According to a recent survey by HubSpot, 74% of companies that weren’t exceeding revenue goals did not know their KPIs.
This statistic implies that it is imperative for businesses to measure their key metrics to achieve sustainable growth and profitability in today’s competitive landscape.
The same applies to growth marketing, where a clear understanding of the critical metrics helps businesses acquire, convert, and retain customers. Therefore, by keeping tabs on the right KPIs, companies can identify the key areas of improvement in their product or service offerings, customer service, loyalty programs, etc.
This article provides a comprehensive understanding of growth marketing KPIs and how they can help boost your marketing efforts at different stages of the customer lifecycle.
So, let’s get started!
1. What is Growth Marketing KPI?
Growth Marketing KPIs are a set of measurable metrics used to evaluate the success of a campaign or strategy. These metrics are specific to a company’s growth objectives and provide insights into customer acquisition, engagement, retention, and advocacy. This comprehensive evaluation enables businesses to identify strengths and weaknesses in their strategies and make data-driven decisions to optimise their campaigns for maximum impact.
2. Why is Tracking KPIs Important for Growth Marketing?
According to a study by Harvard Business Review, companies that effectively use KPIs are 2X times more likely to achieve their strategic goals than those that don’t.
Consistent monitoring of KPIs plays a crucial role in attaining long-term growth and ensuring the sustainability of businesses. Here are the specific reasons why tracking KPIs is of utmost importance in growth marketing:
- Helps Measure the Success of Campaigns
KPIs are quantifiable metrics that allow companies to assess the performance and impact of their marketing campaigns. This data-driven approach provides valuable insights into the most successful growth marketing campaigns and the ones that must be improved for better results.
- Facilitates Data-driven Decisions
Tracking KPIs enables businesses to make informed choices based on factual data rather than relying on assumptions or guesswork. From KPIs, companies can identify the changing patterns in their performance and adopt the trends that accelerate their growth and improve their growth marketing strategies.
- Establishes a Competitive Edge
Monitoring KPIs empowers businesses to identify opportunities for introducing new products or services and make agile decisions that keep them ahead of competitors. This strategic approach enables companies to consistently deliver value to their customers, sharpen their growth marketing strategies, and ultimately gain a competitive edge.
- Optimises Investment Efficiency
Analysing KPIs allows companies to measure the return on investment of their growth marketing strategies and optimise their budget accordingly. In addition, this data-driven approach enables businesses to identify the growth marketing channels that generate the highest ROI, enabling them to allocate their resources effectively.
- Identifies Areas for Improvement
Tracking growth marketing KPIs enables businesses to identify areas for improvement in their marketing efforts, allowing them to make the necessary adjustments and changes. This helps turn more visitors into valuable leads and customers and ultimately enhances overall growth marketing campaign performance.
Having established the importance of tracking KPIs, let us explore the top 15 growth marketing KPIs every business should monitor to drive growth.
3. 15 Crucial Growth Marketing KPIs
Monitoring KPIs is essential as they focus on the strategies and growth marketing tactics that help businesses acquire and retain customers and build advocacy for sustainable growth. Here are 15 essential crucial growth marketing KPIs that companies should track:
- Total Reach
It refers to the total number of people reached by a marketing campaign or message. It includes all the people who have seen the ad at least once, regardless of whether they took any action or engaged with the ad in any way.
Total Reach = (Number of Impressions) / (Frequency)
Let’s say a company’s advertisement was viewed 10,000 times (impressions), and the average frequency of exposure per person was 4 times.
Then, the Total Reach can be calculated as:
10,000 / 4 = 2,500
- Website Traffic Growth
It measures the increase or decrease in the number of visitors to a website over a specific period. This metric is an essential indicator to assess the website’s performance and ability to attract and retain visitors.
Website Traffic Growth = ((Sessions from current period – Sessions from previous period) / Sessions from previous period) x 100 For example, let’s consider a website that had 10,000 sessions in January and 15,000 sessions in February. Applying the formula
The Website Traffic Growth can be calculated as:
((15,000 – 10,000) / 10,000) x 100 = 50%
- Click-Through-Rate (CTR)
It is a metric that measures the total number of people who click on a particular link or CTA compared to the total number of people who view the content or advertisement. It is an important metric to assess advertising performance and capture audience engagement.
Click-Through-Rate = Total Clicks / Total Impressions Imagine if your ad campaign on Google Ads was shown 10,000 times (impressions) and received 500 clicks,
Then, the CTR can be calculated as:
500 / 10,000 = 0.05 or 5%
- Social Media Engagement
It is the level of interaction (likes, comments, shares) that users have with a brand’s social media content, such as likes, comments, and shares. This metric indicates how well the brand’s content resonates with its audience.
Engagement = (Total impressions / followers) x 100 Let’s say an image posted on Instagram receives 20,000 impressions, and the account has 100,000 followers,
Then, Engagement = (20,000 / 100,000) x 100
- Traffic Lead Ratio
Traffic Lead Ratio is a metric that measures the percentage of website visitors who turn into leads. It can be used to evaluate the effectiveness of a website or landing page design, content performance, or call-to-action (CTA).
Traffic Lead Ratio = (Total Website Visitors / Total Leads)
The Traffic Lead Ratio = 10,000/1,000
- Customer Acquisition Cost (CAC)
It is the total cost incurred (including sales and marketing expenses) by the company to acquire a new customer. A lower CAC is generally considered better, as it indicates that a business can acquire new customers at a lower cost, resulting in a better return on investment (ROI) and profitability.
Customer Acquisition Cost (CAC) = Total Marketing and Sales Cost / Number of New Customers.
Let’s say a company spends $10,000 on marketing and sales efforts monthly and acquires 100 new customers during the same period.
Then, the CAC is calculated as:
$10,000 / 100 = $100
- Conversion Rate
It is a marketing metric that measures the percentage of visitors who complete a desired action, such as filling out a form, subscribing to a newsletter, downloading an e-book, or making a purchase.
Conversion rate = (Number of Conversions / Total Website Visitors) X 100
For instance, if a website receives 10,000 visitors in a month, and 200 of them make a purchase during the same period,
Then, the Conversion Rate is calculated as:
(200 / 10,000) X 100 = 2%
- Return on Investment (ROI)
The ratio of the net profit or revenue generated by a marketing campaign to the overall cost of the campaign. A positive ROI indicates the campaign was profitable, while a negative ROI indicates the campaign is not profitable.
ROI = (Net Revenue – Marketing Cost) / Marketing Cost
Then, ROI can be calculated as
($15,000 – $5,000) / $5,000 = 2
This means that for every dollar spent on marketing, the company earned $2 in return.
- Revenue Growth Rate
It measures an increase or decrease in a company’s revenue over a specific period, typically year-over-year (YoY) or quarter-over-quarter (QoQ). It indicates how much a company’s revenue has grown or declined over the period and is an essential indicator of its financial health and overall growth trajectory.
Revenue Growth Rate = ((Current Period Revenue – Previous Period Revenue) / Previous Period Revenue) X 100
For example, if a company generated $1,000,000 in revenue in 2021 and $1,500,000 in 2022.
Then, the Revenue Growth Rate can be calculated as
($1,500,000 – $1,000,000) / $1,000,000 X 100 = 50%
- Average Order Value (AOV)
This KPI measures the average amount of revenue generated by each order placed by a customer. By analysing the AOV, businesses can gain insights into customer behaviour and purchasing patterns. This is especially relevant for companies operating in the e- commerce space or having an online presence.
AOV = Total Revenue / Total Number of Orders
To calculate the AOV, let’s say a company generated $10,000 in revenue from 100 orders in a given month.
Then, the AOV is calculated as:
$10,000 / 100 = $100
- Customer Retention Rate (CRR)
It is a critical KPI that measures the percentage of customers who continue to do business with a company over a specific period. Tracking the CRR can help companies identify potential issues with their products or services and make improvements to retain customers.
Customer Retention Rate = ((Customers at the end of Period – Customers Acquired During Period) / Customers at Start of Period) x 100
For example, if a business had 1,000 customers at the start of the year, acquired 200 new customers during the year, and had 900 customers at the end.
Then, the CRR can be calculated as
((900 – 200) / 1,000) x 100 = 70%
- Churn Rate
The percentage of customers discontinuing business with your company within a specific timeframe. It is an important metric for companies with a subscription-based business model.
Churn Rate = (Customers Lost in a Month / Customers at Start of the Month) x 100
Suppose a company has 10,000 customers at the beginning of the year and loses 1,000 customers over the year.
Then, the Churn Rate can be calculated as
(1,000 / 10,000) x 100 = 10%
- Customer Lifetime Value (CLV)
This shows the total revenue a business can expect from a single customer throughout their interaction or engagement with the company. It helps companies to make informed decisions about customer acquisition and retention.
CLV = (Average Purchase Value X Number of Purchases per Year x Average Customer Lifespan)
For example, a business has an average purchase value of $50, and customers make an average of 5 purchases yearly. Therefore, the average lifespan of a customer is 5 years.
Then, the CLV is calculated as:
($50 x 5 x 5) = $1,250
- Net Promoter Score (NPS)
Net Promoter Score (NPS) measures customer loyalty and satisfaction. It is determined by asking customers survey questions about their likelihood of recommending the products or services to others.
NPS = % of Promoters – % of Detractors
Let’s say a company sends out a customer satisfaction survey and asks customers to rate their experience on a scale of 0 to 10. Based on the responses, the company calculates the following:
% of Promoters: 40% of customers rated the company as a 9 or 10.
% of Detractors: 20% of customers rated the company as a 0 to 6.
NPS = 40% – 20% = 20
- Referral Traffic
It refers to the number of website visitors who arrive from external sources such as social media, emails, or other websites. Businesses can gain insights into which external sources drive the most traffic to their website and adjust their marketing strategies accordingly.
Referral Traffic = Total Traffic from Other Sites / Total Website Traffic X 100
For example, a website receives a total of 10,000 visits in a month, and out of those, 2,500 visits come from referral sources, such as other websites, social media platforms, or email marketing.
Then, Referral Traffic is calculated as:
(2,500 / 10,000) x 100 = 25%
Now that you have gone through crucial growth marketing KPIs, let’s examine how a digital marketing agency can assist you.
4. How can a Digital Marketing Agency help?
A digital marketing agency provides businesses with the skills and resources they need to achieve growth marketing KPIs, boost revenue, and increase profitability. By analysing data, agencies can create targeted ads, refine landing pages, and conduct A/B testing. This targeted approach increases the chances of attracting qualified leads and driving higher conversion rates.
Growth Ganik is a full-stack digital agency that helps you develop and implement the best growth marketing strategies to accelerate sales and boost profitability at every stage of the customer life cycle.