Not all conversions are created equal, and understanding the cost of each conversion will help you determine where to invest your time and money when planning your marketing campaigns. This metric is extremely valuable in determining whether a tactic is successful or not.
If you run Google Ads and get 10 conversions a month, and that's what namibia phone number list you typically get organically from your site, that looks like a success because it's double your total conversions for the month. But if you look deeper, you realize that 5 of your conversions came from a guest blog post you paid just $100 for over a year ago that consistently drives monthly conversions. And it costs your Google Ads campaign $1,000 to earn those 10 conversions.
Knowing this data will help you realize that it may be worth investing in guest posts while cutting your Google Ads budget as you work to lower your cost of customer acquisition on that platform.
To calculate cost per conversion, you can take the total cost of a tactic and divide it by the number of conversions generated by that tactic. Many companies also calculate total customer acquisition cost, which takes your total marketing budget and divides it by the total number of conversions generated that year. This is a good metric to track year over year to better understand your marketing as a whole.
6. Customer Lifetime Value (CLV)
Once you get a customer, how much do they spend with your business? This will tell you how much you can afford to spend on customer acquisition costs. Companies with a higher CLV can generally afford to spend more on acquiring new customers. It also tells you how loyal your customers are and can point to opportunities to improve loyalty.
Measuring CLV is a little more complicated than tracking many other metrics. Here's how to calculate the metric.
Take your total revenue and divide it by your total number of orders. This tells you your average revenue per customer. You will then need to calculate how many orders you have received in a year and divide that by how many customers have placed those orders. You will also need to know your average customer lifespan, or how long a customer has been buying from your company. You can then take your average customer value and multiply it by your total customer lifespan to get your customer lifetime value.