- Learn More About Treefrog’s Small Business Marketing Resources & Services
- Join the Priority Pursuit Facebook Community
- Follow or DM Treefrog Marketing on Instagram
- Follow or DM Kelly Rice on Instagram
- Follow or DM Victoria Rayburn on Instagram
The Priority Pursuit Podcast is a podcast dedicated to helping small business owners define, maintain, and pursue both their personal and business priorities so they can build lives and businesses they love.
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