Every CEO needs a powerful marketing dashboard that can tell you at a glance what return you’re generating, whether you’re pacing on track, and which tactic deserves the credit for a campaign’s success.
This dashboard should be the go-to resource your team uses to track the progress each quarter in achieving your desired marketing outcomes. When you’re armed with all the right data, you’ll make more confident and ROI-driven marketing decisions.
Here are four metrics to use as the benchmarks of your dashboard.
MROI
The cornerstone of your marketing dashboard is MROI. It’s the North Star, the guiding light that illuminates the path to profitability. In my “Mastering MROI” blog, I reviewed how to properly calculate MROI—including too often forgotten costs impacting your returns. You can also use our MROI calculator to get a more accurate understanding of your returns. With MROI calculated, let’s add three additional pivotal metrics: LTV, CAC, and the all-important LTV:CAC ratio.
LTV
LTV is a measure of the average financial worth of each customer over their entire engagement with your business. LTV considers both the longevity of the customer relationship and the profitability it generates. Following is the formula.
LTV = (Average annual gross profit per customer) x (Average lifespan of a customer in years)
Let’s break it down with a sample calculation:
- Average annual gross profit last year: $4,937,411
- Total number of customers last year: 150
- Average annual gross profit per customer: $4,937,411/150 = $32,916
- Average lifespan of a customer: 1.5 years
- LTV = $32,916 x 1.5 = $49,374 per customer
This calculation reveals that, on average, each customer contributes more than $49,000 in gross profit over their lifetime with your company. Knowing this value empowers you to make strategic decisions regarding your marketing investments. What would you be willing to invest if you knew the average lifetime gross profit per new customer was nearly $50,000?
CAC
CAC represents the expense incurred to acquire a new customer. It is a crucial metric for evaluating the efficiency and cost-effectiveness of your marketing efforts. The following formula for determining the CAC for all marketing spend works like the formula for the more limited purpose of determining the CAC for a given marketing channel.
Marketing costs / Number of new customers
Let’s break it down with a sample calculation:
- Marketing costs last year (including salaries, benefits, agency fees, ad spend): $338,773
- Number of new customers last year: 75
- CAC = $338,773/75 = $4,516 per new customer
This calculation reveals that it is costing you $4,516 for every new customer you acquire. Depending upon the LTV of a new customer, this might be wonderful or tragic.
LTV:CAC Ratio
With both LTV and CAC at your disposal, you can calculate the LTV:CAC ratio, a key indicator of your marketing efficiency. This powerful ratio measures the relationship between the lifetime value of a customer and the cost of acquiring that customer.
LTV/CAC
Let’s break it down with a sample calculation using the numbers in the preceding two calculations:
- LTV: $49,374
- CAC: $4,516
- LTV:CAC = $49,374/$4,516 = 10.93
An LTV:CAC ratio of 10.93 indicates that for every $1 spent on customer acquisition, your company earns approximately $10.93 in gross profit over the lifetime of that customer. This metric is invaluable for assessing the overall health of your marketing strategy.
The Power of the LTV:CAC Ratio
The LTV:CAC ratio serves as a compass for your marketing decisions. Here’s how to interpret it:
- A ratio below 1: This suggests that your CAC exceeds the LTV generated by each customer. It’s a warning sign that requires attention and strategy adjustments. This could involve shifting focus to high-converting platforms or refining your target audience to ensure your marketing efforts are reaching the most receptive potential customers. You might choose to shift to more cost-effective, organic marketing strategies like content marketing and SEO. By producing high-quality, relevant content that improves your search rankings, you can attract and engage potential customers at a lower cost than traditional paid advertising. Though this is a longer game, you’ll improve your CAC over time. You could also increase the LTV of existing customers through loyalty programs, upselling strategies, or offering incentives for repeat purchases. By increasing the average customer lifespan with your company through improved customer service, you raise the LTV without necessarily increasing acquisition costs.
- A ratio of 1: While breaking even is not inherently bad, particularly in the early days of a new marketing strategy when you’re building your campaigns and website, it is clearly not where you want to be long term. You are not running a nonprofit.
- A ratio above 1: A ratio greater than 1 signifies that your marketing investments are paying off. It suggests that, over time, each customer is generating more profit than it costs to acquire them. This is the sweet spot. Anything over 1 is good and worthy of added investment. Your goal is to increase this number over time.
The LTV:CAC ratio, when kept above 1, ensures that your marketing efforts consistently yield positive returns. It is a critical component of your marketing dashboard, aligning your strategy with the ultimate goal of guaranteed MROI.
Putting It All Together
The four key metrics—MROI, LTV, CAC, and LTV:CAC—form the cornerstone of your marketing dashboard. These metrics not only provide a high-level view of your marketing strategy’s effectiveness but also set the stage for more granular analysis at the channel and campaign levels. This deeper dive into the data is critical for understanding the nuances of each campaign and its contribution to your overall marketing goals.
Take, for instance, a multi-channel campaign aimed at promoting a specific product. Your marketing efforts might span across diverse platforms such as LinkedIn, email, PPC, and retargeting ads. For a comprehensive assessment, your dashboard should display the following aggregate campaign metrics:
- MQLs
- SQLs
- MROI
- LTV:CAC
In addition, you must break down these same metrics by individual channel. It’s crucial to remember that you can’t evaluate the performance of a single channel in isolation when considering optimizations or cuts in your strategy. Each channel should be considered within the broader context of its role in the customer journey and how it fits into your specific attribution model. This holistic view is essential for making informed decisions that truly enhance your marketing effectiveness.
By adopting this multi-layered approach, your marketing dashboard transforms into a powerful tool, providing both a bird’s-eye view and a microscopic analysis of your marketing strategies. It becomes easier to identify which channels are driving the most value, where to allocate resources for maximum impact, and how to tweak your strategies for better performance.
You can choose from many software platform options to create your own powerful marketing dashboard. I’ve broken down a few of my favorite dashboard platforms for you to make it easy to get started.
By Lori Turner-Wilson, RedRover CEO/Founder, Internationally Best-Selling Author of The B2B Marketing RevolutionTM: A Battle Plan for Guaranteed Outcomes
Taking Action
The CEO marketing dashboard is one of hundreds of best practices found in The B2B Marketing RevolutionTM: A Battle Plan for Guaranteed Outcomes — the playbook that middle-market B2B CEOs and marketing leaders lean on to scale. Backed by a groundbreaking research study, this book offers time-tested best practices, indispensable KPIs for benchmarking, insights on where your dollars are best spent, and, above all, the proven 12 BattlesTM Framework for generating guaranteed marketing outcomes. The B2B Marketing RevolutionTM is a battle-hardened approach to becoming an outcomes-first leader who’s ready to shake up the status quo, invest in high-payoff market research and optimization, and — yes — even torch what’s not serving your endgame. Download more than 50 templates, scripts and tools from the book on the Battle Reader Hub.
If you’d like to talk about how to build a marketing engine that delivers predictable results — whether you want to build it yourself or tag in our team to lead the way — we’d be delighted to help you get started. Just book a call with Jee Vahn Knight, our VP of Strategy.
