Tutorial 1: Digital Business Metrics

Question 1

What are important traffic generation metrics? (“Pre-click metrics”, Spend)

Answer 1

• Unique visitors
• Traffic sources
• Click through Rate (CTR)
• Cost per Click
• Cost per Mille

Question 2

What are the most important traffic conversion metrics? (“Post-click metrics”, Value)

Answer 2

• Conversion Rate
• Bounce Rate
• Cost per lead
• Average page views per visit
• Average cost per page view
• Average time on website
• Rate of Return Visitors

Question 3

What are the central revenue generation metrics? (“Revenue metrics”, Efficacy)

Answer 3

• Customer Lifetime Value (CLV)
• Customer Acquisition Cost (CAC)
• Return on investment (ROI)

Question 4

How can the customer lifetime value be calculated?

Answer 4

rough calculation:
LV = “avg customer lifespan in timespan” * “avg profit margin” * “avg expenditures per visit” * “avg visits per timespan”

simplified calculation:
CLV = margin * (r / (1+i-r)) // i: discount rate, r: retention rate

Question 5

How can the customer acquisition cost be calculated?

Answer 5

Overall:
marketing expenditure / number of new customers
In detail:
CAC = (MCC + W + S + PS + O)/CA
MCC: marketing campaign costs, W: wages marketing + sales, S: marketing + sales software, PS: professional services, O: others, CA: customers acquired

Question 6

How can a marketing campaign be evaluated based on the CLV/CAC rate?

Answer 6

• 1:1 a least compensated CAC
• 3:1 good: business is in growth period
• too high: too little money spent on customer acquisition!

Question 7

How can the ROI be calculated?

Answer 7

ROI = (CLV * CA - CAC * CA)/CAC*CA