Growth marketing is the maximization of value from your customers across their entire lifecycle. It encompasses lead generation, lead nurturing, customer retention, upselling, and cross-selling. It’s a data-driven art, requiring small course corrections along the way based on the results your company is seeing. Of course, to be data-driven, you need to start with the right growth marketing metrics.
Below, we provide benchmarks for the 10 most important growth marketing metrics. We selected these metrics based on surveying 140+ client accounts over the last 5 years. After the main table, we go on to explain each metric and its significance in more detail.
| Metric | Benchmark |
| Customer Acquisition Cost | Organic: $942 Paid: $1,907 |
| Customer Lifetime Value | Industry Dependent |
| Customer Retention Rate | 84.5% |
| ROI | SEO: 748% SEM/PPC: 36% Paid Social: 192% Webinars: 430% |
| Web Traffic | +45% YoY |
| Visitor to Lead Conversion Rate | 2.2% |
| Clickthrough Rate | PPC: 2.0% Email: 4.0% SEO: Ranking Position Dependent |
| Cost Per Lead | Organic: $327 Paid: $458 |
| Annual Recurring Revenue | +20-35% YOY |
| Upsell / Cross-Sell Rate | 21% |
Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) is the average cost associated with gaining a single new customer. This metric is simple to calculate by dividing your total marketing spend by your total number of new customers:
Maintaining a low CAC is a core component of creating sustainable growth through marketing. Lowering CACs can be done in three main ways:
- Investing in low-CAC organic channels to lower overall CACs
- Optimizing conversion rates to improve the efficiency of existing marketing efforts
- Improving audience targeting to increase your sales team’s win rates
Ideally, companies should engage all three approaches, as they target prospects at different stages in the marketing and sales funnel. However, if you need to prioritize one, choose the one that will make the greatest impact on customer acquisition based on your CPL, traffic, and conversion rate metrics, explained below.
Customer Lifetime Value (LTV)
Customer Lifetime Value (LTV, sometimes abbreviated CLV) is the average total value of a single customer over the span of their business relationship with your firm. It can be directly compared with your CACs, with the ratio between the two creating a frame of reference through which you can evaluate your customer acquisition strategy.
Most companies should target an LTV:CAC ratio of 4:1. A lower ratio indicates that your marketing isn’t producing the results necessary to justify its current spend, while a higher ratio often indicates that your company isn’t fully tapping opportunities for growth.
There are three approaches to increasing customer LTVs:
- Refine audience targeting to prioritize higher value prospects
- Reduce churn to increase customer lifetimes, and by extension, value
- Increase upsell rate to directly increase customer value
Tracking high LTV customers also creates useful opportunities for marketing teams to make the above improvements. By interviewing your most valuable customers, your team can learn which selling points were most attractive to them, and tailor your future campaigns accordingly.
Customer Retention Rate
Customer retention rate is the percentage of customers who stay with your company over a defined time period. It’s expressed as follows:
Retention rate is typically measured annually, but teams looking for a more immediate indicator can also examine quarterly or even monthly. Retention rates vary greatly depending on industry, with SaaS companies seeing higher average retention (often 90%+) than traditional services businesses. SaaS companies also often choose to track the inverse of customer retention rate: customer loss rate, or churn.
While it’s inevitable that you’ll lose customers over time, maintaining a high customer retention rate means that you’ve managed to keep the majority of them satisfied and continuing to pay for your product or services. Maintaining or increasing retention rate can be accomplished through customer retention programs that offer rewards or incentives for long-lasting customers, commitment to continuous improvement and excellence, and investing in thought leadership content to position yourself as the top choice for your customers.
ROI
Return-on-investment (ROI) is a measure of the overall profit generated by your marketing campaigns using the formula below:
Your overall ROI can be further divided into per-channel ROI,allowing you to better understand which of your efforts are most successful.
A low ROI is not something that an individual marketing team can directly fix, nor is it a metric that points to a singular problem. Instead, ROI is a more general indicator of marketing health, and if your current campaigns can support the continued growth of your business. That said, the most common cause of low ROI is an overreliance on paid lead generation channels, driving up CACs through increased CPLs.
Web Traffic
Web traffic is the number of visitors who came to your website over a given time period. It includes traffic generated through SEO, paid traffic from ads, and traffic originating from other sources such as email, social media, and direct visits.
Ideally, web traffic will serve as a leading indicator of the success or failure of your marketing campaign, but in practice its ability to do so will depend on the strength of your targeting. For example, a high traffic website may still suffer from a low visitor to lead conversion rate, leading to only a small increase in leads for your sales team despite increased marketing spend. This scenario would indicate one of three potential problems:
- Your current target audience has little interest in your products or services
- The content on your website is low quality
- Your calls-to-action are unclear, confusing visitors and causing them to click off of your website
Combining your traffic data with other metrics such as your conversion rates, win rates, and CACs will provide a much more complete picture of your marketing efforts.
Visitor to Lead Conversion Rate
Visitor to Lead Conversion Rate refers to the percentage of visitors to your website that made a purchase, requested a meeting with your sales team, or performed any other measurable action that demonstrates a clear interest in your products or services. It can be calculated using the following formula:
An underperforming visitor to lead conversion rate may indicate problems with your content; you may have content that does not speak to the pain points of your audience or lacks clear next steps. Both of these elements can be addressed by following conversion rate optimization best practices.
Clickthrough Rate
Clickthrough rate (CTR) refers to the number of visitors to your website through a specific link. It’s calculated using the formula below, where impressions is the total number of people who saw an ad, email, search result, or social media post:
CTRs are measured both individually and per-channel, and as one of the lowest level growth marketing metrics, it’s also one of the most straightforward to improve. CTR is a direct indication of how well your copy engages with your audience and convinces them to invest the time necessary to learn more about your company, and improving your copy will improve CTRs as well.
Cost Per Lead
Cost Per Lead (CPL) refers to the average cost of acquiring a new sales lead. The formula is:
As opposed to CAC, which measures in terms of sales, CPL measures in terms of clicks and information gathered. Similar to CAC, however, your ideal CPL is kept as low as possible. An underperforming CPL indicates a need to either find lower-cost channels or perform conversion rate optimization.
Annual Recurring Revenue
Annual Recurring Revenue (ARR) refers to revenue that is expected to continue from year to year as opposed to resulting from a one-time purchase. It is an expression of the long-term health of a company, as it obviates the need to constantly replace customers each year. Businesses with recurring revenue see higher EBITDA multiples when attempting to sell.
Upsell & Cross-Sell Rate
Your combined upsell rate and cross sell rate measure how often your existing customers purchase additional products or services. These types of sales are particularly valuable because the cost of that additional revenue is often close to zero. You can calculate up/cross sell rate with the formula below:
Upsell and cross-sell rates fall primarily within the purview of customer retention and sales teams, but growth marketers should also track this as one of their core metrics. A high rate indicates higher profits for the company and stronger selling points for your marketing team. Both should indicate a high ROI on your campaign and a larger budget with which you can gear future sales material. A low rate, on the other hand, indicates that more advanced features are not worth the increased price to the majority of your customers, and can be an early indicator of growing dissatisfaction.
While distinguishing between upsells (increasing spend on existing products or services) and cross sells (purchasing new products or services) isn’t necessarily a simple process, doing so will increase your marketing team’s insight into where your marketing campaign is most effective.
Evaluating Your Growth Marketing Metrics
It’s one thing to understand all of the above metrics on paper. It’s another to manage each of the practices involved in optimizing them. Even for seasoned marketing professionals, correctly executing on growth marketing is a challenge.
Many companies choose to outsource aspects of their marketing to an experienced party. Our agency specializes in growth marketing, combining SEO, thought leadership, advertising, and conversion rate optimization. Contact us if you’re interested in discussing a partnership.
