Thread by @jspeiser

I’ve built 10 startups that exceed $100M+ in revenue.

My 6 marketing metrics to build profits:

Quick reminder:

The KPI’s you should be tracking depend on your product or service.

Your vertical and category make a big difference.

Let’s dive in:

1) CAC - Customer acquisition cost

The cost of acquiring customers, calculated per customer.

Make sure it doesn’t cost more to obtain a customer than your profit from them.

For example…

If you spent $1,000 on marketing that obtains 250 customers,

Your CAC is $4.00

But if you’re only profiting $3.00 per customer, you’re in the hole.

Your CAC often includes…

Customer acquisition costs typically include:

• Ad spend
• Branding costs
• Sales team costs
• Marketing team costs
• Influencer partnerships

Be aware of everything that goes into your CAC for realistic analysis.

Keep in mind:

If you’re investing heavy dollars into a long term marketing strategy,

You may not expect to see a low CAC for some time.

2) LTV - Life time value

Your true profit per customer.

A typical SaaS scenario:

Your service offering is $25/mo

Your typical customer will subscribe for 10 months.

LTV = $250 per customer

Now consider this:

Your LTV hinges on your ability to retain customers.

• Offer a subscription
• Create a community around the product
• Focus on organic, brand-building content

High LTV = maximized market spend

It’s the most cost effective way to do so.

3) Margin

Your profit per offering.

Gross margin = your revenue - cost of goods

Ex. Coffee costs you $2 to buy but $6 to sell.

Your gross margin = $4 per coffee.

But this isn’t your true take-home revenue…

Net margin is your true take home.

It accounts for ALL company expenses:

• Software, automation and system expenses
• Employee expenses
• Shipping expenses
• Taxes

Publicly traded companies call this EBITDA.

4) Common pricing metrics

CPL - Cost per lead

Measures the cost to acquire leads.

It identifies customers who have shown intent to buy.

Crucial in understanding where you might be losing prospective customers in your sales funnel.

CPC - Cost per click
How much you pay when potential customers click on your ads.

CPI - Cost per install
How much you pay per install of a product.
(For mobile apps).

CPA - Cost per action

How much you pay for a specific action.

• Sale
• Site visit
• Course download
• Newsletter sign up

Designed to measure all conversion types across the entire customer journey.

5) ROI - Return on investment

How long it takes to make back your CAC.

Can you afford to wait 3 months?
How about 3 years?

If it’s the latter, you better raise a lot of money or your done.

You must know (on average) how long it takes to receive ROI.

The average Ecomm company takes 3-6 months.

The average SaaS company takes 1-3 years.

I look at it from the SaaS perspective…

SaaS companies count on monthly recurring revenue,
so it’s easier to estimate your ROI.

Ecomm is trickier, but you can get close with tools like subscriptions and loyalty incentives.

It’s all related - increase LTV to guarantee your ROI.

TLDR/
Marketing metrics to build profits:

1) CAC - Customer acquisition cost
2) LTV - Lifetime value
3) Net margin - profit after all expenses
4) CPL - Cost per lead
5) CPC - Cost per click
6) CPI - Cost per install
7) CPA - Cost per action
8) ROI - Return on investment

Thanks for reading.

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