Earlier this week I introduced the concept of holding your marketing accountable by establishing metrics to measure performance. Because much of marketing is focused on customer acquisition, at least some of your metrics should measure elements contributing to your effectiveness at attracting new customers.
Customer-acquisition metrics include:
- Awareness levels. Have prospective customers heard about you? Is your name the first that comes to mind in the product category?
- Rate of customer acquisition. How many new customers have you added this month?
- Market share. Of the total number of potential customers in your market, what percentage comes to you?
- ROI (return on investment). As you evaluate the performance of a marketing program divide the cost of the program by the total number of clients you gained as a result. Compare the cost to the average sale per customer. How much are you spending to add one more customer.
By turning loyal customers into advocates, your customer-acquisition costs will decrease as the value of each current customer increases. Therefore adding new customers is only half of the equation. The other important metric deals with customer retention.
- Retention rate. Improving customer retention remains one of the most effective ways to drive profits to the bottom line. What percent of your customers renew services or buy from you a second, third or fourth time?
These are just a few of the possible measurements. How do you measure the effectiveness of your marketing?