Key performance indicators (KPI) for marketing tells you how well you’re doing in relation to your overall marketing and business goals. Marketers use KPIs to understand what is selling, who’s buying, how they’re buying, and why they’re purchasing. They give you enough insight to make better decisions to prove and improve the ROI of your marketing efforts. Column Five Media recently reported how to measure five important KPIs and how improve each one.

Customer Lifetime Value (CLV)

CLV is the net profit that a customer will generate for a business during the entire relationship with that customer. It can be calculated historically, over specific time periods, or it can be predictive. One of the most effective ways to boost LTV is by focusing on two areas: retention and upselling (add-ons and complementary products). The longer a customer continues to purchase from a company, the greater their lifetime value becomes. Incorporating a customer loyalty program can help you keep achieve this, increasing average purchase frequency (APF) and Average customer lifespan (ACL).

Customer Acquisition Cost (CAC)

CAC is the cost of convincing a potential customer to buy a product or service. The online traffic you generate must be converted into sales, so make sure you’re focusing on boosting conversion rates to lower your CAC. When you try to improve your conversions, you need to optimize the landing pages you are directing traffic to. Construct A/B testing on the content, CTA layout, structure, testimonials, emails, etc. The other way is to retarget potential customers and receive attention through email and ad targeting. Referral programs are also a great way to lower CAC and grow revenue. When a customer refers two friends who then make a purchase, you’ve just gained three customers for the price of one.

Marketing ROI (MROI)

Marketing ROI is exactly what it sounds like, a way of measuring the return on investment from the amount a company spends on marketing. There are several benefits associated with using this measurement including justifying marketing spend, deciding what to spend on, comparing marketing efficiency with competitors and accountability. Analyze your data before, during, and after every marketing activity for every part of the marketing mix. Also, use the insights you derive to focus on efforts that bring the greatest returns.

Traffic-to-lead Conversions

This simple KPI is how many subscribers, leads, or users you are generating from your top-of-funnel efforts. The goal is to increase both traffic and conversion rate. Here are some common places a business might get visitors: email marketing, social media, blog post, etc. Once you identify where your leads are coming from, you want to make sure the pages they’re landing on are doing everything they can to capture a visitor’s interest.

Lead-to-Customer Conversions

Once you have leads, you need to turn them into customers. You’ll need a lead-nurturing system to guide leads through each stage of the sales funnel; Awareness, Interest, Decision, and Action. Make sure to segment your leads so you can offer more targeted content. Create content that solves specific issues for specific buyer personas. Lastly, engage with your leads often, 10 times on average to make the sale.