As a marketer, you understand the importance of identifying the most marketing metrics to demonstrate sales and marketing performance to the CEO. The right marketing metrics can tell you a great deal about how effectively you’re reaching your customers and the overall health of your business. CEOs, on the other hand, have other priorities. They are accountable to the board of directors and shareholders for stewarding the direction of the organization.
The CEO expects that the management team can demonstrate how the organization’s investment in marketing has panned out and what to expect in the future. They are focused on diagnosing the health of the business. This includes the competitive environment, customer acquisition, revenues, pro-forma expectations, and of course profits. As a leader in your business, it’s your job to capture a snapshot of performance and package the information for executives.
Focus on New Customers, Sales and Profits
Remember to focus on outputs, rather than strategies and tactics. The CEO understands that the various technologies and marketing tactics are a means to an end, but what is important is demonstrating your ability to synthesize the various campaigns and initiatives and summarize what is most important to the C-Suite. Business leaders want to know about sales. That’s the bottom line. So if you want to prove your worth, make sure to prioritize the metrics that count.
Most Important Marketing Metrics for CEOs and Why
So, talk about the end or at least, how you’re going to get there. Don’t underestimate the value of synthesizing complex information and summarizing what’s most important into key points that are of importance to your CEO. As a marketer, here are five such valuable marketing metrics examples.
1. The Initial Customer Acquisition Cost
Your Customer Acquisition Cost is a very important figure. Simply put, take the total cost of the marketing department for a period of time and divide by the number of customers gained during that time period. This gives you a solid figure to point to when you’re asked how much is it costing you to reach and add new customers. As a leader, you can not only use this figure to point out performance but also how company funds can be better utilized to increase customer acquisition.
COCA = Marketing Costs / New Customers Acquired
2. Customer Lifetime Value (CLV)
The most important metric to your CEO is likely, Customer Lifetime Value (CLV). You can calculate CLV and use the metric to look forward beyond a single sale or a quarterly report. Customers are a valuable asset and the CLV value looks at the total “free cash flows” that a typical customer provides, not just now, but over the “lifetime” of your business relationship. Free cash flows are essentially profits. These are the source of investments in people, resources, wages, and profit-sharing distributions. You need free cash flows to pay down your debt and to invest in sales and marketing, so it’s critical to understand what to expect.
This is an important factor for your CEO to made aware of as repeat business, long term contracts, and customer loyalty are key factors in overall business health.
If you’re interested in learning more, you can download the CLV resource guide, or try the online CLV calculator and calculate the customer lifetime value of your customers.
3. Customer Acquisition Cost Turnaround Time
While it may require investments to drive new revenues your CEO is going to want a timeframe on when that happens. This is a simple metric to explain to your CEO. The costs to acquire a new customer will be offset by the revenue they bring in. Depending on your industry, this will vary and can be based on one-time purchases or long term contracts. With one-time purchases, this metric is demonstrated as the revenue exceeding the CAC (Customer Acquisition Costs) on a per customer basis. For annual or monthly contracts, CAC should be similarly modeled out over a 12-month period.
4. Percentage Of Marketing Originated Customers
There’s a little extra icing on this particular metric. Not only can you demonstrate the broad company-wide capabilities to drive new revenues, you have the opportunity to make sure that you earn a little extra cred by measuring the value of the customers that marketing has acquired. This is a key metric that demonstrates your marketing department’s overall effectiveness. Don’t be shy. Take a pat on the back. If you’re in marketing, I guarantee that you’re also going to take your share of the heat.
Marketing Originated Customers is one of the most important marketing metrics which can be expressed as a percentage of new customers who were acquired via marketing. Though the language is often one of “sales”, it’s important to dissect the organization’s capabilities and understand the mechanics of how leads and customers are acquired. Marketing might be much more effective than your colleagues or the CEO had in mind. Attributing responsibility to customer acquisition is an important process in the battle for resources, investments, and the future of the company.
5. Percentage Of Customers Influenced By Marketing At All Stages
The most important marketing metrics to determine the attribution of ‘customs originated from’ and ‘customers influenced by’ are similar but also different. Marketing is not an all or nothing proposition. While your marketing team might have been absent in the originating the lead generation, those leads can be further educated and nurtured and advanced to critical buying points within your whole aligned sales and marketing processes. This percentage of customers “influenced” at some stage of your selling process is an important indicator of the importance of marketing and helps organizations hand-off customers to different functional areas at different stages.