Leads and customers are important to have in every business. When keeping track of them, you are going by the latest bit of data that can be used for all kinds of critical business decisions. In this guide, you’ll learn about five different types.
Whether it’s online or a brick-and-mortar business, these five metrics can be applied to leads and customers. You’ll have a bird’s eye view of what’s working in terms of your lead and customer acquisition strategy and what you could do to change it if you notice any bottlenecks.
1. Cost Per Lead (CPL)
First, on the list, we take a look at this all-important metric that measures your marketing efficiency. The way your cost per lead (or CPL) is calculated is by the following equation:
Divide the total cost of the marketing campaign by the number of leads generated. What CPL does is provide you with data on how financially feasible it can be to acquire potential clients. It also helps to emphasize exclusive lead pricing - which can give you the best quality leads possible for your business.
You can convert them into your most loyal paying customers. As long as you have the right offer in front of them, it will be hard to get them to say no. That means more sales every time.
2. Conversion Rate
When leads enter your pipeline, the conversion rate is one of the most critical metrics to monitor. This will reflect the percentage of leads that are transitioned into paying customers. The higher the conversion rate, the more revenue you’ll stand to generate.
The best way to convert your leads into customers is to not only provide them with an excellent offer, but with service that is customer-oriented. A high conversion rate will also be an indicator of how effective your sales and marketing efforts are.
If you notice that your rate is lower than the target you set, it’s a sign that you’ll want to make a few tweaks and changes. What can cause a lead to not convert into a paying customer?
You may be presenting the wrong offer in front of the wrong people. In this case, you want to research your target market. What are the needs they want to be fulfilled by your business?
Your marketing message should touch on the needs and pain points your customers have. You can solve those pain points with something you can offer them. Something that may be enough for them to say “yes” and fork over money to you.
If you have a paying customer, it’s important to keep in touch with them regularly. This way, you can offer them exclusive deals. Especially the kind of deals that a select amount of people will enjoy (and no one else).
3. Customer Acquisition Cost (CAC)
Acquiring a new customer is important for any business. So you must understand why the cost of acquiring one is a worthy investment. The CAC will include the expenses related to acquiring those customers including the amount of money you spend on marketing.
If your CAC is low, that indicates a good sign. One of the best practices to keep it low is by utilizing organic social media posts and followings. You can also improve customer retention and keep new customers so they remain loyal to your business for as long as possible.
Also, referrals will help keep those CAC numbers low as well. The best way to do this is to provide them with excellent customer service. Keep those customers happy and they will sing from the rooftops about how awesome your business is.
Their friends and family will trust them enough to shop at your business. The circle goes around and around. Before you know it, your business may have more money than it knows what to do with.
4. Lifetime Value (LTV)
The lifetime value or LTV is the overall value a customer brings. This includes the total revenue that they’ll generate over the lifetime of the relationship with your business. Simply put, the higher your LTV, the better chance it will increase your revenue over time.
Furthermore, it’s a vital metric as it can help target who your ideal clients are. Customer loyalty is everything to a business. So make sure you keep the LTV as high as possible for every customer - especially when you know what kind of need to fulfill whenever the time comes for that customer to make a purchase.
This is also one more good reason why you should keep in touch with them regularly. Encourage them to sign up for your email list, follow them on social media, and provide them with exclusive offers that might only be available to a few, but not everyone.
5. Referral Rate
This metric is based on, you guessed it…referrals. A high rating indicates how satisfied your customers are along with their undying loyalty to your brand. It may be a good idea to ask new customers how they found out about your business.
If they mention that they have been referred, that’s when you can ask them who. Not only will this help you measure how many customers you’ve gotten by referrals, it also gives you another idea. Why not give that referring customer and the “referred” customer a little bit of a reward such as a discount or exclusive offer?
Make Tracking A Priority For Your Business
Tracking these all-important business metrics is key. You’ll want to pay attention to these as you want to make sure that everything is going smoothly. Not just with the amount of sales you’re getting, but also the amount of customers that are coming through your doors (physical or virtual).
If a number indicates something wrong, figure out the cause. Then make the necessary changes. Failing to monitor these metrics will lead to huge problems.
Make sure that tracking your metrics is a priority. Finally, take these five important metrics of your business seriously.