As marketing becomes more science and less art, it’s increasingly essential to measure key performance indicators (KPIs).
In part one of this series, we explored seven KPIs, in the business category. In part two of this series below, we’ll explore 10 more KPIs, these in the customer category.
Some companies will measure all these KPIs, others might only measure a handful. The relevance of each particular KPI depends on your company and its goals. New software programs can effortlessly track these KPIs and many more.
Businesses can grow by making new sales to existing customers, acquiring new customers, or ideally both. Tracking this important KPI reveals how many new customers you’ve acquired. It’s essential to drill down into your acquisitions, and identify what efforts are generating new customers: marketing, sales, the enterprise, etc.
Tracking the percentage of customers you retain is essential, because it costs much less to retain customers than to acquire new ones. Ideally you track the percentage of customers who make additional purchases, what they spend, and more. In any event, you must track both retention and acquisition, and what percentage each contributes to revenue.
3. LTV – lifetime Value
(LTV) can be challenging to measure, based on average transaction value, duration between purchases, and customer lifetime. But it can reveal priceless insights. If you discover, for example, that average customer lifetime is short, try boosting marketing to existing clients to increase their lifetime and thus LTV.
4. Share of Wallet
This metric can reveal tremendous opportunity. For example if the average homeowner spends $10,000 on home improvement, but only $2,000 with your company, you’ve revealed $8,000 in market opportunity. You thus take marketing action to win business from competitors and increase your share of wallet.
5. Engagement Behavior
This KPI measures how well you’re engaging different types of customers. It can reveal, for example, gaps in communication and response, and spotlight how to more effectively engage customers. Engagement behavior is highly customizable, depending on your business and industry.
6. Net Promoter Score
This value reveals how many of your customers would recommend your company to others. It reveals how satisfied your customers are with your brand – and where you need to improve.
7. Churn Rate
This metric reveals how many of your customers come back and buy again. If your churn rate is high, you need to invest into retention. If it’s low, you can safely invest in acquisition.
8. Product Penetration
This powerful KPI reveals who your customers really are. You can drill down by customer type, region, sales channel, and more. Marketers are often surprised to discover their customers aren’t who they thought they were.
A well-known and important metric, upsell is best known as pitching french fries with a hamburger. In the B2B arena, a classic example is converting a basic license to a pro or enterprise license, resulting in revenue lift.
10. Cross sell
This is another well-known and powerful KPI. You customer buys one product, and then you effectively persuade them to buy another product in an entirely different category. An effective cross-selling program can significantly boost revenue.
Conclusion – The first step to improving something is to measure it. KPIs are incredibly powerful tools for measuring your marketing, and improving your ROI. This is part two of a four-part series; check back soon for part three, and discover more powerful KPIs.