The Ultimate Cheat Sheet on 2 Critical Marketing Metrics: LTV and CAC

Sun, 26 Feb 2023 14:29:07 -0800

Please raise your hand if you've ever felt overwhelmed by the plethora of metrics provided within your reporting software - website visits, conversion rates, generated leads per channel, engagement on social media platforms, blog post shares, email click-through rates, etc. Most of the popular reporting software packages come preset to calculate vanity metrics. This data is great and will boost your confidence in your efforts, however it does not provide clear guidance indicating if your business is moving in an upward direction. For example, this is a screenshot of the default dashboard from Google Analytics.

Well, there’s good news: if your marketing efforts are directed towards driving your business and/or revenue growth, there are two essential, actionable metrics that can be used - customer lifetime value (LTV) and cost of customer acquisition (CAC). We will walk through the process on how to track these metrics right now in this very blog post. When we are all done, you will know exactly how to use these data points to answer this question: Do we reflect a profit made on the cost of the initial customer acquisition? Ready?! Let’s dive in!

Customer Lifetime Value (LTV)

LTV calculates how much revenue we expect to receive in the future from our customers. There are a number of formulas for calculating this metric, some of which are pretty intense. I prefer to start with the simplified equation and then adjust as needed, given the business model.

To calculate LTV, take the average revenue the customer pays in a period, subtract gross margin, and then divide by the estimated churn percentage for that customer.

Keep in...Read More

4 Steps to Unifying Sales and Marketing Efforts

Sun, 26 Feb 2023 13:42:19 -0800

Goal

Implement a framework of data-driven tools and practices that help our sales and marketing teams work better together as a single, revenue-generating organization.

Step 1: Standardize Funnel Stages

Develop a unified picture of the funnel and standard definitions of each stage in the process.

Marketing’s Perception of the Funnel Stages:

Visits
Leads
Trials (MQLs)
Trials w/Integrated Marketplaces and/or Carriers (SQLs)
Deals (Opportunities)
Subscribers (Customers)

Define Marketing Qualified Lead (MQL)

Develop a MQL definition based on the combination of fit and interest that’s right for our company. This is the crucial handoff point between marketing and sales, so it’s essential that the teams agree on the terminology.

Marketing’s Perception of What Makes an MQL

A user that has signed up for a free trial of ShipStation.

Step 2: Implement a SLA (Service-Level Agreement)

With clear expectations on how many quality leads (trials) marketing will generate each month, and how sales will follow up with those leads, a SLA defines the expectations and provides hard numbers for both teams to measure their success.

The SLA formalizes the commitment that the sales and marketing teams make to meet shared goals for revenue growth. It’s a two-way process:

The marketing team commits to delivering a certain quantity and quality of leads/trials each month or quarter to help the sales team meet its quota.
The sales team then commits to follow up on those leads/trials in a timely manner, and to make a specific...Read More

Adam Singh - Entrepreneur & Expert in Product Marketing, RevOps, and Growth

The Ultimate Cheat Sheet on 2 Critical Marketing Metrics: LTV and CAC

4 Steps to Unifying Sales and Marketing Efforts