Performance Marketing Handbook

13
KEY METRICS #GrowthMarketing

#PerformanceMarketing
for D2C BRANDS
Contoso Ltd.
1/ Cost Per Acquisition (CPA)
CPA is how much you spend to get one new customer.

This can vary by campaign, channel, & even time of year.
It is used to assess the revenue impact of marketing efforts
How to measure:
CPA = Campaign Cost/Number of conversions.
Contoso Ltd.
2
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2/ Cost Per Lead (CPL)
Before you can acquire new customers, you have to bring in new leads
CPL measures the dollar amount of each new lead by the campaign,
channel, or overall spending
How to measure:
CPL= Total amount spent/Total new leads acquired
Contoso Ltd.
3
3/ Customer Acquisition Cost (CAC)
Total cost incurred in acquiring an individual customer.
Combines expenses involved in converting quality leads to customers.
How to measure:
CAC=Total cost incurred on Mktg/Total no. of customers converted
Contoso Ltd.
4
4/ Lead to Customer Conversion Rate (L2C)
It is also known as lead conversion rate or sales conversion rate.
This helps to measure the efficiency of the sales funnel of a company.
How to measure:
(Total no. qualified leads that results in sales/Total number of leads)*100
Contoso Ltd.
5
5/ _______ Activation Rate (_AR)
It measures the total no. of new users who took a pre-decided action
within a specified period of time – click, visit, dwell, add2cart, follow, etc
The action taken is known to deliver the initial customer value
How to measure:
Activation rate = (Users who performed a key action/Total users)*100
Contoso Ltd.
6
6/ Average Revenue Per User (ARPU)
It helps to determine the revenue-generating capacity at customer level
It compares performance with competitors
How to measure:
ARPU = Total revenue generated over a time period / No. of users during the
same period
Contoso Ltd.
7
7/ Customer Churn Rate % (CCR/CR)
It is % of subscribers or customers who either didn’t renew

subscription/canceled in a given period of time.
How to measure:
Churn Rate = [(total users at the beginning of the period – users at the end of
the period)/total users at the beginning of the period] *100
Contoso Ltd.
8
8/ Monthly Recurring Revenue (MRR)
It is the predictable revenue expected to be earned each month.
The Net MRR gives you an idea about the revenue gains monthly.
How to measure:
Net MRR = Average revenue per customer * total number of acquisitions in
that particular month
Contoso Ltd.
9
9/ Revenue Churn %
It is the lost revenue of a company over a time period.

Could be due to: Cancellations, Downgrades, Competitive losses.
How to measure:
[(MRR at the beginning of the month – MRR at the end of the month) – MRR
during the upgrades] / MRR at the beginning* 100
Contoso Ltd.
10
10/ Net Dollar (/Rupee) Retention (NDR)
It measures the fluctuations within the existing revenue base.
NDR describes the changes in recurring revenue over time according to

upgrades/downgrades, churn
How to measure:
Total revenue – Revenue churn (expiration, cancelation, downgrade)
Contoso Ltd.
11
11/ Customer Lifetime Value (CLV)
It is the total revenue a company expects from a single customer over a

span of time of their need for the product.
To calculate CLV, we must have
APV (Average Purchase Value), APFR (Average Purchase Frequency
Rate), CV (Customer Value), ACL (Average Customer Lifespan)
How to measure:
APV = Total revenue/Number of orders
APFR = Number of purchases / No. of customers
ACL = Sum of customer lifespans / No of customers
Customer Value = Sale price – Cost of goods sold
CLV = Customer Value * Average Customer Lifespan Contoso Ltd.
12
12/ CLV to CAC Ratio (CLV/CAC)
It helps in identifying the efficiency of your overall business operations.
For ex, if your CLV to CAC ratio is 3:1 then it means that for every single
rupee you spend, you earned 3Rs. The objective is to make this grow.
How to measure:
CLV to CAC Ratio = CLV/CAC
Contoso Ltd.
13
13/ Net Promoter Score (NPS)
It is a metric to measure the loyalty of your customers & push them up

the grid into brand ambassadors
It is based on surveys & audience is categorized into three primary

categories: promoters/passives/detractors
The questions asked to the audience are based on subjective ratings.

Eg: On a scale of 1 to 10, how likely to recommend ‘Brand’ to others.
How to measure:
Net Promoter Score = Percentage of Promoters – Percentage of Detractors
Contoso Ltd.
14

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13

KEY METRICS #GrowthMarketing

CPA is how much you spend to get one new customer.

It is used to assess the revenue impact of marketing efforts

Total cost incurred in acquiring an individual customer.

Combines expenses involved in converting quality leads to customers.

It is also known as lead conversion rate or sales conversion rate.

This helps to measure the efficiency of the sales funnel of a company.

The action taken is known to deliver the initial customer value

It helps to determine the revenue-generating capacity at customer level

It compares performance with competitors

It is % of subscribers or customers who either didn’t renew

It is the predictable revenue expected to be earned each month.

It is the lost revenue of a company over a time period.

It measures the fluctuations within the existing revenue base.

NDR describes the changes in recurring revenue over time according to

It is the total revenue a company expects from a single customer over a

It helps in identifying the efficiency of your overall business operations.

It is a metric to measure the loyalty of your customers & push them up

It is based on surveys & audience is categorized into three primary

The questions asked to the audience are based on subjective ratings.

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