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4 The Hierarchy of Metrics

hierarchy of metrics

I spent this past weekend with a group of Duct Tape Marketing Consultants determined to gain a better understanding of how to use metrics to guide our own business and increase the value we bring to client engagements.

Perhaps the greatest discovery for me was that while there are many things we can and should measure, there’s a hierarchy to how we approach what gets measured and like any hierarchical structure if you don’t set up the base, you can’t hope to reach the pinnacle. (More on that in a bit.)

Business owners shy away from the topic of measurement, likely because it’s hard. But, if one of the primary objectives of owning a business it to grow and improve then this is your truth – you can’t improve what you can’t measure.

[tweetthis]If the objective of owning a business it to grow then this is your truth – you can’t improve what you can’t measure.[/tweetthis]


Now, others have said some variation of that statement, but with a culture of measurement, I believe your business is destined to float around aimlessly. You may indeed get to your destination, but at what cost?

Of course, the flip side is that you can overwhelm your brain with every possible measurable detail and then you might just end up worse off in the end. I mean you do have clients that need some attention too.

What to measure

Perhaps the toughest chore is determining what indeed needs to be measured. There’s no shortage of candidates. You have money metrics, content metrics, social metrics, conversion metrics, growth metrics, and even a few competitive metrics that all must be considered to understand a complete picture.

But, in the end, there may only be two things that matter.

Cost to acquire a new customer
Lifetime value of a customer

I don’t think most would argue that if you had a very firm handle on both of those numbers and could then focus all of your attention on dialing them in, this whole business thing would be pretty simple.

As I’m sure you’ve concluded, however, the progression to get to either of those numbers is where the work lies.

The first task is to accept that you can’t simply measure what’s easy, you have to measure what matters, and that’s a process as surely as a skill.

The process

Create metrics that serve priority objectives

First and foremost you must develop or, at least, acknowledge that you have several priority objectives that require tremendous focus and therefore measurement.

Typically, business objectives fall into a list that looks something like this:

  • Increase customer by X
  • Increase top line revenue by X
  • Increase lead conversion by X
  • Grow audience by X
  • Increase average $ per customer
  • Increase quality leads by X
  • Shorten sales cycle
  • Increase retention
  • Expand to new market
  • Increase profit and ROI

Of course, while every entry on the list above is noble and worthy, experience tells me that you can focus on no more than two or three objectives at any given time if you are to make significant progress. Each objective above could likely spin off dozens of projects and experiments and spread what resources you have to devote thin.

Determine how you’ll get inputs

Once you determine your key objectives, it’s time to establish target goals for each and figure out how you will gather the data you need to gauge whether or not you are on track.

If a key objective is to increase retention by 12% for example, you’ll need to know what retention is today of course, but you’ll also need to understand what activity, person or data point you’ll need to keep track of the variable.

Don’t overthink this one, you may just need to make sure there’s someone who’s accountable for looking into the CRM system to extract that number each month.

Establish tools for the job

While many businesses are still held together by spreadsheets and meetings, increasingly dashboards and collaborative spreadsheets are making their way into everyday reality.

Tools like Google Sheets, Dasheroo, and Cyfe make viewing the data you want to track much easier once they are set up. Business owners and consultants alike now have tools that can help keep key success metrics in front of the people who need make decisions based on what’s happening day to day.

Use results to make improvement

Of course, a great deal of what passes as measurement is simply a snapshot view of what happened. While this can be useful to report to an executive team or board, the real value comes by way of analysis.

With the right metrics in place, you might start to see why something happened, what trends the data suggests, and what you might do to make improvement. This, ultimately, is the true value of measurement.

Build a reporting culture

Finally, if metrics and reporting are an afterthought at the top, it will be very difficult to suggest that anyone in the organization by led by numbers.

What if instead of thinking of metrics as something that told the story of days gone by you began to use them to begin with the end in mind.

What if everyone’s job was to increase the lifetime value of a customer? How would that change the way people went to work?

If a consultant walked into your business and said the ultimate goal of their work was to help you increase the lifetime value of a customer – would that get your attention?

The hierarchy

Of course, before you run you’ve got to do a little walking – and perhaps even crawling.


The hierarchy of metrics suggests that you have to start measuring the little things first – you have to set your business and technology up so you can get a glimpse of the basic activity of the business – how your content is performing, how your social and email audience is growing, where your website traffic comes from and how leads are generated.

Something as simple as proper Google Analytics setup and reporting can give you a great deal of this information. The native social media platform and email service provider analytics can round out a great deal of the activity measurement. Tools such as Google Analytics dashboards, Megalytic and SproutSocial help with visualizing these reports.

While these numbers don’t tell a rich enough story to help you understand why someone buys and why they don’t, they are the foundation you must put in place to start to get to the next level.


With an analytics foundation in place, you can aspire to gain even more insight into the performance of your marketing initiatives.

In the performance phase, you’ll start to crave metrics like percentage of leads closed, individual campaign conversion and perhaps even the cost attributed to generating a new client.

This is the bridge stage and may take some time to master as campaign conversion, goal setting, testing and tracking is an art and science on its own.

However, tools like ClickMagick, kissmetrics, mixpanel and ClickMeter are designed to help you track and test conversion funnels. Even using goal setting and funnel visualization options in Google Analytics can give you greater insight into campaign performance.


Once you understand, track and focus on lead generation and conversion channels you are on the path to understanding how every activity contributes to the overall health of the business.

In the ROI phase, you can turn your attention to sales and marketing integration, CRM performance, Brand awareness, business development and yes – the lifetime value of a customer.

Yes, I know there is a great deal that can be done and a great deal that must be done to use data to drive your business decisions, but like every great journey, it begins with a step beyond where you are today.

So begin wherever you are with the end in mind, and the hierarchy of measurement be your guide.

5 7 Marketing Metrics Worth Obsessing Over

Marketers need to measure a lot of things in order to get better. Not everyone does and those that do sometimes measure the wrong things.

marketing metrics

photo credit: aussiegall via photopin cc

The obvious things like leads and sales revenue are important, but they’re quite often just a measure of what is and not an accurate measure of what could be or, perhaps more importantly, what’s causing what is.

Until you can grasp the things that impact your organization’s true health you’ll be stuck treating symptoms instead of treating the disease.

There are many ways to grow a business, including injecting lots of money into the generation of awareness and interest, but the most profitable way to grow a business is to take what it does well and grow organically through the base of your success.

I’ve used the following seven metrics to gain a crystal clear picture about the health, growth potential and challenges facing a business interested in growing organically.

I present these as seven metrics worth obsessing over.

1) Total Community Membership – To me this is a measure of all the social number stuff. Email subscribers, Twitter followers, Facebook Likes, Blog readers. I know a lot people tout quality over quantity, and there’s certainly some truth to this, but what about quantity and quality. The size of your community does matter in terms of social proof, referrals, word of mouth, sharing, trust and awareness.

A recent survey of small business marketers conducted by Vocus showed that marketers attributed more success to social media the larger their fan base was. Measuring the size of your following and working on ways to build the numbers is an important place to start.

2) Average total $ per customer – This is a measure of total revenue divided by number of customers. When you stop to calculate this number you can put your focus on doing more business with existing customers or at least increasing the average dollar per sale. This focus has to start with improvement of your customer touch points and service and pricing and these are great places to look for opportunities to grow your business.

3) Percentage of leads converted – This is perhaps the most under-appreciated metric there is. Everyone wants to know how to get more leads, but the gold is in converting more leads to customers. Get very, very serious about establishing a baseline on this number so you can take every element of your marketing, sales and service apart in an attempt to impact it in positive ways. For some businesses a five or ten percent bump in this number means doubling revenue.

4) Percentage of business by referral – This may be one of the best ways to get a sense of how healthy a business is. You can always do more to get more referrals, but if you’re not even getting accidental referrals there are some other things that might need fixing first. Keep an eye on this number and you’ll have the viewfinder for how your marketing campaigns and your point of differentiation are being received and executed.

5) Percentage of repeat business – This is another measure of satisfaction, but also a bellwether of opportunity. If you are getting referrals, but not a lot of repeat business, it may be simply a matter of extending your offerings and growing organically.

6) Cost to acquire a new customer – To me this is the ultimate measure to use for creating a budget. If you know this number you can start to bring it down while understanding how to buy new business. This of course assumes that the lifetime value of a customer is significantly higher than the cost to acquire them.

7) Percentage of customers likely to refer – This is a shout out to the use of Net Promoter concept put forth in The Ultimate Question books by Fred Reiccheld. This is something that is easy to measure and should be done on a rolling basis with every customer. A lot of people want to measure this just so they can promote how high their score is. I see it as a way to get referrals, testimonials and a second chance. When you ask every customer on a scale of 1 to 10 how likely it is they would refer your business you will get simple feedback that will allow you to take action in a number of positive ways – all good things.

So, get to work digging into at least a couple of these and create processes to extract and understand this data in a weekly or monthly dashboard manner so that you keep you obsession focused squarely on the right numbers.