12 Growth Marketing Metrics: Drive Growth and Measure Success
Updated: Mar 10
As a growth marketer, your ultimate goal is to increase your business's revenue and customer base. To achieve this, you need to understand and track key metrics that indicate the effectiveness of your marketing strategies. In this guide, we'll explore the most important growth marketing metrics you need to measure, why they matter, and how to use them to drive growth.
Customer Acquisition Cost (CAC)
The cost of acquiring a new customer is a crucial metric for any business. CAC measures the amount of money you spend to acquire a new customer. This metric takes into account all the costs associated with marketing, advertising, and sales efforts. CAC is calculated by dividing the total cost of customer acquisition by the number of new customers acquired during the same period. A high CAC can indicate that your marketing efforts are inefficient, and you need to adjust your strategies to reduce costs.
Customer Lifetime Value (CLV)
CLV measures the total amount of revenue a customer will generate for your business throughout their lifetime. This metric is crucial for understanding the long-term value of each customer and helps you make informed decisions about customer acquisition and retention strategies. To calculate CLV, you need to multiply the average customer value by the average customer lifespan. By increasing CLV, you can improve your revenue and profitability while reducing your customer acquisition costs.
Conversion rate measures the percentage of visitors to your website who take a specific action, such as making a purchase, filling out a form, or subscribing to a newsletter. This metric is important because it helps you identify which marketing campaigns and channels are most effective at driving conversions. You can also use conversion rate data to optimize your website and marketing campaigns to improve conversion rates.
Churn rate measures the percentage of customers who stop doing business with your company over a specific period. A high churn rate can indicate that your marketing and customer retention strategies are not effective. To reduce churn rate, you need to identify the reasons why customers are leaving and take steps to address those issues.
Retention rate measures the percentage of customers who continue doing business with your company over a specific period. A high retention rate indicates that your customers are satisfied with your products or services, and your marketing and customer retention strategies are working effectively. To improve retention rate, you need to focus on providing excellent customer service, offering relevant products and services, and creating a positive customer experience.
Return on Investment (ROI)
ROI measures the amount of revenue generated from your marketing and advertising campaigns relative to the amount you spent on those campaigns. A high ROI indicates that your marketing campaigns are effective and generating revenue for your business. To improve ROI, you need to optimize your marketing campaigns by focusing on the channels and strategies that are most effective at driving revenue.
Net Promoter Score (NPS)
NPS measures customer satisfaction and loyalty by asking customers how likely they are to recommend your company to others on a scale of 0 to 10. Customers who score 9 or 10 are considered "promoters" and are more likely to recommend your business to others. Customers who score 0 to 6 are considered "detractors" and are less likely to recommend your business. To improve your NPS, you need to focus on improving customer satisfaction and providing a positive customer experience.
Annual Recurring Revenue (ARR)
ARR measures the amount of revenue your business generates on an annual basis from your recurring revenue streams, such as subscriptions, contracts, and maintenance fees. This metric is important because it helps you understand your business's revenue growth and predict future revenue.
Monthly Recurring Revenue (MRR)
MRR measures the amount of revenue your business generates on a monthly basis from your recurring revenue streams, such as subscriptions, contracts, and maintenance fees. This metric is important because it helps you understand your business's monthly revenue growth and predict future revenue. By increasing MRR, you can improve your business's financial stability and scalability.
Average Revenue Per User (ARPU)
ARPU measures the average amount of revenue generated by each customer or user. This metric is important because it helps you understand the overall revenue potential of your customer base and identify areas for revenue growth. To increase ARPU, you can focus on upselling and cross-selling strategies, improving the value of your products or services, and targeting high-value customers.
Activation rate measures the percentage of new customers who complete a specific action, such as creating an account, making a purchase, or signing up for a trial. This metric is important because it helps you understand how well your onboarding and activation strategies are working. By increasing activation rate, you can improve your customer acquisition and retention strategies and drive growth.
The North Star Metric
A North Star Metric is a key metric that serves as the primary indicator of a company's long-term growth and success. It is a single metric that encapsulates the essence of your business's value proposition, aligns everyone in the organization around a common goal, and drives long-term growth.
The concept of a North Star Metric was popularized by Sean Ellis, the founder of GrowthHackers.com, and it has become a widely adopted practice among growth-focused companies. The idea is that by focusing on a single, meaningful metric, everyone in the company can stay aligned and focused on the most important goal: driving long-term growth.
To identify your company's North Star Metric, you need to consider your business model, your value proposition, and your customer needs. The metric should be focused on a specific outcome that represents the core value your business delivers to customers. For example, if you're a social media platform, your North Star Metric might be daily active users, as this represents the value of your platform in terms of engagement and interaction.
It's important to note that a North Star Metric is not the only metric you should focus on. In fact, it's just one of many important metrics that you should track and analyze. However, it is the one metric that should be at the forefront of everyone's minds in the organization, guiding all decisions and actions.
By focusing on your North Star Metric, you can align your team around a common goal, prioritize your efforts, and drive long-term growth. It's important to regularly monitor and adjust your North Star Metric as your business evolves and grows to ensure that it continues to reflect the core value proposition of your business.
YouTube's North Star Metric
YouTube's North Star Metric is the key metric that the company uses to measure the success of its platform and guide its decision-making processes. For YouTube, its North Star Metric is watch time.
Watch time refers to the total amount of time that users spend watching videos on the platform. This metric is a valuable indicator of engagement because it takes into account both the number of views and the length of time that users spend watching each video.
YouTube's decision to make watch time its North Star Metric was based on several factors. One of the main reasons was that it aligned with the company's mission to provide a platform for users to discover and share video content. By focusing on watch time, YouTube could ensure that users were spending more time on the platform, indicating that they were finding the content engaging and valuable.
Another reason why watch time was chosen as the North Star Metric is that it aligns with the company's business model. YouTube generates revenue from advertising, and the longer users spend watching videos, the more ads they are likely to see. This means that watch time is directly tied to the company's revenue, making it a key indicator of the platform's financial success.
Overall, YouTube's decision to make watch time its North Star Metric reflects the company's focus on creating a platform that is both engaging for users and financially successful. By continually improving watch time, YouTube can ensure that it is delivering on its mission and creating value for both users and advertisers.
Measuring and tracking growth marketing metrics is essential for driving business growth and success. By understanding and analyzing these key metrics, you can identify areas for improvement, optimize your marketing strategies, and make data-driven decisions. When creating a growth marketing plan, it is important to consider a variety of metrics, including your north star metric, customer acquisition cost, customer lifetime value, conversion rate, churn rate, retention rate, return on investment, net promoter score, annual recurring revenue, monthly recurring revenue, average revenue per user, and activation rate. By focusing on these metrics, you can drive growth, improve your marketing strategies, and achieve your business goals.
Remember to regularly monitor your metrics and adjust your strategies as needed to continue growing your business. By staying vigilant and taking a data-driven approach to marketing, you can achieve success and drive growth over the long term.