In this article we detail the main metrics of Conversion Marketing (CPC, CAC, LTV or ROAS) to achieve the desired objective: increased sales.
In order to sell it is necessary to follow, in order, the four stages of Marketing. These are brand creation or Branding, the rise of web traffic, capture of leads y the final sale. What happens when a client already has the brand defined and hopes to increase sales with web traffic?
The preconceived idea that A successful website in traffic generates more sales, it is NOT true, Market Stall that many other actions are needed to capture leads y final customers who buy. That is why they need well-defined strategies that can be measured.
These Conversion Marketing indicators or cost models de traffic web are calculated with the CPC (Cost per Click). To sell your product or service there are other important conversion metrics: the CAC (Acquisition Cost per Customer) and LTV (Lifetime Value). If you define the correct strategies, we can increase the ROAS (Return on advertising investment). Let's see how they are calculated:
CPC = Cost / number of Clicks.
*Is he result of the cost divided by the number of clicks achieved.
Example: A service company invests €900/month in Google Adwords and obtains 1.157 clicks per month. The CPC is €0,77 (900 / 1.157).
Keys to increase sales
The key is to reduce the CPC and CAC. A digital workplace strategy effective is based on explain clearly of our product or service; generate valuable and useful content, that resolve user doubts; get their emails, send them an email to start the relationship and build trust; can bring to life landing pages with key content and use the technique of remarketing to maintain contact with users.
Once the leads have become customers es very important to know how much it costs to get a client and contrast it with the efforts it costs to earn it. This Conversion Marketing indicator is achieved by dividing the CAC by the LTV. Let's look at the metrics:
CAC = Marketing and sales cost / Number of clients acquired.
*It is the number obtained between Marketing and sales expenses (investment in advertising, salaries, etc.) divided by the number of new clients acquired during the established period (month, quarter, year).
Example: This same service company invests €6.000/month in Marketing and has acquired 20 clients per month. The CAC would be 300.
LTV = Average expense x Acquisition Recurrence x Customer life.
*The Customer Lifecycle Value It is the net value of the income that a client generates during the time they are our client. It is calculated by multiplying the average expense made in each purchase by the recurrence of acquisition of our products and by the customer's life.
Example: Let's imagine that the same company has an average service expense of €350, customers buy 2 times a year and the average customer relationship is 2 years. The LTV would be 1.400 (350 x 2 x 2).
La LTV-CAC Conversion Marketing Ratio is obtained dividing the LTV by the CAC. Lo ideal is that this indicator is 3:1, that is, the value of the client triples the cost of obtaining it. In the case of the example it is more than positive, because it is 4,6 (1.400 / 300).
If the metrics consist of indicators of success, the next is create customer retention techniques, loyalty and monetization to increase ROAS, linked to LTV. This metric answers the million dollar question: How much will I recover for each euro spent?
ROAS = Sales Income / Expenses x 100
*It is the percentage of gross income obtained in relation to the investment made.
Example: The same service company obtains income of €14.000 (€350 average expenditure * 2 purchases per year * 20 clients) and its advertising expenses in G. Ads are €10.800 (€900 * 12 months). To obtain the ROAS we divide 14.000 / 10.800 * 100 = 129,62. This is the ROAS in one year, but the LTV is 2 years; hence its importance.
So that, Don't wait any longer and don't settle for just generating web traffic because it is not the absolute key to increasing sales.. We can define a good marketing strategy through Marketing Automation, notifications push, sms, email marketing y remarketing to increase your sales. Contact and we will help you!