EMBiz: Marketing Metrics You're Not Tracking

Marketing Metrics You're Not Tracking

Laurel Mintz

Hi, everyone, Laurel Mintz here, CEO of Elevate My Brand and this is EMBiz. We're gonna talk about marketing metrics that you're probably not tracking, but you definitely should be. The two in particular we're gonna be talking about CAC and LTV. And don't worry if you don't know what those are, we're going to tell you how to measure them today.

Customer Acquisition Cost

So CAC is customer acquisition cost which measures how much an organization spends to acquire new customers. And the way that you calculate that is total sales plus marketing costs divided by the number of new customers. 

You really should be doing this calculation at different times throughout the lifecycle of the brand because your CAC is going to be more expensive in earlier days. And that's simply because you're going to have a higher CAC when customers don't know who you are yet, you have to spend a little bit more and your marketing costs are going to be a lot higher when you're trying to acquire new customers in a market that doesn't yet know like or trust you yet. You're gonna have to spend a lot more at what we call the top of that funnel, right, the visibility and awareness stage, top of funnel to push people down through that funnel because you're a brand new baby brand and you're up against a lot of big players usually in your space. So don't be too upset when your CAC is pretty high. 

Customer Lifetime Value

When you're first in market, the next important metric that you're probably not tracking, but you should be is customer lifetime value or LTV. This measures the value of a customer to the business throughout the customer's full lifespan. And your LTV is the average value of a sale times your number of transactions, times your retention period. And this also can change over time, the longer the company is alive, obviously, the longer the lifetime value, the larger the lifetime value that customer may be, but it's really important to track all of these numbers because it changes your spending in different categories, right? You really need to understand also how to improve these different numbers over time and how to develop things like loyalty programs that will significantly improve things like your lifetime value over time. LTV will also help you understand if you can increase your marketing spend because your LTV is bigger, so it impacts how you spend in every different category. Especially if you're going out to fundraise, if you're looking to sell your company, these are all things that venture funds will want to look at, that acquires of your company will want to understand.