Which metrics you should measure in 2020

Metrics. Every marketer, business or even a teacher needs it as metrics are how we all observe performance and make decisions. In comparison to offline marketing digital marketing offers more flexibility and visibility to your actions. For example if you place a banner on the wall there's no way you could tell how many people have seen it or interacted with it (taken a photo or copied the phone number) but with digital marketing you have that data and that's what makes it special.

All kinds of measurements such as exit rate, avg. page view and conversion rate are as common names James, John and Mary. Yet, these metrics aren't ideal if you want to see the bigger picture of your overall marketing and business performance.
Before we dive in deeper into metrics let's first try to understand what exactly is a metric.

Metrics are measures of quantitative assessment commonly used for assessing, comparing, and tracking performance or production. Generally, a group of metrics will typically be used to build a dashboard that management or analysts review on a regular basis to maintain performance assessments, opinions, and business strategies.

Now having that figured out let's discuss what metrics are important for your business success.
1. Sales Conversion Rate (CR)
Your conversion rate, quite simply, is the percentage of visitors who make a purchase. This is by far the most important metric and this is why it's on the list.
According to Marketing Sherpa, a fair conversion rate for eCommerce stores is between one and five percent.
In most analytics tools such as Google Analytics, it will be visualized automatically but you can calculate it manually by dividing the number of users who made a purchase by the total number of visitors.

IMPORTANT. In any sales funnel, it is important to keep track of Assisted Conversions to understand, which traffic source led to the conversion and whether you should invest in it or not. You may learn more about it in our recent blog on the given subject.
How do you improve your customer lifetime value?
Provide 24/7 Support

Monitor Social Media and deal with complaints

Collect Feedback

Detect Common Pain Points & Provide Solutions

Offer Your Clients a Personalized Experience

You may learn other options in our previous blogs.
2. Customer Lifetime Value (CLTV)
Your customer lifetime value is a metric of the total you earn from an average paying customer over the course of their life. If you earn 100 Euros over five transactions from an average paying customer thought their life, your CLTV would be equal to 500 Euros. Of course, you would need to subtract your acquisition costs but we will talk about it in the next metric on the list.

Knowing your average customer lifetime value is viable information as it tells you how much you can spend to acquire a new one and if it's profitable in the long-term.
3. Customer Acquisition Cost (CAC)
Naturally, it costs something to acquire a new customer and this value is called your customer acquisition cost. To make a profit, your customer acquisition cost needs to be less than your customer's lifetime value. Ideally, your acquisition cost should be less than your average order value so you make money off every new customer.

As an example, let's pretend that you've decided to launch a Google Ads campaign on a specific location and your budget is 300 Euros per campaign. After the campaign's completion, you've managed to attract new website visitors and only 6 of them made a purchase meaning your acquisition cost was 50 Euros. Now having calculated LTV earlier you can compare these numbers and conclude if it is profitable to prolong the campaign or not.
How do you lower your customer acquisition cost?
Improve your site for conversions. Meaning make your website more appealing with graphical design, promotional offers, user feedback etc.

Optimize your paid ad campaigns, so that you spend less for the same result. Alternatively, use programmatic advertising tools for cost-efficiency and to build brand awareness.

Invest in cheap marketing channels like email marketing, social media or content marketing.

Create a referral program to attract new customers via the existing user base.

Some businesses can afford to lose money and spend more on CAC while having low LTV. This is done to combat competition but eCommerce businesses usually don't have margins to do that and that is why it is important to use your resources efficiently.

You can calculate your CAC by dividing your total marketing spend by the number of your customers. That's an overall figure, however. It's also useful to calculate your CAC by source. You want to know your CAC for each traffic channel.
4. Revenue by traffic source
In our recent blog about google analytics we discussed Multi-Channel View and its importance in determining, which funnels are the most productive. It's important to stop wasting funds on sources that don't work well or don't work at all, and invest that money in sources that do work. You can identify, which channels by calculating your revenue by traffic source – a metric that shows you which channels send you actual customers, as opposed to visitors who never buy. How you raise your traffic by source depends on the source. More about it you can read in the blog.
5. Average order value
Your average order value is, quite simply, the average value of each purchase. To identify yours, you would need to divide the total value of all sales by the number of carts. It's a no surprise that naturally you want customers to spend as much as possible, so that you earn as much as possible and to do that you need to calculate your average order value before trying to raise it.
How do you improve your average order value metric?
Bundle products together so the customer gets a minor discount on the purchase as opposed to buying them each one separately.

Upsell your customer's additional features or premium versions of your products

Recommend products that are based on their previous purchases

Offer a free shipping

If you would like to see more strategies let us know in the comments below.
6. Shopping cart abandonment rate
This metric is the percentage of shoppers who add items to their shopping cart, but then leave your store without making a final purchase.
The Average Cart Abandonment Rate Across All Industries is 69.57 Percent in 2019
You can track cart abandonment by using a cart abandonment tool or setting up a funnel in Google Analytics.
How can you reduce your cart abandonment rate?
Make the checkout process as simple as possible, so that the customer can order without any unnecessary hustle.

Send emails that will prompt the potential buyer to return to shop and complete the purchase

Use retargeting tools to pursue them to complete the purchase.

In fact, Meazy has an effective retargeting strategy built just for that. You can launch your first retargeting strategy to deal with the abandonment cart here.
7. Net Promoter Score (NPS)
This is a basic survey that measures the overall satisfaction of your customers with your brand or products. In this survey, only two questions are asked:

How likely are you to recommend us to a friend? From 1 to 10.

Why you responded with that number?
You may simply track it by using 3rd party services and segment the data into 3 categories:

Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.

Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.

Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

Subtracting the percentage of Detractors from the percentage of Promoters yields the Net Promoter Score, which can range from a low of -100 (if every customer is a Detractor) to a high of 100 (if every customer is a Promoter).

Let us know what metrics you use to measure effectiveness in the comments below.
Roman Pilipenko
Marketing manager of Meazy
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