Professional Documents
Culture Documents
1
Table of Contents
Sean’s Introduction......................................................................... 3
Return on Ad Spend (ROAS)............................................................ 6
Customer Acquisition Cost (CAC)..................................................... 7
Cost Per Acquisition (CPA).............................................................. 8
Customer Lifetime Value (LTV or CLTV)........................................... 10
Conversion Rate (CR%)................................................................... 11
Cost Per Lead (CPL)........................................................................ 12
Churn Rate..................................................................................... 13
Customer Retention Rate................................................................ 14
Allowable Cost Per Acquisition (ACPA)............................................ 16
Lead-to-Customer Rate................................................................... 18
Click Through Rate (CTR)............................................................... 19
Open Rate...................................................................................... 20
Impressions................................................................................... 21
Bounce Rate.................................................................................. 22
Average Cart Value (ACV)................................................................ 23
Cart Abandonment Rate................................................................. 24
Earnings Per Click (EPC)................................................................ 25
Engagement.................................................................................. 26
Session Duration........................................................................... 27
Daily or Monthly Active Users (DAU and MAU)................................ 28
Customer Retention Cost (CRC)...................................................... 29
Clicks to Your Order Form (CTR-OF)............................................... 30
Share of Voice (SOV)...................................................................... 31
Foot Traffic.................................................................................... 32
Same Store Sales............................................................................ 33
Alex’s Outro................................................................................... 34
2
Sean’s Introduction
KPIs. Key Performance Indicator.
Here’s a fun story about KPIs (as though there could be such a
thing).
But his strategies were entirely, uh, let’s just say “vibes based.”
People wanted to know why. This new marketer was beloved and
smart.
You suck. You are irredeemably bad. There is no space for you on
his team. Do not pass Go. Do not collect $200.
3
Brand Agencies and Social Media Marketing agencies are the
biggest culprits. Also: Idealistic entrepreneurs who are obsessed
with their product and not the optimal way to sell their product.
But I would argue this: If you want to work for or with those
kinds of people, you will greatly benefit from understanding the
data more and this will allow you to easily surpass your peers…
(This is true for business owners too. Are you a business owner?
This guide will be helpful for you, too.)
Why?
If you aren’t looking at the data, you don’t know what to calibrate.
You’re not learning.
4
You suck. You are irredeemably bad. There is no space for you on
this team. Do not pass Go. Do not collect $200.
He’d open up the database and see how emails, ads, and sales
letters had performed the day before. He’d spend up to an hour
every morning studying patterns in the data, looking for
interesting anomalies, hunting for marketing efforts that could
help him improve.
So with the help of GPT-4 and a ton of caffeine, Copy That! has
generated this handy-dandy guide to marketing KPIs…
5/24/2023
5
Return on Ad Spend (ROAS):
What it is:
Return on Ad Spend, or ROAS, is like a business’s report card for its advertising campaigns. It tells
you how much revenue you make for each dollar you spend on advertising. For instance, a ROAS of
5% means that for every $100 you spend on advertising, you generate $5 in revenue.
Why it is Important:
ROAS is like the gas mileage on a car; it tells you how far you’re getting on the fuel (or money) you’re
putting in. Just like you’d prefer a car that can go 50 miles on a gallon over one that can only go 10
miles, you’d prefer an advertising campaign that can generate more revenue for each dollar spent.
ROAS helps you understand the effectiveness of your advertising and can guide you in making
decisions about where to invest your advertising budget for the best return.
However, just like gas mileage isn’t the only factor to consider when buying a car, ROAS shouldn’t be
the only metric you look at when evaluating your advertising. For instance, a campaign might have
a lower ROAS but be attracting new customers who have a high lifetime value, making it a valuable
investment in the long run.
Also, ROAS doesn’t consider profit margins. Returning to the car analogy, a car might have great gas
mileage, but if it requires expensive premium fuel, the costs might outweigh the benefits. Similarly,
a high ROAS is great, but if your net profit margins on those sales are low, you might not actually be
generating much money for a business.
[SEAN’s NOTE: This is one of the big reasons why campaigns that SEEM successful in the data are
often killed by a business—the ultimate costs outweigh the high revenue generated.]
6
Customer Acquisition Cost (CAC):
What it is:
Customer Acquisition Cost, or CAC, is like the entrance fee you pay to invite each new guest to
your party (or in this case, your business). Simply put, it’s the total amount of money you spend on
marketing and sales efforts to gain one new customer.
Why it is Important:
Think of CAC as the price of a ticket to a fair. You want to ensure that the cost of the ticket is less
than the enjoyment (or value) you’ll get from the attractions inside. Similarly, you want your CAC to
be less than the value that a new customer brings to your business. It’s a crucial metric because it can
help you understand whether your marketing and sales efforts are financially sustainable. If the CAC
is too high, you may need to reevaluate your strategies.
You should also consider CAC in context with other metrics. For instance, if a customer has a high
lifetime value (LTV) — meaning they continue to buy from you over a long period or spend lots of
money on your products — a high CAC might actually be acceptable.
CAC = (Total Marketing and Sales Costs) / (Number of New Customers Acquired)
So, if you spend $10,000 on marketing and sales and acquire 100 new customers, your CAC would
be $10,000 / 100 = $100.
7
Cost Per Acquisition (CPA):
What it is:
Cost Per Acquisition, often abbreviated as CPA, is like the price tag on a new item you want to
add to your collection, where the collection is your customer base, and the item is a new customer
or a specific action they perform. In simple terms, CPA tells you how much it costs your business
to acquire a new customer or to get an existing customer to take a specific action, like making a
purchase, filling out a form, or subscribing to a newsletter.
This might sound similar to Customer Acquisition Cost (CAC), but here’s the distinction:
• Cost Per Acquisition (CPA): This term is usually used in the context of digital or affiliate
marketing, and it represents the cost to acquire a customer who completes a specific action.
This action could be anything from clicking a link, filling out a form, signing up for a trial,
or making a purchase. CPA is often used to evaluate the effectiveness of individual ad cam
paigns or marketing initiatives.
• Customer Acquisition Cost (CAC): CAC represents the cost of acquiring a new customer,
but it takes into account all the costs associated with sales and marketing, including salaries,
overhead, technology, and more, over a specific period. CAC is usually used in a broader
context than CPA, helping businesses understand their overall efficiency in turning market
ing and sales spending into new customers.
Why it is Important:
Think of CPA as the admission fee to a movie. You want to ensure that the price you pay to see the
movie (or acquire a customer) is worth the experience (or revenue) you’ll get from it. CPA is crucial
because it helps you understand the financial efficiency of your campaigns. If CPA is too high, it
might be draining your resources and hurting your profitability.
Like any metric, CPA shouldn’t be looked at in isolation. For instance, a higher CPA might be
justified if the customer acquired has a high Lifetime Value (LTV).
8
Cost Per Acquisition (CPA):
How to Calculate It:
Calculating CPA is like determining the price of each movie ticket you’re buying. You take the total
amount you spent on the movie (or the total marketing and sales expenses) and divide it by the
number of tickets (or the number of acquisitions). Here’s the formula:
For example, if you spend $5000 on marketing and acquire 50 customers, your CPA would be $5000
/ 50 = $100.
9
Customer Lifetime Value (LTV or CLTV):
What it is:
Think of Customer Lifetime Value (LTV) as planting a fruit tree in your garden. The fruit tree
represents your customer. Just as a fruit tree needs an initial investment (seed, water, fertilizer, time)
to grow, acquiring a customer requires marketing, sales, and onboarding efforts. Over its lifetime,
the tree yields fruit, much like a customer brings revenue to your business through repeat purchases.
Add up the value of all the fruit (that is, revenue you get from a single customer), and you have the
lifetime value you get. Once you get an average LTV across all your customers, you will know how
much each one of your customers is worth.
Why it is Important:
You wouldn’t plant a tree unless you were reasonably sure it would bear enough fruit over its lifetime
to justify the initial investment and ongoing care, would you? Similarly, you need to know that
the “fruit” (revenue) a customer will bring over their “lifetime” with your company justifies the
“investment” (marketing, sales, and service costs) made in them. If the LTV of a customer is high, it
implies they yield a generous “harvest” over time, making the effort and investment worthwhile.
In business terms, it’s also crucial to compare LTV with the Customer Acquisition Cost (CAC). A
healthy “garden” (business) will have trees (customers) with a high fruit yield (LTV) relative to the
investment and effort (CAC) it took to plant and maintain them.
So if a customer typically spends $50 per purchase, makes 2 purchases every month, and stays with
your business for an average of 3 months, the LTV would be $50 X 2 X 3 = $300.
While this formula gives a basic understanding, real-life scenarios might require more complex
calculations, considering factors like gross margin, discounts, and costs of serving the customer.
[SEAN’s NOTE: Personally, I prefer a simpler calculation of LTV: Add up the value of everything a
customer bought in a given timeframe—say, 6 months. Then find the average across all your paying
customers.]
10
Conversion Rate (CR%):
What it is:
In a marketing context, a “conversion” is the completion of a desired action by a user as a result of a
marketing or advertising effort. This action can vary depending on the goal of your campaign, and
it could be anything from making a purchase, signing up for a newsletter, downloading a piece of
content, filling out a form, or even clicking on a link.
For instance, if you run an e-commerce store, a conversion might be when a visitor to your website
makes a purchase. If you’re a software company offering a free trial of your product, a conversion
could be when a visitor signs up for this trial.
Essentially, whenever a prospective customer completes the action that your marketing or
advertising effort intended for them to do, that’s considered a conversion.
Conversion Rate, or CR%, is the percentage of your customers or prospects that complete your
targeted action. It can be compared to the number of guests who attend a party out of all those who
received an invitation. In the context of marketing, the “party” is a specific action you want users to
take on your website or app (such as making a purchase, signing up for a newsletter, downloading a
report, etc.), and the “invitations” are the total number of visitors to your site or app.
Why it is Important:
Imagine throwing a party and sending out 100 invitations, only to have 5 people show up. You’d
likely wonder what went wrong. Was it the party theme, the date, the time, or maybe the invitations
themselves? Similarly, the CR% helps you gauge the effectiveness of your website or app in
convincing visitors to complete a desired action. If your conversion rate is low, it might indicate that
something in your sales funnel is not appealing to your audience, and adjustments are needed.
Of all the KPIs and metrics, this one is probably the most important for determining the success of
an ad campaign.
For example, if your click through rates (CTRs) are low but your conversions are high? You know
the problem is with your traffic drivers. But if your CR% is low and your CTR is high? That means
people are getting to the final page and they’re hating your copy or your offer.
11
Conversion Rate (CR%):
How to Calculate It:
Calculating CR% is as straightforward as determining the percentage of guests who attended your
party out of all those invited. Here’s the formula:
So if your sales page had 500 visitors last month and 50 of them made a purchase, your conversion
rate would be (50 / 500) * 100 = 10%.
12
Cost Per Lead (CPL):
What it is:
Cost Per Lead (CPL) can be likened to the price of seeds for a farmer. Just as a farmer buys seeds
with the hope that they’ll grow into profitable crops, businesses invest in acquiring leads (potential
customers) in the hopes they will eventually convert into paying customers.
Why it is Important:
In the farming analogy, it wouldn’t make sense for a farmer to spend more on seeds than he’d earn
from selling the resulting crops. Similarly, businesses need to ensure that the cost of acquiring a lead
(CPL) makes sense in relation to the potential revenue that lead could generate. If CPL is too high, it
might mean that the marketing strategy is not cost-effective and needs adjustment.
Cost Per Lead (CPL) = Total Marketing Spend / Total Number of Leads Generated
So, if you spent $1000 on a marketing campaign and it resulted in 100 leads, your CPL would be
$1000 / 100 = $10. This means, on average, you spent $10 to acquire each lead.
[SEAN’s NOTE: Lead generation is typically done for what are called “2 step” marketing campaigns.
That is, first step, you pay to get the lead. Second step is you pay to monetize that lead and make
them a customer. The total cost per acquisition is typically the combined cost of acquiring and
monetizing a lead.]
13
Churn Rate:
What it is:
Imagine having a bucket of water with a small hole at the bottom. The water seeping out of the hole
can be compared to churn in business terms. Churn Rate refers to the percentage of customers or
subscribers who leave your service or stop buying your product during a given period.
Why it is Important:
Sticking with our analogy, if you’re trying to fill the bucket, you’d want to plug the leak, right?
Similarly, businesses aim to minimize their churn rate because it’s generally more cost-effective
to retain existing customers than acquire new ones. A high churn rate could indicate customer
dissatisfaction, poor product quality, or effective competition, all of which require attention and
action.
It’s also important to look at churn rate in the context of other metrics such as Customer Acquisition
Cost (CAC) and Customer Lifetime Value (LTV). For instance, if your churn rate is high but you’re
acquiring new customers at a low cost, it might not be a serious problem.
Churn Rate = (Number of Customers at the Start of the Period - Number of Customers at
the End of the Period) / Number of Customers at the Start of the Period * 100
So, if you started the month with 200 customers and ended the month with 180 customers, your
churn rate would be ((200-180)/200) * 100 = 10%. This means that you lost 10% of your customers
during that period.
14
Customer Retention Rate:
What it is:
Think of Customer Retention Rate as the stickiness of a piece of tape. If your tape (your business) is
very sticky, it can hold onto things (customers) really well. Customer Retention Rate in business is
the measure of your company’s ability to retain customers over a given period of time.
Alex Myatt is obsessed with sticky things, so he loves this particular metric.
Why it is Important:
Continuing our analogy, the stickier your tape, the more useful it is, right? Similarly, a higher
Customer Retention Rate is generally better because it means you’re keeping your existing
customers. This is important because it’s typically more cost-effective to keep existing customers
than to acquire new ones. Plus, loyal customers often become advocates for your brand and
contribute to word-of-mouth marketing.
However, it’s also crucial to understand this in the context of other metrics like Customer
Acquisition Cost (CAC) and Customer Lifetime Value (CLTV).
Where:
• E is the number of customers at the end of the period
• N is the number of new customers acquired during that period
• S is the number of customers at the start of the period
So if you had 200 customers at the start, gained 40 new ones, and ended with 210 customers, your
Customer Retention Rate would be ((210-40)/200) * 100 = 85%. This means that you managed to
retain 85% of your customers during that period.
15
Allowable Cost Per Acquisition (ACPA):
What it is:
Allowable Cost Per Acquisition (ACPA) is like a budget for a particular task. Imagine you are
planning a party. You decide you are willing to spend a certain amount of money to invite each
guest. In the context of marketing, the “party” is your business, and the “guests” are new customers.
ACPA is the maximum amount you’re willing to spend to acquire a new customer through a specific
marketing campaign or channel.
Why it is Important:
Our party gets a bit more complex when we start selling tickets. Suppose each guest at the party will
pay a ticket price that contributes to your overall earnings. Now, it makes sense to ensure that the
cost of inviting each guest (your ACPA) is less than what that guest will pay for a ticket. The same
applies to your business. The ACPA helps you understand how much you can spend on getting
new customers in a way that keeps your business profitable. It’s the financial limit that ensures your
customer acquisition efforts don’t end up costing more than the value those customers bring.
In your marketing efforts, if your actual Cost Per Acquisition (CPA) is consistently lower than your
ACPA, you may have room to invest more in your marketing to reach more customers. If your CPA
is higher than your ACPA, you’re overspending, and you’ll need to find ways to acquire customers
more cost-effectively.
You should also consider other metrics and context when interpreting ACPA. For instance, a high
ACPA might be justifiable if those customers have a high lifetime value (they keep buying from you
over time). Or you might accept a higher ACPA during a launch or awareness phase when you’re
aiming to reach as many people as possible quickly.
For example, if you make a $100 sale and your gross margin is 30% ($30), and you want to make $20
profit on each sale, your ACPA would be $30 - $20 = $10. This means you can spend up to $10 to
acquire a customer and still achieve your profitability goals.
For example, if your average customer spends $500 with your company over time, and your gross
margin is still 30%, the total gross margin over the customer’s lifetime would be $500 * 30% = $150.
If you want to make $100 profit per customer, your ACPA would be $150 - $100 = $50.
[SEAN’s NOTE: If you’re working with a business that’s constantly releasing new products or
doing new affiliate offers, it will be impossible to get a ‘true” LTV for your customer. So what you
do is calculate the CLTV at a certain cutoff point. I prefer 6 months, but if you want to be more
conservative (for example, if you’re worried about sales decreasing) you can reduce it to your 3
month CLTV. Alternatively, if business is booming, you can increase it to your 9 month or 12 month
CLTV.
Counterintuitively, you should WANT your ACPA to gradually go up, because it means you
can justify outspending your competition and still maintain a profit. Don’t be too hasty about
recalculating this number, though.]
17
Lead-to-Customer Rate:
What it is:
Consider the Lead-to-Customer Rate as a part of a conveyor belt in a factory. The factory (your
business) has a lot of raw material (leads) coming in one end. The objective is to convert this raw
material into a finished product (customers). The Lead-to-Customer Rate tells you how many of
your leads are turning into actual customers.
Why it is Important:
Just as a factory would want to optimize its production process to get the most finished products
from its raw material, a business wants to maximize its Lead-to-Customer Rate. This is because
higher conversion means that your sales and marketing efforts are effective. It also means you’re
getting a good return on investment for those efforts.
Similarly, a low Lead-to-Customer Rate could indicate issues with the quality of your leads, or with
the effectiveness of your sales process. Are you attracting the right kind of leads who are genuinely
interested in your product or service? Or maybe your sales process isn’t persuasive enough to
convert leads into customers?
So, if you had 1000 leads and 250 of them became customers, your Lead-to-Customer Rate would be
(250/1000) * 100 = 25%. This means you successfully converted 25% of your leads into customers.
18
Click Through Rate (CTR):
What it is:
Imagine you’re a city tour guide and the Click Through Rate (CTR) is like the number of people who
actually follow you on your tour after you”ve pitched it to a crowd. In the digital marketing world,
the crowd is your audience, the pitch is your ad or email, and the tour is the destination your ad or
email is trying to lead people to (usually a webpage).
Why it is Important:
The more people follow you on the tour, the better your pitch, right? Similarly, a high Click Through
Rate means your ad or email is effective in persuading people to “follow” you to your destination
(click the link). A high CTR generally means your message is resonating with your audience, which
could result in more conversions or sales, depending on where you’re driving your traffic to.
However, it’s also crucial to understand CTR in the context of other metrics, such as Conversion
Rate (CR%) and Return on Ad Spend (ROAS). A high CTR is great, but if it’s not leading to
conversions, you might need to reassess your strategy.
For example, if your ad was seen (impressions) by 1000 people and 50 people clicked on it, your CTR
would be (50/1000) * 100 = 5%. This means 5% of the people who saw your ad clicked on it.
[SEAN’s NOTE: This, in my opinion, is the most important metric for any aspiring email marketer.
This plus Earnings Per Click (EPC) are what you should most closely track if you’re attempting to
monetize or engage an email list.]
19
Open Rate (OPEN%):
What it is:
Let’s think of the Open Rate as being akin to the number of people who open and read a letter
you”ve sent through the mail. In the world of email marketing, you send a large number of emails
(the letters) to people on your mailing list (the recipients), and the Open Rate represents the
percentage of recipients who actually open and presumably read the emails you”ve sent.
[SEAN’s NOTE: Open rate has always been an overinflated and unreliable metric. This has
increasingly become the case since Apple and Google began using “proxy servers” to automatically
open and scan your email, usually triggering a read receipt that signals your email has been opened.
Many people trying to get clients by cold emailing fret and complain about their email being opened
6 times in various locations, but never receiving a response. They don’t realize that, in all likelihood,
their email was read by a robot and not a human. Personally, I”ve stopped caring about or even
thinking about opens in my own email campaigns because they tell me nothing. Clicks or responses
matter the most.]
Why it is Important:
Just as you’d want as many people as possible to open your letters and read what’s inside, you want
a high Open Rate for your marketing emails. It’s a primary indicator of how well your emails are
resonating with your audience. A high Open Rate suggests your subject lines are compelling and
your emails are reaching people at a time when they’re likely to read them.
However, the Open Rate alone doesn’t provide a complete picture. It’s also important to consider it
in the context of other email marketing metrics such as Click Through Rate (CTR), Conversion Rate
(CR%), and Bounce Rate.
Open Rate (OPEN%) = (Total Emails Opened / Total Emails Sent) * 100
For example, if you sent 1000 emails and 200 of them were opened, your Open Rate would be
(200/1000) * 100 = 20%. This means 20% of the people who received your email opened it.
20
Impressions
What it is:
Let’s imagine you’re walking down a bustling city street with billboards on each side. Each time
you glance at a billboard, that’s like an “impression” in the digital marketing world. An impression
is essentially a view or exposure to an advertisement. It counts the number of times an ad, a link, a
post, or a webpage has been viewed or loaded.
[SEAN’s NOTE: More often than not, your impressions is just a proxy for how much a social media
platform algorithm likes and spreads your content or ad.]
Why it is Important:
Impressions serve as a fundamental metric in understanding the overall reach of your campaign. The
number of impressions can give you an idea of how many people potentially saw your ad or piece
of content, even if they didn’t click on it or take any further action. Think of impressions like the
number of potential seeds you”ve sown. Not every seed will germinate and grow, but the more seeds
you sow, the higher the chance you have of seeing growth.
For example, if your ad appears on users” screens 500 times, then you”ve got 500 impressions. It’s
important to understand that multiple impressions could also come from a single user. If one person
sees your ad five times, that counts as five impressions.
21
Bounce Rate:
What it is:
Imagine going into a store, looking around quickly, and leaving without interacting with anything -
that’s a real-life equivalent of a “bounce” in the digital world. In online terms, a bounce occurs when
someone visits your website and leaves without clicking or interacting with anything on the page
they landed on. The website bounce rate is the percentage of all your site’s visitors who “bounce” off
just after landing on it.
Why it is Important:
The bounce rate is important because it gives you insight into how effectively your website is
capturing the interest of your audience. A high bounce rate might indicate that your site isn’t
engaging or relevant to visitors, or that the user experience might be off-putting (for example, slow
page load times, unattractive design, or difficult navigation). Conversely, a low bounce rate suggests
that your website’s content and design are compelling, and visitors are inclined to explore more,
which increases the opportunity for conversion.
Bounce Rate =
(Total number of one-page visits / Total number of entries to the site) * 100%
This calculation is typically done automatically by website analytics tools like Google Analytics. They
track the visitor interactions on your website and provide you with the resulting bounce rate.
22
Average Cart Value (ACV):
What it is:
Picture this: you’re at a grocery store, and you have a shopping cart that you fill with various items.
Some people might only buy a few things, resulting in a light and relatively cheap cart. Others
might load up their cart with all sorts of items, making their cart heavy and more expensive. In
e-commerce terms, the “cart” is the virtual shopping basket that online customers fill with products
before checking out. The Average Cart Value, or ACV, is the average amount of money that
customers spend per transaction in your online store.
Why it is Important:
ACV is important because it helps you understand your customers” spending habits and allows you
to strategize how to increase your overall revenue. It provides insights into how much revenue you
can expect from a typical customer, and you can use this data to devise strategies that encourage
customers to spend more. If you can increase your ACV, you increase your revenue without needing
to attract more customers, which is often a more cost-effective strategy.
For example, if your online store generated $10,000 in revenue from 200 transactions, the ACV
would be $10,000 / 200 = $50. This means that, on average, customers spend $50 each time they
shop at your online store.
23
Cart Abandonment Rate:
What it is:
Let’s stick with the grocery store cart from the ACV entry. Now imagine filling up your shopping
cart with items, but then suddenly leaving without making a purchase. Your cart’s just sitting there,
full of items you took from a fridge and left to rot, expecting someone else to clean your messes. Jerk.
Anyway, that’s essentially what cart abandonment is in the digital world. It’s when a customer adds
items to their online shopping cart but exits without completing the purchase. The Cart Abandon-
ment Rate measures the percentage of your online shoppers who do just that.
Why it is Important:
Understanding the Cart Abandonment Rate is like reading the mind of a customer who walked out
of a store empty-handed. It gives you insights into possible problems in your checkout process or
other areas that might be causing customers to leave without purchasing. By identifying and fixing
these issues, you can increase your conversion rate and overall revenue.
For example, if you had 100 shopping carts created and 25 of them resulted in completed purchases,
your Cart Abandonment Rate would be (1 - (25 / 100)) * 100 = 75%. This means 75% of people who
created a cart did not complete their purchase.
24
Earnings Per Click (EPC):
What it is:
Imagine you’re running a lemonade stand and you pay your friend a nickel every time they bring
someone over to look at your stand. Now, if you earn a dollar every time someone visits your
stand, you’re in a good spot. Earnings Per Click (EPC) operates on a similar principle in the digital
marketing realm. It represents the average earnings generated each time someone clicks on your ad
or affiliate link.
Why it is Important:
EPC helps you understand the profitability of your campaigns. If you’re running pay-per-click (PPC)
ads or affiliate marketing campaigns, EPC is crucial to measure. It informs you if the money you’re
spending on getting clicks is translating into profits.
Keep in mind, EPC should be compared to the Cost Per Click (CPC). If your EPC is greater than
your CPC, your campaign is profitable. But if it’s the other way around, you’re losing money on every
click.
[SEAN’s NOTE: I find that EPC is most helpful when you’re comparing the results of multiple space
ads or emails driving traffic to a particular promotion or landing page. For example, you could
make way more money with one email sent to one particular list… but if the EPC is lower than an
email sent to another, smaller list? It’s possible that the email to the smaller list was better copy, even
though it ultimately generated less revenue.]
For instance, if you”ve earned $100 from an email CTA that got clicked 200 times, your EPC would
be $100 / 200 = $0.50. This means, on average, each click on your ad earns you 50 cents.
25
Engagement
What it is:
Think of engagement as a handshake or a conversation you have with someone at a party. It’s
not enough to just show up; you want to interact and make a connection. In the digital world,
engagement refers to how users interact with your brand’s content. This could be likes, shares,
comments on social media posts, or clicks on your email newsletter.
Why it is Important:
Engagement is the digital equivalent of audience applause. It’s a clear indicator that your audience is
not just passively scrolling past your content but is actively interacting with it. It tells you that your
content resonates with your audience. A high engagement rate often leads to a strong brand loyalty,
increases the chances of conversions, and enhances your brand visibility.
Keep in mind, engagement should be analyzed relative to reach or impressions. Having 100 likes
on a social media post might sound good, but not if your post reached 10,000 people. That’s an
engagement rate of just 1%.
[SEAN’s NOTE: If you want to be the best Social Media Marketer on the planet, figure out how to
connect engagements to conversions.]
So if a post gets 200 likes from 1000 impressions, the engagement rate would be
(200 / 1000) * 100 = 20%.
26
Session Duration:
What it is:
In the world of digital marketing, a ‘session” is like a visit to a museum. Session duration, then, is
how long someone stays at the museum. It’s the length of time a user spends actively interacting with
your website during a single visit.
Why it is Important:
Just like the length of a museum visit may hint at how interesting the exhibitions are, session
duration can indicate the quality and relevance of your website content. The longer a visitor stays,
the more likely they are finding value on your site. This may lead to higher chances of conversion.
High session durations can also positively affect your website’s search engine ranking.
Remember, context matters! For instance, if your site is designed to provide quick answers (like a
dictionary or news update site), a shorter session duration might not be a bad thing. But if you’re
driving traffic to a long-form sales page and your conversion rates are low, you might want to check
your session duration to see how long folks are staying on that page (or if they’re quickly clicking
away).
For example, if your website had a total of 500 minutes spent across 100 sessions, the average session
duration would be 500 minutes / 100 = 5 minutes.
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Daily or Monthly Active Users
(DAU and MAU):
What it is:
Imagine your business is like a park. Daily Active Users (DAU) and Monthly Active Users (MAU)
count how many different people come to visit your park each day or month. In the context of
a digital platform or an app, DAUs are the number of unique individuals who engage with your
platform within a single day, while MAUs are those who interact at least once within a month.
Why it is Important:
Knowing the number of people visiting your park regularly helps you understand how popular
your park is. Similarly, tracking DAU and MAU can show the stickiness of your platform or app:
how frequently users are returning, and how compelling your content is. It’s also important for user
growth and retention strategies.
An important metric derived from DAU and MAU is the ‘stickiness” ratio (DAU/MAU), which tells
you what percentage of your monthly users are using your platform daily.
For DAU, count each unique active user per day, and for MAU, count each unique active user per
month. It’s important to ensure you’re counting unique users and not multiple activities by the same
user. This calculation is generally done through analytics platforms that track user activity.
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Customer Retention Cost (CRC):
What it is:
Imagine throwing a fun, memorable party, and you want the same people to attend your next party.
You might send reminders, create special invitations, or plan some unique attractions to ensure they
come back. This effort and money you’re spending is similar to Customer Retention Cost (CRC).
In business terms, it’s the amount of money a company spends on activities and initiatives to keep
existing customers coming back or to reduce customer churn.
Why it is Important:
Like having the best guests at your party makes the event more successful, retaining customers
is crucial for a business’s success. It’s generally more cost-effective to retain an existing customer
than acquire a new one. Knowing your CRC can help you understand if your retention efforts are
financially sound. If your retention cost is high, you might need to rethink your strategies.
This metric should be calculated for a specific time period, usually a year, but can also be monthly
or quarterly. Just make sure to use the same time period when comparing with other metrics for
consistency.
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Clicks to Your Order Form (CTR-OF):
What it is:
Imagine you’re a tour guide in a museum. The goal is to lead visitors to the gift shop. How many
visitors actually follow you to the gift shop is like the Clicks to Your Order Form. CTR-OF is a
measure of how many people visiting your website or viewing your ad actually make it to your order
form. It’s a specific type of click-through rate (CTR) where the “click-through” destination is the
order form on your website or ecommerce store.
Why it is Important:
Like leading as many visitors as possible to the gift shop increases potential sales, a higher CTR-OF
means more potential customers are reaching your order form, leading to potential higher sales. It’s
a critical stage in the buying process and understanding how many visitors reach this stage can help
identify obstacles in the buying journey and improve the overall sales funnel efficiency.
CTR-OF = (Clicks to the Order Form) / (Total Clicks to Sales Page) * 100
The result will be a percentage, and higher percentages typically indicate more effective marketing
strategies and a more engaging website layout. However, as always, remember to evaluate this in the
context of your overall business objectives and other related metrics.
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Share of Voice (SOV):
What it is:
Imagine you’re at a party with several conversations happening at once. The Share of Voice is like
how much of the overall conversation is about you. In marketing, Share of Voice measures the extent
to which your brand is being discussed or mentioned compared to your competitors. It can apply to
various platforms, like social media, television advertising, search engine advertising, and more.
This is a similar concept to “market share,” or the percent of revenue your business generates
compared to the total revenue generated by you and all your competitors.
Except, instead of revenue, you’re measuring how much people are talking about you or your
product compared to everyone else.
Why it is Important:
SOV helps gauge your brand’s visibility in the market. Just like being the main topic at a party might
make you more popular, a higher SOV means your brand is dominating the conversation in your
industry, leading to increased brand recognition and potentially more customers.
This gives you a percentage that represents your Share of Voice. Keep in mind, it’s not just about
having a high SOV, but having a positive one. So, don’t forget to measure the quality, not just the
quantity, of your voice.
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Foot Traffic:
What it is:
Imagine your business is a party, and the people attending it are like customers visiting your store or
an event. “Foot traffic” is a term used in retail to indicate the number of people visiting your store,
like attendees at a party. It gives you an estimate of how many potential customers come into your
store over a certain period.
Why it is Important:
Just like a party isn’t a success without attendees, your store needs visitors to make sales. So, foot
traffic is essential because the more people enter your store, the more chances you have to sell
products. Additionally, understanding foot traffic trends can help you schedule staff appropriately,
plan promotional events, and generally optimize your business strategy.
Monthly changes in foot traffic in stores is often used as a metric to gauge the performance of non-
direct response ads, such as television commercials.
However, the simplest way to calculate foot traffic is by manually counting the number of customers
that enter the store over a given period, though this might be impractical for larger stores.
Comparing foot traffic to the number of purchases can help calculate the conversion rate, another
important retail KPI.
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Same Store Sales:
What it is:
Same Store Sales, often referred to as like-for-like or comparable sales, is a metric used by retailers
and big advertising agencies to compare the sales of existing stores over a certain period of time.
Think of it like measuring the growth of a plant: you want to see how much it has grown compared
to its previous size, not compared to other plants.
Why it is Important:
This metric is important as it gives a clear insight into the core operations of a business. It tells
you how well your existing stores are doing in terms of sales growth, independent of the effect of
opening new stores. If your same store sales are growing, it’s like your plant is flourishing; if they’re
decreasing, your plant may be wilting and need some attention.
1.Choose the period you want to compare - for example, this could be the sales for this year vs.
last year.
2.Subtract the sales of the previous period from the sales of the current period.
3.Divide the result by the sales of the previous period.
4.Multiply the result by 100 to get the percentage change in same store sales.
Remember, when calculating this, ensure you are only including the sales from stores that were open
during both the current and the comparison period.
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alex’s outro
I’m stealing the outro of this report from Sean because there’s something
important – and less noble than this report’s intro – that I want to tell you.
But I want to leave you with something even more crucial than those three
things put together:
Strutting into a pitch call, asking “Do you know which of your channels
provide the lowest Customer Acquisition Cost?” and proceeding to
watch your prospect’s brain work overtime as they suddenly realise their
helplessness within this big, wide marketing void they have no hope of
navigating by themselves… feels amazing.
Even a basic understanding of KPIs can build your authority like nearly
nothing else.
It highlights the knowledge gap between YOU and the person that you
want to impress.
So, you see, even ignoring the obvious benefits of: being a better marketer,
improving your copy, and interpreting results – there’s a far more selfish
reason to re-study the contents of this report.
You’ll seem like you know what the f*** you’re talking about.
(Which you will).
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I want you to be the smartest marketer in the room, winning buckets-
full of trust each time you drop a term that sounds technical.
Be self-centred.
When the terms and acronyms in this report become part of your
regular business vernacular, you’ll advance your results, shore up your
prospecting, and establish your authority as a ‘proper’ human being.
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