Customer Metrics for Enhanced Marketing

Published by MBA Skool Team, Published on January 02, 2020

Companies have various strategies in place to ensure that customers buy their products. There are huge sums of money spent by companies in developing products, acquiring new customers, retaining loyal customers etc. However, no matter how good a product is or how much effort a company puts in, it is very difficult to evaluate a customer’s behavior and intent completely. Thus, companies need to focus on important key metrics or parameters which can help improve business and marketing efficiency.

Some key marketing metrics which companies should focus are purchase intent, customers spending power, conversion rates, retention cost and customer lifetime value. These parameters when measured and evaluated can help increase marketing efficiency and drive business. Let’s look at these metrics individually.

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Purchase Intent

Any customer which has an intention to use a product will respond maximum to a marketing campaign. Customer's purchase intent is useful for evaluating his behavior and marketing campaigns should build on intent. Consider a customer who has applied for a visa. This customer has shown an intent to travel abroad. Hence things like flights, hotels, travel insurance, forex are things which he would buy and hence marketing campaigns focusing on this intent would yield highest returns.


Customers Spending Power

Companies need to ensure that their marketing campaigns are focused on people based on their incomes and spending power. There is no point reaching out to people who do not have the financial capacity to purchase a product or service. A premium car should focus only on marketing to business people or CEOs or rich celebrities. Simply targeting automobile enthusiasts would not help in selling cars as affordability is an issue while buying a premium car.


Conversion Rates

Marketing companies need to understand the conversion rates on customer buying their products compared to the total audience targeted. This would help set realistic targets and expectations. Also understanding conversion rates can improve efficiency towards the required set of customers and also help reduce the overall target audience. Consider a customer funnel for online shopping. The most important customers are those which reach to the payment stage but do not buy. These are easily converted to customers compared to those who simply browse and see prices.


Cost of Retention

Retaining a customer is a critical metric for marketing. However, it is important not too over sped while retaining a customer. Customer retention cost should be able to generate more sales rather than simply having an idle customer as a part of a bigger base. Marketing companies must hence retain customers through aggressive strategies but ensure that they at least breakeven and not make losses.


Customer Lifetime Value

For marketing, understanding a customer lifetime value is important. Companies must understand the requirement, time period, paying capacity of a customer and target them based on their lifetime value. Order amount, frequency of shopping etc. can help understand the life cycle of a customer, based on which different marketing campaigns can target them differently.


Marketing is an important tool to drive business. It helps generate sales and revenue for companies. But if companies evaluate businesses using key metrics, it can help reduce costs and increase margins.

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