When being thrown into the business world, whether you are a college grad or starting a new career, the lingo can be tricky. No need to fear, we have compiled a list of the five marketing terms you need to know so the next time you can take on that meeting like a champ!
The Customer Acquisition Cost (M-CAC) is how much money a company dishes out to bring more customers into their client base. This cost can be calculated by taking the total of all marketing cost in one year and dividing it by the number of new customers acquired in those 365 days. This number will help a company, as well as investors, see how effective their marketing campaigns are and help to reevaluate them if the recruitment isn’t where they want it to be.
Life-time Value (LTV) or Lifetime Customer Value (LCV) is the overall profit in regard to a single customer. You can figure out a customer’s LTV by performing the following calculations:
Calculate the average purchase value - Total revenue divided by number or purchases over the same time period
The average purchase frequency rate - Number of purchases divided by the number of customers who had transactions during the same period
Calculate the customer value — multiply the average purchase value by 1 and subtract the average frequency rate
Figure out the average client lifespan - Calculate this by finding out the number of years a customer continues to serve your business
Finally find the LTV by multiplying the customer value by the average lifespan
Website Conversion Rate (CR) is when an individual browsing the web stumbles upon your company’s website and completes an action. This action can be filling out a form, signing up for your newsletter, or even completing a sales transaction. A good conversion rate for your website is anywhere from 2.35% to 5.31%.
Key Performance Indicators (KPIs) depicts how well your business is hitting key objectives. They can help you see if the company has meant certain percentages and goals within a specific time period. They can be evaluated yearly, semi-annually, or quarterly depending on when reports must be pulled. There are many types of KPIs that can be calculated and they can cater to certain aspects and your business, making it easy to zone in on figuring out the statistics of specific objectives.
Click-through Rate (CTR) is the total numbers of clicks a website, advertisement or email receives. This statistic is usually used to determine the success of online and email advertising as well as the success of web pages. To determine this number, use this handy equation: (number of clicks/number of impressions) x 100