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Did you know that only around 10% of online businesses succeed on average, with the majority failing within the first 120 days? About 90% of online companies can’t survive the first few months or fail to sustain their digital marketing ROI due to the absence of underlying digital marketing metrics.
But failure isn’t an option: you must survive times of turbulence and thrive. And you will!
Below is a toolkit of digital marketing metrics to measure your success across different strategies, channels, and audiences. With no further ado, let’s dig into the 17 most essential metrics in digital marketing.
ROI – The Metric that Tops the Bill
The ROI metric is the King of all important digital marketing metrics. Here’s how to calculate ROI in digital marketing:
Calculating ROI is as crucial as simple. Suppose you’ve spent $1000 on a campaign that generated $1200 in profits. Your ROI would be 20%, or $200 more than your investment. However, if you’ve generated only $800 with the same campaign, the ROI would be -20%, rendering the campaign unprofitable.
Another way to calculate your digital marketing ROI is to divide the campaign revenue by the costs. From the example above, the profitable campaign would bear an ROI of 1.2 ($1200/$1000); the latter – 0.8 ($800/$1,000).
But there’s a catch…
As good as ROI is for a conversion-driven digital marketing campaign, it cannot apply to all campaigns across all marketing channels nor provide you with deep analytics. For some traffic channels and campaigns – for example, awareness campaigns – you need subtle digital marketing metrics.
Below are the 17 most important digital marketing metrics for online business.
1. Conversion Rate
Most digital marketing campaigns must convert, making the conversion rate one of the most essential tools for measuring marketing ROI and the performance of a particular campaign.
Here’s how to calculate the conversion rate for your marketing campaigns:
Another way to calculate a conversion rate is by dividing conversions by total ad interactions. For example, for 100 conversions from 10,000 interactions, the conversion rate would be 0.1%.
- Conversion rate by channel allows you to zero in on specific traffic sources and learn how well organic traffic converts compared to, for example, paid and social media traffic. In other words, you can find out where your most valuable traffic is coming from.
- Conversion rate by device helps you compare traffic sources, such as web and mobile, and identify missed opportunities. For example, if mobile users convert better than web users, you may want to double down on mobile marketing campaigns.
Different traffic channels have different conversion rates: phone calls convert up to 50% of callers; emails convert around 1.2% of users; the average conversion rate is about 3.5%.
2. Cost Per Lead
Lead generation is the biggest challenge for any online business. Increasing the quality and number of leads is the priority for 68% and 55% of companies, with 53% of marketers spending at least half the budget on lead generation. Knowing how much you pay for a lead is vital.
Here’s the formula to calculate your cost per lead:
Comparing your cost per lead for different marketing channels – for example, email marketing versus print ads – enables data-driven budget allocation within your ROI-driven marketing.
Average Cost Per Lead by Marketing Channel
|Social Media Advertising||SEO||Webinars||Search Engine Ads||Content Marketing||Video Marketing||LinkedIn Ads||Referrals||Traditional Ads|
Average Cost Per Lead by Industry
|Finance||Retail||Healthcare||IT||Media & Publishing||Business Services||Travel & Tourism||Education||Consumer Products||Telecom|
Varying by marketing channel and industry, your cost per lead must always be higher than your gross profit per sale, desirably two or more times higher. For example, if you’re spending $50 to capture an email lead, you must obtain at least $100 when converting it.
3. Cost Per Acquisition (Customer Acquisition Cost)
Cost per acquisition is the total you pay for one acquired customer throughout the cycle:
Cost per acquisition must be higher than the customer’s lifetime value or the total profit one customer provides.
Average Cost Per Acquisition by Industry
|Industry||Insurance||Financial||Medical||Oil & Gas||Consulting||SaaS|
|Organic CPA: SEO and organic social media||$590||$644||$501||$710||$410||$205|
|Inorganic CPA: PPC, SEM, and paid social media||$600||$1,202||$755||$1,003||$901||$341|
Source: SEO With David
4. Average Order Value (AOV)
Average Order Value (AOV) is the average value of an order in general or for a specific product or service:
For example, if 100 orders generated $5,000 in sales, your AOV would be $500.
AOV helps you understand purchasing habits, including your customers’ budgets and how much they are willing to spend at once. More often than not, even a slight increase in per-order spending increases ROI substantially, making it reasonable to increase your AOV by upselling, cross-selling, free shipping, coupons, volume discounts, and more.
5. Customer Lifetime Value (CLV)
Customer lifetime value (CLV) is the profit you can get from a customer over their lifetime. CLV is based on the sales value, the number of sales, and the customer retention period:
You can segment your customers by lifetime value to maximize the value of relationships with high-value, mid-value, and low-value clients while enabling a better customer journey.
Besides historical CLV, there’s a predictive CLV, a more complex parameter that requires machine learning and statistical regression to be calculated. However, having CLV at hand, you can foresee your average revenue and thus improve your marketing and budget allocation.
Average Customer Lifetime Value by Industry
|Industry||Heath Consulting||Medical Billing||HVAC||Insurance||Financial Advisory||Digital Design||Business Consulting|
Source: Hockey Stack
6. Bounce Rate
Bounce rate is the percentage of visitors leaving your website without taking conversion-driven actions, such as flipping through website pages, filling out a form, clicking on links, or – ideally – making a purchase:
For example, if 300 of your 500 daily visitors closed your landing page the second they landed there, your bounce rate would be 60%. In other words, you could expect six out of ten visitors to leave your landing page unless you improve it.
That said, it’s important to consider your website objectives when interpreting the bounce rate, as a high bounce rate doesn’t always mean poor performance. Blog pages have an average bounce rate of 80%; content websites – 50%; service websites – 20%.
Average Bounce Rate by Industry
7. Exit Rate
Exit rate is the percentage of exits on a specific page to a third-party website:
Like bounce rate, exit rate helps you understand the performance of particular pages within your site. The difference between the two is that a bounce counts if a user exists on the same page they entered, whereas an exit counts regardless of what page they are leaving. Therefore, all a bounce is always an exit, but an exit is not always a bounce.
8. Click-Through Rate (CTR)
Click-through rate (CTR) is the percentage of users who clicked on a link on your webpage, blog, email, or advertisement:
CTR measures how successful your ads are in capturing attention. Not only does a high CTR mean your ads draw attention, but it also allows you to get a discount on ads from Google.
Average Click-Through Rate for Search by Industry
|Industry||Finance||Real Estate||Auto||Apparel||Business Services||Health & Fitness||Shopping (General)|
Source: Smart Insights
You can measure CTR for literally everything. For example, knowing your blog CTR rate will allow you to understand how many visitors are willing to explore more of your website. The value of your blog traffic versus other channels will help you improve your marketing strategy.
You can measure CTR for brand and non-brand (general) searches to improve your budget allocation for different campaigns. Besides, non-brand CTR can help you evaluate the performance of your SEO and paid search campaigns.
9. Net Promoter Score (NPS)
Net promoter score (NPS) is how likely your customers are to recommend your company, product, or service to their family, friends, and colleagues. In other words, NPS is the loyalty of your audience:
To obtain your net promoter score, ask a post-purchase question: ‘How likely is it that you would recommend this company/product/service to a friend or colleague?’ Then subtract detractors from promoters: those putting 9 or 10 are ‘promoters,’ 7 or 8 – ‘passives,’ 6 or lower – ‘detractors.’ You will get a number from -100 to +100 indicating how loyal your customers are.
Average Net Promoter Score (NPS) by Industry
|Industry||Finance||Software||Consumer Electronics||Consumer Packaged Goods||Utilities||Fashion|
10. Return on Time Invested (ROTI)
Dealing with internal tasks, whether related to marketing or not, you must optimize your choices – allocate tasks to the best performers, arrange useful meetings, etc. – to ensure the invested time is well spent.
Here is how to calculate your return on time invested (ROTI):
For example, if you spent 100 hours training your 20 sales agents, allowing them to save 30 minutes a day consistently, your monthly ROTI would be 200% (20 working days in a month * 20 employees * 0.5/100 * 100).
11. Traffic-to-Lead Ratio (Lead Conversion Rate)
No matter how many people land on your website and how they get there – on their own, attracted by ads, or through affiliates – what matters is how many of them convert into leads and then customers.
Here’s how to calculate your traffic-to-lead ratio:
Lead conversion rate indicates how effectively you convert your audience. Like other metrics, it varies by industry, campaign, and traffic channel.
Average Lead Conversion Rate for Organic Search
|Industry||Finance||Healthcare||Real Estate||Legal||B2B e-Commerce||Auto||Travel|
|Lead Conversion Rate||4.7%||5.6%||3.2%||4.3%||4.0%||2.5%||8.5%|
Source: Ruler Analytics
12. Return on Ad Spend (ROAS)
Return on ad spend (ROAS) is how much you get in return for every dollar spent on advertising within a particular campaign:
If you spent $500 on ads and generated $1,500 in sales, your ROAS would be 300%. You can calculate ROAS for a single ad, campaign, or period.
13. Customer Retention Rate
Customer retention rate is the percentage of customers retained over time:
If you lost 50 out of 212 in a month while acquiring 70 new customers, your customer retention rate would be (232-70/212) *100 = 76.42%.
Average Customer Retention Rate by Industry
|Customer Retention Rate||78%||83%||84%||81%||83%||77%||63%||78%|
Source: Exploding Topics
14. Unique Monthly/Weekly/Daily Visitors
The unique visitors metric is important to understand your audience and strategize your marketing, SEO, and advertisement. Likewise, this metric can help you differentiate between leads and first-timers.
15. Traffic Distribution by Channel
Search, referral, social, and direct traffic distribution can reveal your most and least important traffic sources so you can improve your budget allocation and grow your digital marketing ROI.
16. Branded Search Lift
One of the most undervalued digital marketing metrics, branded search lift shows how many searches containing your brand name you get per month as a result of your digital marketing efforts. Branded search lift is useful for analyzing your marketing efforts across different channels.
Source: Google AdWords
17. Landing Page Performance
Landing page performance isn’t so much a single metric as a comprehensive understanding of the effectiveness of your landing page. You can look at multiple data points – conversion rate, sessions by source, bounce rate, average time spent on the landing page, etc. – to evaluate and improve your landing page performance.
Marketing Automation to Increase Your Digital Marketing ROI
You can’t beat the competition by manually working your digital marketing metrics. You need automation to scale and improve.
- Phonexa’s LMS Sync, an all-encompassing lead management platform, will dissect the customer journey from A to Z while providing valuable insights on your leads. With LMS Sync, you will unlock the full potential of your leads and open up new revenue streams.
Frequently Asked Questions
ROI stands for return on investment, quantifying your profits versus investments ratio. An ROI of 100% means you’ve doubled your initial investment, whereas a negative ROI (for example, -10%) means that your total costs exceeded the returns.
Marketing ROI is the money generated by your marketing campaign or traffic channel versus the money invested.
The marketing ROI formula is as follows:
You can calculate ROI for digital marketing using one of the numerous digital marketing ROI calculators.
Calculating marketing ROI is important to understand the effectiveness of your marketing campaigns and get a chance to allocate your resources accordingly. Measuring digital marketing ROI enables doubling down on profitable and eliminating unprofitable marketing campaigns.
ROI in sales (sales ROI) is the profitability of your investment. The ROI formula for sales is as follows:
The marketing ROI benchmarks vary for different industries, companies, and campaigns. The rule of thumb is that a good ROI for digital marketing is around 500%, while anything below 200% may not pay off, especially if the product production, marketing, and distribution costs are high.
Digital marketing metrics measure the performance of digital marketing campaigns. The most important digital marketing metrics are ROI, overall traffic, cost per lead, customer lifetime value, and more.
The lead close rate is essentially the same as the conversion rate, indicating the percentage of leads you convert:
For example, if you’ve converted 50 leads out of 600 in a month, your lead conversion rate would be 8.33%.
Since ROI evaluates the efficiency of your investment, any unrelated metric would be useless in evaluating or predicting your ROI.
Every digital marketing metric indicates how well you’re doing in a particular dimension of your business. However, to interpret your metrics correctly, you must consider your business realities, such as your industry, scale, competition, and more.
You can use ratios of metrics – for example, the ratio of your customer lifetime value (CLV) to your cost per acquisition (CPA) – to understand whether your business is healthy. A good CLV/CPA ratio is between 2 and 3 for SaaS business (the ratio one would indicate that you lose more money than you make).
Automation of tracking and analyzing marketing metrics is the main trend in marketing metrics. Around 75% of companies are using automation to save time, increase customer engagement, and enable timely communications, with 25% planning to adopt automation soon. Automated marketing generates 450% more leads.