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The 6 Metrics Every Subscription Business Needs to Track
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• 3. We’ll cover...1 The metrics we like to track...2 The metrics we NEED to track3 Q&A • 4. WHY DO METRICSMatter? • 5. They tell us if we’re succeeding • 6. Great metrics help us work on the right projects • 7. THE METRICS WE LIKEToo Much • 8. Total users • 9. Pageviews and visitors • 10. Vanity metrics are a distraction • 11. We need metrics that track our business • 12. Metric #1 MONTHLY RECURRING Revenue • 13. What is monthly recurring revenue (MRR)? • 14. SaaS depends heavily on recurring revenue All your costs are up front. And it takes a long time to turn a profit on a customer. • 15. MRR best practices • 16. Metric #2 USER AND REVENUE Churn • 17. Churn is the percentage of people that bail • 18. High churn = pain, low churn = win • 19. Churn starts low but grows quickly If customer growth is constant, churn will eventually match it. You’ll stop growing. • 20. 100 new customers per month at 10% churn 800 600 Customers 400 200 0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar • 21. High churn = improve your product • 22. Once you have control of churn... To keep growing, you’ll need to acquire customers faster every month. • 23. Churn best practices • 24. Metric #3 AVERAGE REVENUE PER Customer • 25. Average revenue per customer • 26. Up-sells and cross-sells are the key • 27. Up-selling = get them on a higher plan • 28. Cross-selling = sell more stuff • 29. Average revenue best practices • 30. Metric #4 LIFETIME Value • 31. There are many different ways to calculate LTV LTV combines current revenue with churn to predict how much you’ll earn in the future. • 32. Different from average revenue per customer? • 33. LTV best practices • 34. Metric #5 COST PER Acquisition • 35. What’s the cost to acquire a new customer? • 36. The importance of CPA • 37. Get CPA for each marketing campaign • 38. CPA best practices • 39. Metric #6 THE SIGNUP Funnel • 40. Track each step to becoming a customer • 41. Don’t forget to track activation Activation = Someone uses a core part of your product for the first time • 42. Funnel best practices • 43. CAN WE TRACK THESE IN Analytics? • 44. Google Analytics can’t track any of this. • 45. You need to connect revenue to customers. • 46. A customer analytics revenue report • 47. We can also segment by traffic source • 48. Where do we get customer analytics? • 49. Two metrics you’ll need to pull by hand (for now) • 50. KISSmetrics will track these metrics for you

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Agenda
• Overview of CLV/CAC ratio and
why it’s important
• Understanding Customer Lifetime
Value (CLV) &
Customer Acquisition Cost (CAC)
• How to use the CLV/CAC ratio in
day-to-day marketing decisions

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This document provides an overview of setting smart targets for paid search campaigns to maximize profitability. It discusses moving from fixed budget mindsets to focusing on return on ad spend (ROAS) or cost per acquisition (CPA) targets based on relevant business inputs. These inputs include profit margin, percentage of margin willing to invest in acquisition, and lead-to-sale conversion rates. The document also provides guidance on calculating smart targets, health checking targets and CPCs, integrating advertising data with CRM systems, and using smart bidding to explore efficiency and volume tradeoffs. The goal is to set targets grounded in an understanding of actual business metrics and profitability.

ppcsemgoogle ads
Modern B2B
marketers have
learned to coexist
with chaos
Marketers are inundated
with metrics that offer
countless ways to dissect and
evaluate their campaigns
CLV/CAC: The Formula to Find
‘True North’ on Your Marketing
Map
Did your business make more money
from a customer than it spent to
acquire that customer?
The Formula to Find ‘True North’ on Your Marketing Map
“The expected lifetime value of a
customer represents the maximum
allowable acquisition cost of that
customer. Then using those numbers,
you can craft a marketing budget that is
related to firm profitability versus some
fussier method of budgeting for
marketing expenses.”
—Ruth Stevens, President, eMarketing Strategy
“ “

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CLV/CAC Can Help
Answer Crucial
Questions
Are you finding your most valuable
customers?
Are you targeting them effectively?
Are you making the most of the relationship
once you win their business?3.
2.
Part I: Understanding CLV
Customer Lifetime Value
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matters when looking at what the term
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Two Rules Will Get
You 90% of The Way
There
These are common-sense
marketing metrics. It’s important
to keep them that way.
Consistency is key. Pick the
right formula for your business
and use consistently.
2.
How Should You
Calculate CLV?
What is the average sales value of your first
transaction with a customer?
How much do you typically make per year
from a customer after the first purchase –
including cross-sell and upsell revenue (if
relevant)?
How long does a typical customer continue
to do business with you? (The answer,
ideally, will be in years – not months or
weeks.)
3.
2.
How Do I Know if
My CLV is Good or
Bad?
How much you spent to acquire a customer
Whether businesses like yours typically
generates significant revenue from
return/repeat customers
How much you typically spend to maintain
these ongoing customer relationships
3.
2.
What’s the Most
Important Mistake to
Avoid When
Calculating CLV?
The biggest mistake, by far, comes
back to the word lifetime –
marketers who calculate customer
value based only upon the value of
the first sale.

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How Can I Use CLV to
Improve Marketing
Effectiveness?
1. A complete view of CLV
allows you to track the impact
of your customer onboarding,
retention, upsell / cross-sell and
loyalty programs
How Can I Use CLV to
Improve Marketing
Effectiveness?
2. CLV can also be used to
determine how much should
be spent on marketing
investments
3. By identifying and comparing
your “best” customers’ CLV to
the average CLV for your customer
base as a whole, you’ll be able to
determine how much those “best”
customers are truly worth – and how
much you should invest in acquiring
them.
How Can I Use CLV to
Improve Marketing
Effectiveness?
Part II: Understanding CAC
Customer Acquisition Cost

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This certificate certifies that Ted Breyere successfully completed the AAE2703 - Technical Enablement for MOTOTRBO Third-Party Application Environments course on August 21, 2015.

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The	key	to	defining	CAC	is	the	
word	acquisition
What is CAC?
Divide the amount your marketing
organization spends on customer
acquisition during a specific period by
the number of customers acquired
during the same period
How Do You
Calculate CAC?
How Do I Know If
My CAC is Good or
Bad?
What’s the best way to uncover
this cost to value ratio?
This is where CLV/CAC once
again enters the picture
(I promise we’ll get there!)
What’s the Most
Important Mistake to
Avoid When
Calculating CAC?
A lack of context when you
calculate CAC and use this
metric to make decisions and
assess marketing effectiveness.

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Fine-tuning your email, landing pages,
forms, and other touch points
Improving on-site ecommerce
conversion metrics
Experimenting with tactics such as
inbound and referral programs
3.
2.How Can I Use CAC to
Improve Marketing
Effectiveness?
Part III: Mapping a Path to Profit
A Closer Look at the ”Compass Metric”
CLV/CAC	=	
Compass	Quotient	(CQ)	
One Number to Rule
Them All
An Example of CQ
For CLV let’s assume a customer generates $50,000
in revenue during a three-year timeframe.
For CAC let’s assume it cost $15,000 to acquire this
customer.
Using CLV/CAC (50,000 / 15,000) we get a
quotient of 3.33

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7 Keys to Getting Your Bearings When Analyzing CQ
The CQ is (within reason) a self-contained marketing metric
The CQ is a historical metric rather than a predictive metric
The CQ offers a clear “redline” for identifying urgent and fundamental business problems
The CQ can’t tell you whether a business is (or will be) profitable
1
2
3
4
5
6
The CQ can include customer retention costs
… but including retention costs is not always important or helpful
7
The CQ offers powerful insights to assess marketing performance and support a marketer’s
decision-making process
Insight to Impact:
Using CQ in Day-to-Day Marketing Decisions
Using CQ in
Day-to-Day
Marketing
Decisions
Build a More Valuable
Customer Base
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Day-to-Day
Marketing
Decisions
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familyldscouncil
Using CQ in
Day-to-Day
Marketing
Decisions
Other Places to Apply
CLV/CAC
The Most Useful Aspect of
The CQ is its Flexibility
A few of the 4,000+ customers that can attest to this vision
We believe in making it simple for any marketer to master today’s
customer journey.
We enable marketers to focus on strategy, creative, and customers -
not the underlying technology.
www.act-on.com | #ActOnSW | @ActOnSoftware
Questions?
Contact Us:
+1 (877) 530-1555
sales@act-on.com
See a Demo:
www.act-on.com/live-demo

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Dr. Peter Fader, co-founder of predictive analytics company Zodiac and marketing professor at Wharton, teams up with CMO Michael Loban of web analytics consultancy InfoTrust to explain the basics of using Customer Lifetime Value (CLV) and predictive analytics to supercharge your marketing and business strategy. The presentation covers- -The definition of Customer Lifetime Value (CLV) -Why CLV is meaningful to your organization -How to think about calculating CLV and why many methods are incorrect -How to use CLV and predictive analytics to optimize your strategy and campaigns -Common questions and concerns

predictive analyticscustomer analyticsweb analytics
#SPS16
How	Are	We	Doing?
#SPS16
Q&A	/	Speakers
MODERATOR:
Andrew	Gaffney
Editorial	Director
Demand	Gen	Report
Matt	Zelen
Chief	Customer	Officer
Act-On	Software
@Matt_Zelen
#SPS16
Thank	You	For	Attending
Register	for	more	sessions	now	thru	November	18th!
Please	Join	Our	Next	Session	Tomorrow	at	12PM	ET	/	9AM	PT
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