Most Important Go-To-Market Metrics

What are go-to-market metrics?

In a nutshell, go-to-market success metrics monitor the performance of your product and marketing or sales efforts. It can be anything from keeping tabs on the volume of organic traffic you receive to how much it costs you to acquire new customers.

Here are the key metrics we’ll cover:

•  CAC 
•  LTV 
•  MRR and ARR 
•  ROAS 
•  Churn rate
•  Organic search traffic

CAC (Customer Acquisition Cost)

CAC (Customer Acquisition Cost) refers to how much, on average, you spend to reel in a new customer. This is a simple metric to calculate and one of the most important to monitor. With your CAC figure, you’ll know exactly how effective your marketing efforts have been throughout a certain period.

You can work out your CAC using the following calculation:

Total acquisition costs divided by number of new customers

Your total acquisition costs are any expenses you make to acquire new customers, including any funds you put into marketing and sales.

With the CAC figure, you’ll know how much money you need to bring in to cover the costs of reaching new customers. It will also let you know if you could be more effective with your marketing and sales strategies.

LTV (Customer Lifetime Value)

While CAC gives you information about how much it costs to acquire a new customer, LTV (Customer Lifetime Value) gives you a ballpark idea of how much you can expect to receive from each customer over time. You can implement this metric once you’re into the swing of things and have started generating revenue from customers.

Use the following formula to estimate your LTV:

Average customer revenue per annum multiplied by gross margin and divided by churn rate

Once you have an LTV figure (we’ll cover churn rate later), you can assess whether the cost of acquiring new customers is worth it in the long run. Generally speaking, you want your CAC figure to be two to three times larger than your LTV, as this is a healthy ratio to operate within.

MRR and ARR (Monthly and Annual Recurring Revenue)

MRR and ARR (Monthly and Annual Recurring Revenue) are metrics that you can use to define the financial success of your business, particularly if you have a subscription-based payment model.

You’ll want to keep these metrics in mind from the day you start trading, as they can act as milestones letting you know if you’re on track to meet your financial goals.

You can calculate MRR and ARR using this formula:

MRR: Number of subscribers multiplied by average revenue per user (ARPU)

ARR: Annual subscription price divided by 12 then multiplied by number of annual customers

For subscription-based services, these figures can help you justify your monthly and annual pricing plans or let you know that adjustments are necessary.

ROAS (Return on Ad Spend)

ROAS (Return on Ad Spend) is an important metric if one of your primary marketing channels is paid ads. 

If you plan on rolling out an ad campaign to accompany your product launch, track its effectiveness using the following formula:

Paid ads revenue divided by paid ads spend

A good return on your investment in ads would be in the region of 2x, but you can define what success means to your business.

Churn rate

Another metric primarily for subscription-based services, churn rate refers to how many of your customers cancel their subscriptions or how many customers you lose in a given period. You’ll need to calculate your churn rate to get an accurate LTV figure which, in tandem with CAC, can give you a lot of information to go on.

Churn rate for a set period of time is calculated using the following sum:

Customers lost divided by total customers

If your churn rate is high and you’re losing a lot of customers, you need to act. It could be that you’re charging too much or that customers perceive more value in your competitors’ offerings. To get to the bottom of the issue, it’s a good idea to solicit feedback from your customers through surveys and reviews.

Organic search traffic

Organic search traffic is a metric for understanding how many consumers visit your website or one of your web pages. We use the term “organic” because this type of search traffic refers to consumer searches that have led to your web pages rather than paid ads.

It’s easy to assume that paid ads bring in more traffic, but in reality, organic search traffic can be a more accurate metric to use and focus on. After all, organic search makes up more than 53% of overall site traffic.

You can work out whether the organic search traffic you receive leads to prospects engaging with your content and making purchases with the following metrics: 

• Time-on-page: A solid indicator that your website content strategy is hitting the mark is time-on-page. If prospects spend time browsing your web pages, you’ve hooked their interest and in theory, all that’s necessary to secure sales is a few compelling calls to action (CTAs). 
• CTR (Clickthrough Rate): To determine whether time-on-page results in sales made, you should monitor your CTR. This figure will tell you how many prospects click on your CTAs and ultimately end up making a purchase. It’s calculated by taking the number of total clicks on your CTA button or ad divided by the times they are shown.
• Bounce rate: Bounce rate is a metric you want to stay on top of, as it tells you how many prospects land on your web pages and then bounce away soon after. This could mean that your content isn’t engaging, customers couldn’t find what they were looking for, or there is a poor user experience. To calculate your bounce rate, simply take the percentage figure of single-page sessions.

Use go-to-market analytics to propel your business to greater commercial success and monitor progress against your expectations. If you’re savvy, using data to inform your business decisions should be a no-brainer.