The short version
- 01A KPI is a number that can change a decision, and qualified revenue and pipeline come first.
- 02Compare customer acquisition cost by channel with lifetime value to see how hard you can push.
- 03Measure conversion at the steps that make money and track organic share and AI-referral traffic.
Open almost any marketing report and you will find impressions, followers, sessions and average time on page. They look busy. They move. And almost none of them tell you whether to spend more money next month or less.
That is the test we use for a KPI. If a number can't change a decision, it belongs in an appendix, not on the first page.
Two old favourites fail that test. Bounce rate as most people knew it disappeared with Universal Analytics, and blog visits on their own say very little about revenue. Here are the six numbers that earn a place on the first page.
Start with revenue and pipeline
Everything else on this list exists to explain this one. Track revenue that marketing touched, and track the pipeline that comes before it: qualified leads, booked calls, quotes sent, deals closed.
The important word is qualified. A form fill from a student doing homework and a form fill from a buyer with budget both count as a "lead" in most ad platforms. They are not the same thing. Agree with your sales team (even if your sales team is you) on what makes a lead real, and count only those.
If you use a CRM, this is where it earns its keep. Tie each closed deal back to its first source and its most recent one. The answer won't be perfect. It will be far better than guessing.
Know what a customer costs you
Customer acquisition cost (CAC) is total sales and marketing spend for a period divided by new customers won in that period. Include the agency fees, the software, the ad spend and a fair share of the time your team spends on it. Leaving those out makes CAC look great and tells you nothing.
Track CAC by channel where you can. Paid search, paid social, organic and referrals almost never cost the same per customer, and the blended number hides which one is carrying the others.
Know what a customer is worth
Customer lifetime value (LTV) is roughly average order value, times how often a customer buys in a year, times how many years they stay. Use gross margin rather than revenue if you can get it, because a sale you lose money on is not worth chasing.
CAC on its own is half a story. A $400 customer is expensive if they spend $300 once. It is a bargain if they stay for six years. Put the two numbers side by side and you know how hard you can afford to push on acquisition, and whether retention (email, service, follow-up) deserves more of your attention than another campaign.
