Internet Marketing Digital_marketing_for_dummies | Page 351

Tracking the Wrong Metrics
Digital marketing is trackable, almost to a fault. You can, for example, use Google
Analytics (a free program) to determine the sales of persons visiting your website from
Ohio, on Tuesdays, and when using an iPhone. Although that data might be absolutely
relevant to your business, every business should be tracking two overarching metrics: Cost
of Acquisition (COA) and Average Customer Value (ACV).
Cost of Acquisition is the amount of money you must spend to acquire a single customer.
For example, imagine that you sell men’s dress shirts and acquire new customers by using
Facebook ads. Say that you determine that it costs $40 in ad spend to acquire each new
customer. You’ve therefore determined that the Cost of Acquisition (COA) for this offer is
$40.
Now, for this same shirt offer, you want to calculate the Average Customer Value, or ACV.
You can calculate this in a number of ways, but our favorite metric is to calculate the
immediate value of a new customer. In the example, each new shirt sale generates $20 in
net profit (revenue minus expenses), and, on average, a new customer buys two shirts. So
each new customer results in $40 in profit for the business. This is good news because it
means that this business can generate new customers with this offer and marketing
campaign at a break-even point. Any additional sales made to these newly generated
customers result in additional profit for the business.
There is a time and place to dive deep into the numbers, but always remember that the
amount it costs to acquire a customer and the average value a new customer brings to the
business are the most important metrics to track. For more on data analysis and optimizing
campaigns, turn to Chapters 12 and 13.