5 Critical Numbers To Fuel Your Business
Scroll to top
Talk To Us - +91 8080 619 589

Five Critical Numbers To Fuel Your Business

TransFunnel Consulting
TransFunnel Consulting Dec 15, 2017

The Five Critical Numbers To Fuel Your Business

Famous Astronomer and Physicist (and much more), Galileo once said: “Measure what is measurable and make measurable what is not so.”

And after centuries, this stays so true, even today, for one to remain directional and achieve goals. Every successful business measures its plans; it’s successes and with that setbacks. All in all, there has to be criteria for progress, for getting ahead and finally, for achieving the end goal. Same applies for your front office, i.e., the Marketing.

Now that Marketing has a new digital face, metrics become much more important than the Marketing of the gone era. And, that makes measurement both easier and tougher at the same time. Tougher, for the parameters and the approach, have changed, and easier, for it’s easy to generate information from the data when the right set of tools are deployed.

Here are the top 5 must-have metrics that help measure the modern and digital marketing efforts:

Cost Per Lead (CPL):

Cost Per Lead measures the cost-effectiveness of your marketing efforts this helps see the cost-effectiveness of marketing in generating new leads, and additionally contribute to tracking the marketing budget for both traditional and digital ways of marketing. CPL is calculated with a simple formula as:

CPL = Marketing Spend / Total New Leads

To efficiently implement CPL, you must know the business’ appetite on how much can be spent per lead, and accordingly, strike a balance on how and where to spend. This will also give you an idea on the return on marketing investment.

However, these metrics have a few associated constraints:

  • It emphasizes quantity over quality
  • Puts cost over return on investment
  • Does not differentiate in qualified and unqualified leads
  • Does not offer any predictive data to act upon and plan for the future

Cost Per Qualified Lead (CPQL):

Now that CPL offers a few constraints, one metrics that comes to the rescue id CPQL. And as the name suggests it helps to focus on the qualified leads instead of just a lead.CPQL is calculated as similar to CPL, with the elimination of unqualified leads:

CPQL = Marketing Spend / Total New Qualified Leads

This metric is closely related to other key business metrics such as the cost to acquire new customers, which is discussed below.

Cost Per Acquisition (CPA):

This metrics is a further step up from CPQL and allows you to put control on your marketing budget. It’s the crucial metric for determining true return on investment. For this, you can set a baseline of your own and modulate as you progress on conversions.  CPA is calculated as:

CPA= total cost/number of acquisitions

Determining CPA  charts a clear picture of the cost/benefit ratio and also helps determine more accurate investment evaluation.

CPA differs with CPL and CPQL in the following ways:

  • While CPL/ CPQL is in much of your own metrics, CPA is are publisher-centric metric, and hence dependent on them for where the brand will be run, based on the package you opt for. For example for Google Adwords or Adsense.
  • CPA campaigns are usually low volume and complex, unlike CPL/ CPQl where volumes are high.

Average Revenue per Account (ARPA):

ARPA is a measure of the revenue generated per account, typically for a standard period (Monthly, Quarterly or Yearly), and helps analysis of revenue generation and growth at the per-unit level, for a given business. Now, this becomes really important in identifying which products or services are high and which products or services are low revenue-generators. ARPA, with a yearly/monthly timeline, is calculated as:

ARPA= total revenue generated by all accounts in a month/ the number total number of accounts

You can also split the metrics into two, say one for the existing accounts and one for the new accounts to keep a tab on how your business is evolving.

Net promoter Score (NPS):

One of the most important marketing metrics that matter is the Net Promoter Score (NPS). These metrics let you know whether your existing customers would recommend your brand to their connections. If you are doing a good job, then this number should have an upward trend, and that’s also a sign that you are improving. This one can actually help you multiply your business. And it’s easy to calculate with a simple formula:

NPS = % Number of promoters-% Number of detractors. This could be on a scale of 1 to 10 as well.

Well, all 5 metrics are important and can be built upon gradually as your business grows. In whatever form you design your metrics, ensure that you have a baseline to start and a target to reach. Steven Covey wasn’t wrong when he placed Start with the end in mind as one of the famous Seven Habits of Highly Effective People.

Check how our experts can help you build effective metrics and dashboards with the right set of tools at TransFunnel