How to Excel at Small Business Marketing: Top Key Performance Indicators (KPIs) to Track
In life, we measure all sorts of things. Weight, blood pressure, cholesterol, blood sugar all help keep tabs on our health. Measuring cups and spoons ensure your built-from-scratch birthday cake comes out beautifully. “Measure twice, cut once” is a mantra among both professional carpenters and DIY home improvement enthusiasts.
Measuring success in business involves paying close attention to key performance indicators (KPIs). These are metrics that provide you guidance on how your small business marketing initiatives are performing. If you’re not moving the needle on your business objectives, KPIs can help you identify why.
There are some KPIs that stretch across different content platforms. For example, conversions and click-through rates. Both apply to social media, paid advertising, and email marketing. Others are specific to marketing platforms. Social media marketing benefits from monitoring likes, comments, and shares.
8 Small Business Marketing KPIs to Include in Your Marketing Strategy
The following represents the most common types of small business marketing KPIs business leaders should be tracking and monitoring.
1) Website Traffic
Your website is often the first point of contact between your business and potential customers. As such, it’s essential to track how many people are visiting your site. The number of visitors to your site, also known as website traffic, is one of the most important small business marketing KPIs to track because it gives you a sense of how well your website is performing in attracting potential customers.
To track website traffic, you can use tools like Google Analytics. This tool allows you to assess the number of site visitors, how long they’re staying, which pages they’re visiting, and much more. By analyzing this data, you can identify which pages on your site are most popular and which ones might need improvement.
2) Conversion Rate
While website traffic is a crucial KPI to track, it’s not the only metric that matters. Ultimately, the goal of your small business marketing efforts is to convert visitors into customers. That’s where conversion rate comes in. It’s necessary to keep in mind a “conversion” doesn’t necessarily mean a “sale.” Conversion rate measures the percentage of visitors to your site who take a specific action, such as filling out a form, making a purchase, or signing up for a newsletter.
To calculate your conversion rate, divide the number of conversions by the total number of visitors to your site, then multiply by 100. For example, if you had 100 visitors to your site and 10 of them made a purchase, your conversion rate would be 10%.
By tracking your conversion rate, you can identify areas where you might be losing potential customers and make changes to improve your website’s performance.
3) Cost per Acquisition
Another key small business marketing KPI to track is the cost per acquisition (CPA). This metric measures the total cost of acquiring a new customer, including all marketing expenses, divided by the number of new customers acquired.
To calculate your CPA, add up all your marketing expenses—such as advertising costs, content creation costs, and any other expenses related to acquiring new customers—then divide that by the number of new customers you acquired during that period.
Tracking your CPA is beneficial, because it allows you to determine how much you’re spending to acquire new customers. If your CPA is higher than the amount you make from each new customer, then you might need to re-evaluate your small business marketing strategies or find ways to reduce your expenses.
4) Customer Lifetime Value
Customer lifetime value (CLV) is a KPI that measures the total amount of revenue you can expect to earn from a single customer over the course of their lifetime. This metric is helpful because it allows you to determine how much you should be willing to spend on acquiring new customers.
CLV takes into account the revenue a customer generates over the course of their relationship with your business. For example, if you run an online store and a customer makes a purchase of $50, you might be tempted to think of that as a one-time $50 transaction. However, if that customer continues to make purchases from your store over time, their total lifetime value to your business could be much higher.
To calculate CLV, you’ll need to determine the average amount of revenue you earn from a single customer per year and multiply that by the number of years you expect them to remain a customer. For example, if the average customer spends $100 per year and you expect them to remain a customer for five years, their CLV would be $500.
Here’s the thing: CLV is not a one-size-fits-all metric. Different businesses will have different CLVs based on their industry, target audience, and pricing strategies. A business that sells high-end luxury items typically has a much higher CLV than a business that sells low-cost, disposable products.
Once you have a good understanding of your CLV, you can use it to make informed decisions about how much you should be willing to spend on acquiring new customers. If your CLV is $500, you might be willing to spend up to $250 to acquire a new customer (assuming a 50% profit margin).
Tracking CLV is a meaningful small business marketing KPI because it helps you make informed decisions about how to allocate your marketing resources. Doing so ensures you’re getting the most value out of your marketing efforts.
5) Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) is closely related to CPA, yet they differ in their scope and calculation.
CAC is a metric that calculates the average cost of acquiring a new customer. It takes into account all the expenses involved in the marketing and sales efforts to attract and convert potential customers into actual customers. The purpose of CAC is to help small businesses understand how much they need to invest to gain a new customer, which can then be compared with CLV to assess the profitability and sustainability of the business.
CAC is calculated as follows:
- CAC = (Total Marketing and Sales Expenses) / (Number of New Customers Acquired)
CAC specifically focuses on the cost of acquiring a new customer, while CPA measures the cost of obtaining a specific action or conversion from users. Both metrics are essential for understanding the efficiency of small business marketing efforts, but they serve different purposes and can be applied to different aspects of a marketing campaign.
6) Return on Investment (ROI)
ROI, or return on investment, measures the amount of revenue generated by your marketing efforts compared to the cost of those efforts. Essentially, it tells you how much you’re getting back for every dollar you spend on marketing.
To calculate ROI, you’ll need to know the revenue generated by your marketing efforts and the total cost of those efforts. As an example, if you spent $1,000 on a marketing campaign and generated $5,000 in revenue from that campaign, your ROI would be:
- ROI = (Revenue – Cost) / Cost
- ROI = ($5,000 – $1,000) / $1,000
- ROI = 4
This means that for every dollar you spent on the campaign, you generated $4 in revenue.
Tracking ROI as a small business marketing KPI is important, as it helps you understand the effectiveness of your marketing efforts. If your ROI is high, it means your marketing efforts are generating a significant amount of revenue compared to the cost. However, if your ROI is low (or negative), it may indicate that you need to adjust your marketing strategy to improve effectiveness.
Tracking ROI can help you make informed decisions about where to allocate your marketing budget. If you have two marketing campaigns that cost the same amount, but one has a higher ROI, it may make sense to invest more in the campaign with the higher ROI.
7) Social Media Engagement
Social media engagement refers to the level of interaction your audience has with your social media content. There are a few different social media engagement metrics you should be tracking, including:
✅ Likes. Likes are a basic form of engagement that indicate someone enjoyed your post. Tracking the number of likes your posts receive can give you a sense of what types of content your audience finds most appealing.
✅ Comments. Comments are a more in-depth form of engagement that indicate someone took the time to write a response to your post. Tracking the number of comments your posts receive can give you a sense of how engaged your audience is with your content and provide valuable feedback on what they like (or dislike) about your business.
✅ Shares. Shares are when someone shares your post with their own network. Tracking the number of shares your posts receive can help you reach a wider audience and increase brand awareness.
✅ Followers. The number of followers you have on social media is an imperative metric to track because it gives you a sense of how many people are interested in your business and want to see more of your content.
✅ Click-through rate (CTR). CTR measures the number of clicks that your social media posts receive compared to the number of impressions (e.g. the number of times your post was shown to someone). This can help you understand how effective your social media content is at driving traffic to your website or other online platforms.
By tracking these social media engagement metrics, you can gain valuable insights into what types of content your audience finds most engaging. This helps you understand how you can optimize your social media strategy to reach a wider audience and build a stronger online presence for your small business. By monitoring social media engagement, you can identify opportunities to respond to customer feedback, address concerns, and engage in meaningful conversations with your audience.
8) Email Open and Click-Through Rates
Email marketing can be a game-changing way for small businesses to connect with potential and existing customers. However, to get the most out of your email marketing efforts, you cannot ignore open and click-through rates.
Email open rate measures the percentage of people who open your emails. It’s vital to track this metric because it gives you a sense of how interested your subscribers are in your content. A low open rate could indicate your subject lines aren’t compelling enough or that your subscribers aren’t engaged with your brand.
To improve your open rates, consider testing different subject lines to see what resonates with your audience. Additionally, segmenting your email list and sending targeted messages to specific groups can help increase open rates by ensuring your subscribers receive content that’s relevant to their interests.
Click-through rate (CTR) measures the percentage of people who click on a link within your email. This tells you how effective your email content is at driving traffic to your website or other online platforms.
To improve your CTR, make sure your email content is engaging and includes clear calls-to-action (CTAs) that encourage subscribers to click through to your website or landing page. Segmenting your email list and sending targeted messages to specific groups can help improve CTR by ensuring your subscribers receive content that’s relevant to their interests.
To calculate your email open and click-through rates, divide the number of opens or clicks by the number of emails sent, then multiply by 100 to get a percentage. For example, if you sent 1,000 emails and 200 people clicked on a link in your email, your CTR would be 20%.
By tracking these email marketing KPIs, you can gain valuable insights into how engaged your email subscribers are and identify opportunities to improve your email marketing strategy. And, by segmenting your email list and sending targeted messages to specific groups, you can increase the effectiveness of your email marketing efforts and drive more traffic to your website or other online platforms.
Small Business Marketing KPIs Evolve Your Business for the Better
Tracking small business marketing KPIs is a crucial part of any business’s operations. Doing so provides valuable insights into your marketing performance and allows you to make data-driven decisions about where to best allocate resources.
Ultimately, by tracking these KPIs, you better understand your audience, optimize your small business marketing strategies, and drive growth for your business.
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