Trending this month



November 17, 2017

five lesser known inbound marketing metrics


 
1)LTV ( Lifetime value of your Customer ) Your customers are valued much more than one purchase. Their value to your company can be defined in influence and in dollars over the course of your business relations with your website. 
For the purpose of calculation ROI, you can simply use a lifetime value for your customer (LTV). 

Using historical sales data you can figure in two different ways. 

The first one is this : Average transaction purchase amount ($) x average number of purchases =LTV 

For example, lets take an example of an online education company whose average course fee is $30. If this company analyses its data to discover that an average student takes 10 courses, the lifetime value of its customers is $300 ( $30X10) Another way of calculating lifetime value is by multiplying the annual purchase amount x average length of engagement.

For example, let’s say that a mobile phone carrier whose average customer has two phone plan at $60 a month per phone and the average customer remains active with its mobile carrier for 3 years ( 36 months).Let’s assume that data shows that the first year’s purchase also includes 2 mobile phones and set up fees totalling $1004 
Therefore first years total revenues (mobile phones, set up fee and 12 months of service =$2000 Second 24 months of contract revenue =(2x$60) x24 =$120x24=$2880 $2000 (year 1)+$2880(year 2 and 3)=$4880 LTV.
To obtain an even more accurate lifetime value of your customer you could apply revenue erosion which arises from contract cancellations and non-fulfilment 

2)First Action Value(Purchase) Because it takes times to realise your customer's lifetime value, you may sometime want to take a quicker view of your marketing ROI. Knowing your initial value of your first action makes it easy for you to calculate the ROI Using the above example of a mobile phone carrier, Let us also assume that there is an initial phone purchase that averages $330 and a setup fee of $22 per phone.Let us assume that for these numbers there is a one-year contract commitment required Because the average customer purchases 2 units the phone hardware cost of $330x2) and the initial set up fee is ($22x2).
The first year contract for 2 phones amounts to 2X$60x12=$1440.Let's also assume that your data shows that customers who don’t fulfil their contracts reduce this amount to on an average 90% of the first year contracts fees, lowering your average first year to $1296 ( $1440-$144=1296)

From this you can calculate your first action value, in this case, the purchase of mobile phones, set up and one year service by adding these 3 values $660+$44+$1296 or $2000 
Your customers average first action value purchase is then $2000. 

3)Cost per Acquisition: Measuring your cost per acquisition simply means how much dollars are you spending to get a customer are yourdoorstep..The simplest way to calculate this is by dividing your digital budgets by the number of customers you are getting via digital channels.
For example in a hospital, if you spend $10,000 a month for promoting a speciality service and 5 customers land up at your clinic, the cost of acquisition is 10,000/5=$2000.Most marketers aim to bring down the cost of acquisition. So does that mean that if you increase this budget by 10 times 50 customers would end up at your hospital? Well, that’s impossible to say, but ideally, you should increase your digital budget incrementally until you reach a point of diminishing returns.

4)Return on Investment: This is simply defined by Cost per lead / Cost of Acquisition Now that you have broken down your marketing budget by assigning your marketing initiative inputs to product pyramids, you can easily find your ROI 
Here is how it's calculated
 LTV X number of customers ) /Marketing Budgets=Total ROI 
In case of the above-mentioned phone company, this looks like this. 250 customers per monthx$4880=1220,00 1220000/100,000 marketing budget=12.2 return or 12000 percent Your marketing budget was 8.2% of sales ($100,000/$1220,000).

Just remember your not realizing your full return at once, but in this example, it requires 3 years to capture the full return on your digital marketing investment For a more immediate ROI, simply replace the Lifetime value of the customer ( LTV) number in your equation with the first action value. This is represented by (First action value X number of customers)/Marketing Budget=immediate  ROI 

5)Cost per Lead: cost per lead ration is determined by dividing your marketing expenses by the number of total leads, For example, you run Paid campaign spending $10,000 and end up with 10 validated leads. Your cost per lead is $10000 

6)CONTACT CONVERSIONS to MQL ( marketing qualified leads)Ratio: The number of leads that become marketing qualified leads (MQL) is the first measure of lead quality. Upon conversion the marketing department designates each lead as one of the following Ideal customer matches or A leads Prospective leads who appear as good matches either by engagement information they provided in the contact form, their onsite activity or their status as buyer decisions , also known as B leads Prospective leads who provided information but whose online activity information or other factors caused the marketing department to view them as questionable. They are C leads Contact Leads which are not good prospects. Classify these leads as unqualified.