Key Marketing Analytics Metrics

Why This Matters

Marketing analytics isn't just about tracking numbers—it's about understanding the story those numbers tell about your customers, your campaigns, and your bottom line. You're being tested on your ability to connect metrics to business decisions: when should a company invest more in acquisition versus retention? How do you know if a campaign is actually working? These questions require you to think beyond definitions and understand how metrics like CAC, CLV, and churn rate interact to drive profitability.

The metrics in this guide fall into distinct categories: customer value metrics, engagement metrics, conversion funnel metrics, and competitive position metrics. Each category answers a different strategic question. Don't just memorize formulas—know which metric you'd recommend when a business asks "Why are we losing money on marketing?" or "Should we focus on new customers or existing ones?" That's the analytical thinking that separates strong exam responses from mediocre ones.

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Customer Value & Profitability Metrics

These metrics answer the fundamental question: how much is a customer worth, and what does it cost to get them? The relationship between acquisition cost and lifetime value determines whether your marketing strategy is sustainable.

Customer Acquisition Cost (CAC)

• Total cost to acquire one new customer—includes all marketing spend, sales team costs, and overhead divided by number of new customers acquired
• Efficiency benchmark that reveals whether your marketing channels are cost-effective; calculated as total acquisition spending ÷ new customers gained
• Strategic trigger point when CAC exceeds CLV, signaling an unsustainable business model that requires immediate intervention

Customer Lifetime Value (CLV)

• Projected total revenue from a single customer over their entire relationship with your business—the ceiling on what you should spend to acquire them
• Retention multiplier that increases dramatically with loyalty; even small improvements in retention can significantly boost CLV
• Investment guide that determines appropriate CAC thresholds and helps prioritize high-value customer segments

Average Order Value (AOV)

• Mean transaction size calculated as $\text{AOV} = \frac{\text{Total Revenue}}{\text{Number of Orders}}$—a direct lever for increasing revenue without acquiring new customers
• Pricing strategy indicator that reveals customer purchasing behavior and willingness to spend
• Growth multiplier when combined with purchase frequency; upselling and bundling strategies directly target AOV improvement

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Customer Loyalty & Retention Metrics

Retention metrics reveal whether customers stick around and why they leave. Since acquiring new customers typically costs 5-7x more than retaining existing ones, these metrics often have the highest ROI impact.

Customer Retention Rate

• Percentage of customers maintained over a specific period—calculated as $\frac{\text{Customers at End} - \text{New Customers}}{\text{Customers at Start}} \times 100$
• Loyalty indicator that directly correlates with CLV; high retention compounds revenue over time
• Cost efficiency signal since retained customers require less marketing spend and often increase purchase frequency

Churn Rate

• Inverse of retention—the percentage of customers who stop doing business with you during a given timeframe
• Early warning system for customer dissatisfaction, competitive pressure, or product-market fit problems
• Revenue leak metric that compounds negatively; a 5% monthly churn means losing nearly half your customers annually

Net Promoter Score (NPS)

• Customer loyalty predictor based on one question: "How likely are you to recommend us?" scored 0-10, then calculated as % Promoters (9-10) minus % Detractors (0-6)
• Segmentation tool that identifies promoters (brand advocates), passives (satisfied but vulnerable), and detractors (potential negative word-of-mouth)
• Leading indicator of future retention and organic growth through referrals

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Engagement & Interaction Metrics

These metrics measure how audiences respond to your marketing touchpoints. They're diagnostic tools that reveal whether your content resonates before you see revenue impact.

Click-Through Rate (CTR)

• Engagement ratio calculated as $\text{CTR} = \frac{\text{Clicks}}{\text{Impressions}} \times 100$—measures how compelling your ad or content is to viewers
• Relevance signal that indicates alignment between your message and audience intent; low CTR suggests targeting or creative problems
• Platform-specific benchmark that varies dramatically (email CTR of 2% may be strong; display ad CTR of 0.1% may be acceptable)

Bounce Rate

• Single-page exit percentage—visitors who leave without any interaction beyond the landing page
• Content-audience mismatch indicator suggesting either wrong traffic sources, poor page design, or unmet expectations
• User experience diagnostic where high rates demand investigation into page load speed, mobile optimization, or content relevance

Brand Awareness

• Recognition and recall measurement—the extent to which consumers can identify your brand unprompted (recall) or when shown options (recognition)
• Top-of-funnel metric that precedes consideration and purchase; typically measured through surveys, search volume, or social mentions
• Long-term investment indicator that correlates with reduced CAC over time as organic discovery increases

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Conversion Funnel Metrics

Funnel metrics track how prospects move toward purchase. They help identify where you're losing potential customers and which stages need optimization.

Conversion Rate

• Action completion percentage calculated as $\frac{\text{Conversions}}{\text{Total Visitors}} \times 100$—the ultimate measure of whether your marketing drives desired behavior
• Funnel health indicator that can be measured at each stage (visitor → lead → customer) to identify bottlenecks
• Optimization target where even small improvements compound significantly; a 1% to 2% conversion rate improvement doubles results

Cost Per Lead (CPL)

• Lead generation efficiency metric—total marketing spend divided by number of leads generated
• Channel comparison tool that reveals which acquisition sources deliver leads most cost-effectively
• Budget allocation guide that should be evaluated alongside lead quality, not in isolation

Marketing Qualified Leads (MQL)

• Interest-based lead category—prospects who've engaged meaningfully (downloaded content, attended webinar) and match target criteria
• Funnel progression marker indicating leads ready for nurturing but not yet sales-ready
• Marketing effectiveness measure that quantifies how well campaigns attract the right audience

Sales Qualified Leads (SQL)

• Sales-ready lead designation—MQLs that have been vetted and demonstrate purchase intent or budget authority
• Marketing-sales alignment metric where the MQL-to-SQL conversion rate reveals lead quality
• Revenue predictor since SQL volume and conversion rates directly forecast pipeline value

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Investment & Competitive Position Metrics

These metrics answer executive-level questions: Is our marketing investment paying off? How do we compare to competitors?

Return on Investment (ROI)

• Profitability ratio calculated as $\text{ROI} = \frac{\text{Revenue} - \text{Cost}}{\text{Cost}} \times 100$—the universal measure of investment effectiveness
• Campaign evaluation standard that enables comparison across different marketing initiatives and channels
• Decision-making anchor where positive ROI justifies continued or increased investment; negative ROI demands strategy revision

Market Share

• Competitive position indicator—your company's portion of total market sales, expressed as a percentage
• Growth trajectory signal where changes in market share reveal whether you're gaining or losing ground relative to competitors
• Strategic planning input that informs decisions about market penetration, expansion, or defensive positioning

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Quick Reference Table

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Self-Check Questions

1. A company has a CAC of $50 and a CLV of $40. What does this ratio indicate, and what strategic changes would you recommend?

2. Which two metrics would you analyze together to determine if a landing page redesign was successful? Explain why these metrics complement each other.

3. Compare and contrast MQL and SQL. A marketing team reports 500 MQLs but sales only accepts 50 as SQLs—what does this suggest about the marketing-sales alignment?

4. A subscription business has a 90% retention rate. Calculate the implied churn rate and explain why even this seemingly strong retention number might concern executives in a competitive market.

5. An FRQ asks you to evaluate a digital advertising campaign's effectiveness. Which three metrics would you prioritize in your analysis, and in what order would you examine them? Justify your sequence.