Metrics to Measure Small Business Growth

Not all metrics can be used to measure your marketing activity. Focusing on the wrong metrics can slow down or even stop your business’ growth.

should not measure “vanity indicators”. These are still important indicators to gauge marketing performance. However, there is a difference between indicators and strategic metrics across channels, content, and landing pages.

This guide will discuss key metrics and how to segment them by stage of the marketing funnel. These metrics are important for marketing and you will learn how to use them.

Top Tip To measure the success of your marketing efforts, you must first understand your target audience and how to build an image that they love. This includes defining your unique selling point (USP) to stand out from the rest and engage in meaningful conversations with potential customers. You must be familiar with all information before you launch your product/service. Learn more about our 5-step guide to building a market-ready product or service (GTM).

Your “True North” marketing metrics

When measuring your marketing performance, true north metrics are the most important. These are the key metrics that will tell you if your growth initiatives are contributing towards your core business goals.

These may seem obvious to most people. These are important because it is easy to get distracted. You should also experiment with different types of content and channels.

1. Revenue

Revenue is the most important metric to measure how effective your marketing is.

Why? Because a marketing campaign can generate thousands of visitors to your website or likes on your Instagram post. If it’s not generating any revenue, then something is wrong.

You can get a truly objective view of your marketing performance by measuring it by revenue. If a channel is contributing to cash flow or overall growth, it can be justified.

Top Tip Monitoring your cash flows can help you understand how your business is doing overall. It gives you an overview of how much money is coming into and leaving your business at any given moment. Understanding how to track your cash flow is crucial to your survival and growth. Many new businesses fail because they run out of cash. Our complete guide for accounting for startups will help you to understand more. ?

2. Customer lifetime value (CLTV)

Understanding the lifetime value of your customers, in addition to initial revenue, is also important. You can calculate your true ROI by understanding your average CLTV.

CLTV is typically calculated by the average amount of money a customer spends on average with you each time they buy, as well as how often and how long they have been a customer. This is how you calculate CLTV.

1. First, divide the total revenue over a calendar year by the number purchased during that same period to calculate your average buy value.
2. Next, divide the total number of purchases by the number individual customers who bought to calculate average purchasing frequency rate
3. Next, multiply the average purchase price (see step 1) and the average purchase frequency (see step 2) to calculate customer worth
4. Now calculate your average customer lifetime, which is simply how many years a customer does business.
5. Calculate CLTV by multiplying customer worth (see step 3) and average customer lifetime (see step 4).

Let’s look at an example of Business A.

The stats of Business A over a year

Revenue: PS100,000 Purchases: 2,000
Number of customers who bought: 50

1. Average Purchase Value: PS100,000.00 / 2,000 = PSD50
2. Average purchase frequency: 2,000/50 = 40
3. Customer value: PS50 x 40 = PS2,000
4. Average customer lifespan: 2.5
5. CLTVPS2,000×2.5 = PS5,000

Now you should have an idea of the average value that a customer brings over time.

3. Customer acquisition cost (CAC).

It is much easier to track your marketing costs these days thanks to the shift from “spray-and-pray advertising” to digital channels. You can make better strategic decisions about your marketing by calculating the cost of acquiring a customer.

Top Tip If you want to connect with your target audience online, a comprehensive digital marketing plan will be essential. Learn more about how to reach your core digital business goals, as well as which digital marketing channels to consider, in our guide to How to create a complete online marketing strategy for your small company. ?

Simply divide the amount you spent on a marketing campaign or channel by the number of customers you acquired to calculate CAC. For example, let’s say you spent PS10,000 on Facebook ads and got 2,000 customers. Your CAC would then be PS5.

CAC can seem daunting, especially if there are small margins. It is important to optimize your CLTV. This will be covered in greater detail when we discuss ROI.

4. Cost per lead (CPL)

It is important to calculate your cost-per-lead in addition to CAC. This is done by multiplying the marketing budget by the number of generated leads.

This, along with CAC, is valuable for many reasons. It will tell you if your leads are being generated at a sustainable pace. It will also allow you to optimize the funnel at different stages to reduce lead costs and increase conversions.

Let’s take Facebook Ads as an example. If you spend PS10,000 on ads to generate 5,000 leads, then that would be a cost per lead at PS2.

There are a few things you can do to lower your cost per lead.

1. Your Facebook ads will cost less per click if your copy and creative are more relevant.
2. To increase conversion rates, you can improve elements on landing pages

This is how to use these critical metrics for marketing performance improvement.

Top Tip – Facebook is only one of many social media channels you can use to generate organic and paid traffic. Our 7-step guide to creating an effective social media marketing strategy for your small business will help you learn more. ?

5. Marketing return on investment (MROI).

The final step is your marketing return on investment. This can be calculated in one of two ways:

1. Divide the marketing budget (overall or by specific channels) by the revenue generated
2. Divide the marketing budget by CLTV

The first gives you an objective, true view of your marketing. It gives you a true, objective view of your marketing efforts. It’s still a smart idea to use CLTV to project future revenue and justify marketing investment.

Metrics for Awareness

It is crucial to measure your results at the awareness stage in order to understand the reach and impact of your marketing message. It is a good indicator for brand awareness and volume at top of the funnel.

This section will cover the key metrics and areas of marketing that you should be measured during this phase.

1. Website traffic

How much traffic do you generate to your website each week or month? You can get a bird’s-eye view of your website visitors and gain insights into seasonality, trends, and the top-performing channels or contents.

These data can all be obtained through web analytics tools, of which there are many. Google Analytics The most popular, free, and easiest to use option is Google Analytics . There are also Statcounter and GoSquared. Matomo is another option. You can look at all the options and then choose the one that best suits your business goals.Google Analytics dashboard, source Lovesdata

Let’s begin with the overall traffic. Look at how many visitors your site generated over the course of a year. Did there seem to be any spikes or falls in traffic for a particular month? These patterns can help you identify seasonal trends and plan accordingly for next year.

Traffic across all marketing channels must be monitored. These channels can be divided into the following categories:

1. Direct. This refers to people who visit your site by typing your URL directly into their browser. It also counts for traffic that cannot easily be attributed. In other words, traffic that is not directly related to your site will be counted as direct traffic.
2. Referral. This refers to traffic that was sent from another website, e.g. A link from another domain.
3. Organic Search. These visitors found you via organic search engine results pages (i.e. They entered a keyword and clicked through to your website.
4. Social. Traffic that comes via social media platforms like Twitter, Facebook, and LinkedIn.
5. Paid search. Similar to organic search but with pay-per-click (PPC), this traffic comes from your campaigns.
6. Email. This includes any traffic generated by your email marketing campaigns.

Traffic can be used to measure your top of funnel and awareness performance. This will allow you to determine which channels to invest in to increase volume.

Your branding efforts can be measured by the reach of your social media posts. There are two options for businesses when it comes to social reach: organic or paid.

Organic is free and includes engaging content that enhances the brand’s image and experience. Organic is a great way to show your customers your personality. It’s best to be transparent and professional while being relatable. Follow hashtags, respond to comments, and be open to suggestions. This is your chance to connect with customers on an individual level. This leads to trust, and ultimately loyalty.

Paid advertising, on the contrary, can help you expand your reach with targeted ads and campaigns. These tools can be used to increase awareness, generate leads and drive traffic to your site.

Your social media reach can also be used to measure the distribution and coverage of your content across various social media platforms.

This is often represented as the number of shares your content has received. It can be found in many ways. You can see on Facebook how many people have seen a post you made from your business page.

To evaluate reach, you can also use tools such as BuzzSumo and Ahrefs. Simply enter your domain in their Content Analyzer and you’ll be able to see the most shared pages and content according to the channel.

This data can be segmented by social platform to identify which platforms are performing well. This data can be combined with traffic metrics to give you a clear picture of your top-performing channels. You can also look at the stats of your competitor’s top-performing content and get ideas by plugging them into their site.

Top TipKeep an eye on your competitors to see how they are changing over time. You’ll be able to keep track of your customers’ online and offline activities, as well as what your competitors are doing and how they’re positioning themselves and where the industry is heading. It’s important to conduct market research before you launch. However, it’s an ongoing process that should be revisited often to ensure you don’t miss a beat. Learn more about market research for your business idea. ?

3. Searches and brand mentions

Another great way to gauge awareness is to see how often you are mentioned online. This can be done in many ways.

The first is to monitor how many people mention your name in their online content. You can do this easily with a tool such as Google Alerts which will give you a daily digest of sites that have mentioned your name online.

You can also use a tool that offers more detailed functionality, such as Mention. These tools often offer more advanced features such as the ability to monitor social media mentions in real-time (as well the ability to reply directly from the platform)

You should also monitor the number of branded visitors and impressions that you are generating from search engines. To keep track of how many people search for your brand, use Google Search console. Here is an example of Buffer’s brand searches volume using the tool Ahrefs.

4. Metrics of engagement

Your site’s content can be consumed at any stage of the marketing funnel.

It is important to measure engagement metrics in order to determine how visitors interact with it.

These are two of the most popular engagement metrics:

1. Average time on site/page. This is the time spent by visitors on your website in general or on a particular page.
2. Bounce rate. The percentage of visitors who visit a page and do not navigate to another. This is the rate at which visitors visit your site and then “bounce” to another page without taking any other action.

To analyze how people interact on landing pages and content, you can also use tools such as CrazyEgg or Sumo. Here are heatmaps in CrazyEgg.

Using this information, you can make improvements on your pages to increase site traffic and conversions.

Consideration of Metrics

We covered broad metrics and marketing analytics at the awareness stage. These indicate how well your message has been spread and how visitors are engaging with you.

Let’s now examine how each element of your marketing contributes to lead generation and conversion.

1. Visits and conversions by source

The consideration phase focuses on guiding prospects through your funnel to generate conversions. We need to have a comprehensive view of each source and channel to measure the conversion rate at each stage in a customer journey.

Begin by looking at how many people visit your website each month. This is not just a channel-level view (e.g. “organic search”). You can dig into the social media platforms and referring websites that generate high volumes of traffic and conversions.

You can do this in Google Analytics by going to Acquisition > All Traffic > Source/Medium

Next, use Goals for measuring conversions and the conversion rate for each channel. This is how it works. Monster Insights has an easy-to-follow guide that you can find here.

2. Landing page performance

The number of visitors your website is generating overall vs. the number that your landing pages are generating is broken down. A landing page is a page that is used to promote a product, feature, campaign, or item. It is the page that a visitor sees after clicking a link. This page can also be your homepage.

Landing page traffic is important because these pages can lead to specific results and prompt action from your prospects.

These metrics should be monitored:

1. Total landing pages visited. How many people are you driving to your landing pages each day? This can be measured for each page to determine if they are performing well.
2. Traffic source. What sources, referring pages, and ad campaigns are driving traffic to your landing page?
3. Total conversions. How many conversions do you generate on each landing page?
4. Conversion rate. What is the conversion rate (e.g. What is the conversion rate (e.g., how many visitors take action on each landing page)? You can segment these by campaign and channel.

These metrics will enable you to make more informed decisions about your campaigns and the journey to a particular conversion. You can prioritize landing pages with lower conversion rates than others for your conversion optimization (CRO).

4. Call-to-action (CTA) performance

This is one of your most important metrics to measure during the consideration phase. You can see how many people are actually clicking on your CTAs. This can be further divided into two categories:

1. Navigational Call To Action. These CTAs are what drive visitors to the next stage in your funnel, e.g. Clicking an ad will take them to a landing site.
2. Conversion Call To Actions. These can be found on landing pages and require filling out and submitting forms.

You can measure the click-through rates (CTRs) of your CTAs to identify optimization opportunities. How does a change to the color or copy impact conversion rates? You can make small adjustments and split-test to see if these changes improve performance.

Metrics for retention

It can be easy to forget your existing customers when you have so many metrics about acquisition and conversions.

We’ll be covering three key metrics to measure customer loyalty, retention, and satisfaction. These metrics will allow you to focus on generating more revenue for customers you have already attracted and captured.

1. Customer churn

Customer churn refers to the rate at which customers stop buying from you or subscribing to your services. This is crucial for subscription-based businesses such as SaaS because reducing churn will result in more predictable revenue.

Depending on the business, churn may occur for many reasons.

1. Customer cancelling a subscription they have with You
2. They aren’t using your services anymore, or
3. They have stopped buying your products

The size of your business will determine how you calculate churn. If you have thousands of customers, for example, you might want to calculate churn monthly.

To calculate churn subtract the number of customers you had at the beginning of a period from that number at the end (e.g. 1st March to 31 March Next, divide that number by the number of customers at the beginning of the period.

If we have 500 customers on the 1st of March and 480 on the 31st, that would mean 20 customers are churned. This gives us a churn rate of 4%.

2. Rate of revenue growth for existing customers

This is a critical metric for measuring retention. This is a key metric for measuring retention. If customers spend more with you, it means that your marketing and sales are successfully encouraging customers to buy from you more often (or upgrade their plans).

It means that your customers see the value of your products and services. If this rate drops, it is a red flag that must be addressed immediately.

Customer revenue growth rate must only consider revenue from existing customers, not new customers.

This is done by subtracting the revenue or monthly-recurring revenue (MRR), at the end of a particular month, and subtracting it from the revenue/MRR at the beginning of the month. Divide that result by the revenue or MRR at the month’s beginning.

Let’s say, for example, that your MRR from existing clients was PS2,300 on March 1st and PS2,750 on 31st March. This means that your existing customer growth rate for the year is 19.56%.

3. Net Promoter Score (NPS).

NPS is a measure of how satisfied and loyal customers are with your brand. It can be used to measure how likely a customer will recommend your products or services on a scale from 1-10.

The scoring ranges from -100 up to +100. The range will drop towards the lower end if there are more negative than positive responses.

Do not be surprised if you score lower than you thought. Statistics show that people who have had negative experiences are more likely than those who had positive ones to report them. This is evident in a industry benchmark report, published by Hubspot.

It is easy to calculate NPS by asking your customers on a scale from 1-10 “How likely are they to recommend our company for a friend or colleague?” This score can be used to segment your customers.

1. Customers with a score of less than 6 are called detractors and are considered unhappy customers that could harm your brand.
2. Customers with scores of 7-8 or less are called passives. They are unenthusiastic customers that may be attracted by competing offers.
3. Customers who score 9-10 are called promoters and are loyal customers who are more likely to recommend your brand’s products to their friends and family.

Simply subtract the percentages of promoters and detractors to calculate your NPS.

Let’s say Business A surveys 500 clients. 300 responses are 9 or higher, 150 are between 7-8 and 50 are 6 or lower.

Percentage of detractors = 50/500 = 10%
Passives as a percentage: 150/500 = 30%
Percentage of promoters = 300/500 = 60%

Business A’s NPS = 60% for promoters – 10% for detractors = 50

Net Promoter Score is always referred as an integer, not a percentage. Business A’s NPS is therefore 50.

?? Expert insights

Start with the end goal

Insights author Frances MacPherson, Senior Marketing Manager at DuDil is a company intelligence platform that helps businesses discover risks and grow faster. It delivers insights on more than 50,000,000 companies and the people who work for them.

My first step in identifying the right metrics to measure marketing performance is to consider the end goal. Before defining the metrics that will measure performance, I ask myself two questions: 1) What are we trying accomplish with this initiative or activity? and 2) How does it tie to business outcomes?

The metric will differ depending on the marketing activity, channel and business goals. For example, if we want to increase brand awareness, we will measure website traffic driven through campaigns and channels.

If we want to increase conversions, then we will look at the number and conversion rate of leads generated by each channel. We also use our quarterly revenue objectives to determine our marketing targets to ensure that we are delivering the opportunities required to reach our company’s revenue targets.

Select the metrics that show success across your marketing channels

Insights author Gordon Folta Global Marketing Manager at Tom Dixon. This high-end furniture brand specializes in lighting and accessories.

The channel you are focusing your marketing activity on will determine the metrics you should use. Each channel requires a different set of metrics to help you identify optimization opportunities, strengthen performance, and make it easy for stakeholders to evaluate your work.

PPC activity is an example of this. Metrics and key performance indicators (KPIs), should be chosen based upon the prelaunch goals and objectives. One should always set targets. The marketing funnel also affects the metrics. Are you looking at top (awareness), middle (consideration), or lower (conversion?) funnel campaigns?

If one is creating a campaign to increase brand awareness, impressions, sessions, and clicks are all metrics to consider. You might pay attention to sessions, bounce rates, add-to-basket, session time, lower funnel conversion rates, revenue, and average order value for mid-funnel campaigns.

Each metric can be used to evaluate whether a campaign is successful. The beauty of marketing is that you can test and optimize to find a formula that works, for a time, before you have to adjust again.

These metrics will help you determine if your ad copy meets target standards to drive awareness, whether the landing pages you send to the audience resonate with their intent, and if your e-commerce has sufficient UX and SEO standards for conversion.

Wrapping up

This guide will help you to direct your marketing efforts and measure your overall performance. It is important to remember your “true north”, goals first and foremost. These are indicators of how well your marketing campaigns contribute to your strategic business goals.

Next, you will need to measure the core metrics that are listed here as indicators for each component of your growth plan. It’s crucial to understand how each component of your funnel performs, from awareness to retention to consideration.

What are the benefits? The ability to make strategic decisions at every stage.