Many business owners believe that customer acquisition metrics are an intimidating topic and that it requires the knowledge of experts. So they steer clear from it.
But as a business owner, you need to observe your business' performance and make informed decisions based on those metrics.
The good news is that you can easily measure metrics online. As long as you know which metrics matter most, you'll have no trouble understanding what truly matters for your business goals.
By being able to gather and analyze metrics, you can make the most of your customer acquisition strategy. This data can also help you grow your business.
Without metrics, you'll end up playing a guessing game on how best to utilize your business.
Things like conversions, customer retention, repeat visits, and others are just some of the metrics that you should pay close attention to.
In doing so, you'll be able to understand the things that influence your business' growth and your customers' decision process.
Don't worry. Here are 7 customer acquisition metrics you should keep track of in your business:
7 Key Customer Acquisition Metrics to Monitor
1. Cost Per Acquisition (CPA)
When it comes to customer acquisition, your Cost Per Acquisition (CPA) is one of the key metrics you need to monitor. This is important to know how much you are paying when you are trying to acquire customers for your business.
According to Gary Stevens, a web hosting and IT administrator at Hosting Canada, “Measuring your CPA will make sure that you are not spending money on exorbitant campaigns that only generate a small number of customers. That’s because, as a business owner, your main goal is for your customer value to be higher than what you spend on your acquisition cost.”
You can get these metrics from the online marketing strategies you utilize for your business, like email campaigns, paid search, and other tools.
But at the end of the day, if the cost of the campaigns you use is far superior to the total revenue they produce, you are not actually earning a lot from the strategy.
This will also let you reconsider your campaign and find other ways to improve it. The metric can also teach you how to manage your campaign budgets carefully.
One way you can improve your CPA is to segment your campaigns to reach your target customers who will likely respond to your call-to-action and landing page.
You need to make sure that your CPA benefits from your Average Order Value (AOV).
2. Clickthrough Rates
The next performance metric that you should be looking at is your Click-Through Rate (CTR).
This metric is expressed in percentages and measures the number of times that your ad, email, or organic search result has been clicked compared to the number of times it was viewed.
This is one of the customer acquisition metrics people use to measure how effective a paid search, display, or email marketing campaign is. Not to mention, this metric also measures how well an ad copy, metadata, and the subject line is performing.
A few examples where CTR is typically measured include the following:
- Organic SERP page result
- Call-to-action button or link in an email
- Facebook display ad
- A link on a landing page
- PPC ad on a SERP page
- Other on-site elements
Since the CTR calculates the number of times people click on your ad after seeing it, this metric reveals the strength and quality of your ad image, copy, positioning, and keywords are.
When you know how to use CTR as a metric, you can increase conversions to generate more sales.
3. Average Order Value (AOV)
In a nutshell, the Average Order Value (AOV) is another customer acquisition metric that measures the average value of every purchase. You can obtain this metric by dividing the total value of all sales by the number of items in your customer's carts when they check out.
The good news is that there are now tools that can generate this value for you. With the help of invoicing software, you can get an estimate of this figure without having to do a manual computation, so you make fewer errors. You will simply need to input the numbers into the software to generate the results.
The idea behind this metric is that your main goal is to earn as much as possible from customer purchases. And once you know your AOV, you can use it to help you raise the chances of your customers making more purchases.
For example: If you get an AOV of $100 and a CPA of $25, then that is an indication that your campaign is doing good.
But if your AOV is only $30 and your CPA is still $25, you should try to come up with a new way to improve those numbers.
Some tips for driving up this metric include the following:
- Provide a small discount on bundled products instead of buying items separately.
- Offer additional features or premium versions of your products to customers.
- Suggest other products in your inventory that complement their recent purchases.
- Offer free shipping on higher total purchases.
Just remember that whatever promotion you use to increase your AOV should be something that will be advantageous to your customer.
4. Traffic Sources
Your website's traffic also plays a crucial role in how you are acquiring customers. By understanding where your traffic is coming from, you will get to know how well your strategy is working.
If you find that your traffic is increasing yet you still have a low traffic-to-lead ratio, it could mean that you are missing something on the page. One factor could be a misalignment in the information provided on what your customers are clicking on.
If you fail to answer their question on that page, your customers may leave your website to look for another resource.
Before you start optimizing your content, you need to identify the pages on your site that are getting the highest bounce rate as well as the lowest view-to-contact rate. By having this knowledge, you'll know which pages you should be putting your efforts into.
So how do you figure out which traffic sources work most? You simply need to calculate your revenue by traffic source.
This customer acquisition metric will show you the channels that earn you actual customers instead of website visitors who never buy from your site.
5. Customer Retention
Another customer acquisition metric that you should know about is customer retention rate.
Basically, this refers to the percentage of customers you manage to maintain over a duration of time.
Once you have a high percentage, that means you are doing well in serving your customers.
An important thing to remember when calculating this metric is that you need to subtract your new customers from the total number of customers.
While your new customers are important, they won't affect this metric since it is focused on how well you retain your existing customers.
6. Cart Abandonment Rate
Out of the 7 customer acquisition metrics on this list, you'll be shocked to know that marketers also take a look at cart abandonment rate.
Yes, if you are an online shopper yourself, you may be guilty of adding things to your cart and leaving the site without making a purchase.
Well, as a business owner, did you know that you can use this metric to your advantage?
According to Baymard Institute's data, almost 70% of shoppers tend to abandon their carts. Some of the revenue can still be recovered as long as you know how to lower your cart abandonment rate.
The cart abandonment rate lets you see if your site or cart has any issues that prevent customers from making a successful transaction.
The good news is that you can use a cart abandonment tool or even set up a funnel in Google Analytics to keep track of this.
Once you have the data, you can use the information to lower your cart abandonment rate. Here are some tips on how you can do this:
- Make your checkout process more simple so your customers can have a smooth experience from start to finish.
- Send cart abandonment emails to remind the shopper that there is an item on their cart waiting for them to check out.
- Use remarketing strategies to bring potential customers back to your site.
7. Return and Refund Rate
E-commerce sites deal with refund and return rates all the time. But despite this, it is something they dread.
Because of this, certain companies already include returns and refunds in their financial models.
Even though they occur, they don't happen a lot. Having a system in place, however, helps the business owner prepare for such things.
As a marketer, you can use your return and refund rate to your advantage.
This is particularly true if your customers know that you offer free returns and exchanges. Unfortunately, some customers use this model to drive your business.
If you can track these metrics, you can be aware of a particular section in your store where there is a high refund rate.
Once you get notified of this, it's time to investigate what is causing the spike and take necessary action.
You can use these customer acquisition metrics to your advantage, as long as you know how to use them. They are, however, not something that you should only check once and forget.
To make the most out of these metrics, you need to regularly keep track of them. You can practice doing this either weekly or monthly.
This will ensure that you can make the best decisions for your store using accurate data that truly matters.
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|About the Author: Kevin Payne is a content marketing consultant that helps software companies build marketing funnels and implement content marketing campaigns to increase their inbound leads.|
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