Attracting new leads and customers to your business is obviously important. However, getting new leads isn’t the only key to running a successful marketing campaign. If you’re spending too much money to get your target audience’s attention, your company will struggle to stay afloat.
Tracking the monetary success of your lead generation and content marketing is crucial if you want to create the best marketing strategy for your business. Still, not all metrics will give you the same insights. In order to get a full understanding of how well your marketing is performing, you need to understand what the different numbers are trying to tell you—and what you can do to improve the important ones.
Let’s take a look at the two monetary metrics you should be tracking, what they mean, and what steps you can take if they are falling short of your goals!
- Knowing your cost per lead can help you determine if you’re marketing appropriately.
- The lifetime value of a customer can allow you to see the investment of your content marketing.
- Tracking the return on your marketing investment can show you how well your campaigns are paying off.
1. Examine the Cost to Acquire Your Leads
Your cost per lead tells you how much money you’re spending, on average, to engage just one lead. To find your cost per lead, you simply take the total amount you spent on marketing and divide it by the number of new leads you gathered from that campaign.
You can find this metric for your total marketing budget or for each specific method or campaign, as shown in this example of a cost per lead comparison from Klipfolio:
Your cost per lead can give you an idea of whether or not your content is reaching your target audience appropriately. If this metric is low, you’re successfully engaging new audience members at a reasonable price. If your cost per lead is high, however, there may be a discrepancy between what you’re providing and what your target audience is looking for. Spending too much money to attract one lead could mean you’re creating content that isn’t relevant to your audience, marketing on a channel where your target customers aren’t active, or just spending too much money and not seeing a lot of results.
There is no set amount that you should strive for with your cost per lead, since each company and situation is different. However, you do want to consider how that cost compares to the amount each customer is spending on your products or services. For example, if you’re spending $100 to attract a new lead who may only end up paying for a $50 product, your cost per lead is way too high. On the other hand, a $100 cost per lead for a $2,000 service is relatively low.
If it’s too high, you can reduce your cost per lead by creating more targeted content marketing campaigns. Understand what content your audience is looking for, where they’re searching for it, and what information they need before they’ll convert. Also, consider if there are cheaper marketing methods you can take advantage of.
2. Understand the Lifetime Value of Your Customers
Once you gain a new customer, the hope is that they will continuously purchase from you for years to come. However, in order to understand how much revenue you can actually expect to gain from a customer, you’ll need to consider what their lifetime value is.
A customer’s lifetime value is the projected amount of revenue that customer will bring in during their lifetime. In order to find this metric, you need to know both the average number of visits a customer makes in a year and how much they’re spending on each visit, so you can calculate how much they spend per year. You’ll also need to know the average length of time that someone stays a customer. Multiply their yearly spend by the number of years they patronize your business, and you have your customer lifetime value.
You can use this metric to determine whether or not your cost per lead is justified. If you’re spending a lot of money to attract new leads who don’t repurchase often or spend little money over their customer lifetime, you may struggle to create a financially sound business. However, if you’re investing in long-term customers who will purchase from you frequently, it may be okay to have a higher cost per lead.
When determining how much you’re willing to spend on your marketing, you want to keep it well below the lifetime value of each customer. For instance, if your customer has a lifetime value of $10,000, spending $12,000 to attract that new customer would lose you profit. This is an extreme example, but the point is that you want each lead to bring in far more than you spend on attracting and keeping them.
Bonus: Analyze the Return on Your Marketing Investment
Return on Investment (ROI) is one of the most common metrics that helps determine financial success. Plus, knowing your marketing ROI can be incredibly important for understanding whether your campaigns are actually making you money. Although you may be attracting leads and getting new clients, if your investment is larger than your returns you aren’t going to see much profit.
Your marketing ROI can be found by subtracting your investment from your gross profit. You can determine this metric for your marketing strategy as a whole, or you can break down your return on investment for each individual technique or campaign, as illustrated by this graph from Niel Patel:
Tracking your marketing ROI can help you better understand what the best content marketing investment is for your company. While a larger ROI is always better, a good rule of thumb is to aim for at least a 500% marketing ROI. In other words, you want to bring in 5x the amount you’re spending. If you aren’t there quite yet, it’s still important to be sure that you’re at least covering the costs of your expenses. You don’t want to bring in less than what you’re spending.
Fortunately you can improve your content marketing ROI by getting to know your target audience better. If you’re not seeing a lot of profit from your content, it’s usually because you’re not connecting with your customers the way you should. Refine your message, try new promotion styles, or create higher-quality content to improve conversions and see more sales.
Getting new leads through your content marketing is important for your business. If you’re unable to attract customers in a cost-efficient way, however, your marketing strategy won’t be successful. Through keeping your eye on various monetary metrics, you can get a better understanding of whether or not your marketing budget is working for you.
Let’s recap the three things you should track to ensure your plan is financially successful:
- Measure the cost to acquire each lead.
- Know the lifetime value of your customers to properly determine your marketing budget.
- Track your marketing ROI to ensure you’re bringing in more than you’re spending.
Which of these metrics do you think is most important for your business? Let us know in the comments section below!
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