4 Metrics CEOs Use to Grow Their Companies
Why You Need to Know About Acquisition Metrics
CEOs have the responsibility of growing a company. With mountains of available data, they use metrics to focus on the greatest sources of successes and opportunities.
Metrics are objective data points that provide insight about the status of a company. There are many types of metrics: financial metrics, sales metrics, engagement metrics, production metrics, cost metrics, retention metrics, and on and on.
But which ones does a CEO focused on growth focus on?
Greg Lisiewski, CEO of Blispay, a fintech startup offering a mobile-centric credit card, said, “As a founder of a rapidly growing startup sitting on top of a mound of data that's flowing constantly, I pay close attention to our acquisition funnels such as traffic and conversion. I track the acquisition / usage metrics daily, sometimes hourly. This allows me to keep a pulse on the business while trusting that various teams are analyzing data more targeted at specific areas that impact the various operations of Blispay.”
Lisiewski is not alone. From our conversations with various CEOs, one type of metric kept popping up: acquisition metrics.
Acquisition metrics are substantive indications of growth. They inform company leaders of where customers come from, what they’re buying, why they’re buying, and how they’re buying it.
Four helpful acquisition metrics you’ll learn from this article are:
Net Promoter Score - how likely are your customers to recommend your company?
Sales win rate - how many leads are you actually converting into sales?
Prospect origin - where do your clients come from?
Content vs. lead conversions - how do I know our website is supporting our business goals effectively?
1. How likely are your customers to recommend your company?
According to Nielsen, 92% of consumers believe recommendations from friends and family over all forms of advertising. In other words, without positive word-of-mouth, you’re going nowhere fast. Net Promoter Score is a metric that measures word-of-mouth, a direct influencer of acquisition.
Net Promoter Score (NPS) is a system to measure customer loyalty to the company. In its most basic form, it provides a quantitative answer to the question: “How likely is it that you would recommend our company/product/service to a friend or colleague?” The scoring is based on a 0 to 10 scale.
The number a customer gives assigns them to one of three categories:
0 – 6: Detractors
7 – 8: Passives
9 – 10: Promoters
The NPS formula can be calculated by subtracting the % of Detractors from the % of Promoters. For example, with 1000 customers, if 80 are Promoters, 10 are Passives, and 10 are Detractors, then the NPS score for this company would be 7 (80% - 10% = 70% or 7).
NPS is used by nearly two-thirds of Fortune 1000 companies, including GE, American Express, and Intuit, as well as a number of startups.
John Waldmann, founder and CEO of Homebase, a startup that provides a team management software platform, monitors NPS on a live dashboard every day.
He said, “Anyone can look at these dashboards. They give us an early indication if anything is going wrong — or if recent changes have had a positive impact. We send [these dashboards] out to the entire company on a weekly basis so that we can discuss the progress we're making as a team.”
Learn more about NPS here.
2. How many leads are you actually converting into sales?
Sales win rate is the ratio of won sales over the total number of possible sales. Sometimes referred to as “Quote to close” ratio, the sales win rate measures the number of proposals that lead to wins.
A high sales win rate means you’ve found product-market fit (yay!), understand your customer’s needs, and have priced accurately. A low sales win rate means your team might be targeting the wrong customer, positioning your product or services incorrectly, or over- or underpricing your products or services.
CEOs use this metric to measure their sales and marketing strategies and team performances. Alex Bisignano, CEO of Recombine, a clinical genetic testing company, measures his sales team’s performance by tracking sales win rate per month. He said, “This metric allow us to assess how well we are addressing customer needs as well as who on the team is contributing.”
Want to drill deeper? Learn more about marketing-qualified leads and sales-qualified leads here.
3. Where do your clients come from?
While not an arithmetic calculation, prospect origin shows you where people are hearing about your products or services.
Why is this important?
CEOs want to know what’s working, so that they can maximize it. CEO of Vaynermedia, Gary Vaynerchuk said, “Focus on your strengths, not your weaknesses.” For example, if a partner is an excellent referral source, the CEO may wish to mail a handwritten thank you note.
Prospect origin tells the CEO where the message is clicking and where the demand is strong. Don’t waste time and resources pursuing resistant or picky prospects. Rather, widen the aperture in the areas where wins occur naturally.
4. How do I know our website is supporting our business goals effectively?
Content conversions and lead conversions play a key role in measuring the effectiveness of a website.
The content conversions metric shows what topics your customers and prospects want to learn about before purchasing. It tells the CEO what digital messages and mediums (storytelling strategies) are working and not working on the company website.
The content conversion formula takes the number of times a content piece was consumed and divides it by the total number of visitors to that content piece. For example, if an ebook landing page received 30,000 visitors and 3,500 downloaded it, the content conversion rate is = 11.7%. We are looking for the user’s deeper action taken after landing on a page. It could be playing a podcast, reading a full blog post, or signing up for e-learning course.
For example, if an ebook is downloaded by 40% of total traffic to its landing page, then it’s probably an indication that your marketers should generate more content around that high-performing topic.
But note! Strong content conversions alone won’t grow your business. Whether a page is successful or not, if there are no lead conversions, then the content doesn’t really matter.
Lead conversions happen when visitors to your site turn into interested, good-fit prospects, usually by submitting a project form, adding a product to a shopping cart, or dialing a number. The lead conversion metric divides the number of leads by the total number of visitors to the webpage.
How is a lead conversion different from a content conversion? A lead is someone who is actively interested in purchasing your product or service. A content conversion is someone who is curious. A lead could be a content conversion, but a content conversion isn’t necessarily a lead (but they could lead to one).
What does it mean if you have a high content conversion rate but a low lead conversion rate? It could be a user experience problem, meaning the navigation, the copy, or the user flow during checkout led to a bad experience, and the visitor bailed. Not good. Find these choke points and fix them!
A high lead conversion rate means you’ve managed to translate product/market fit and a good pricing strategy into an easy digital customer journey. In other words, customers want what you’ve got and it’s easy to get it.
“I look at new lead conversions for people requesting a demo or requesting to be contacted on a weekly, monthly and quarterly basis. These are high intent buyers. I am also looking at what other content they have consumed and what touch points were made immediately before conversion. Monthly and quarterly analysis of premium content conversions where prospects submit an email in exchange for content or information is also a priority. These represent our core audience.”
Don’t forget the humans
While metrics are helpful and provide bite-sized insights into a company, remember they aren’t meant to deliver the whole picture.
Evi Meyer, CEO of uMake, a startup that makes a 3D sketching tool, warns others to not forget your actual customer (and employees):
“Data is definitely an important part of the whole process, but we're trying to not to lock ourselves in the 'data-driven startup' box — we carefully try to understand how customers are using the product by getting in touch with them directly and in a very transparent way. It requires a bit more effort, but the actual feedback you're getting is better than any number on your dashboard.”
I left out another important acquisition metric: customer acquisition cost. Learn more.