For most companies, every Euro matters. It is certainly the case for all those small and medium sized businesses that struggle with high labor costs. Marketing might feel like an unnecessary expense at times, but it can actually be a true growth engine. As a CEO, demanding clarity on the return on investment (ROI) from your marketing team can transform your company’s approach to growth and profitability. To get there, you need to focus on the right metrics: ones that directly tie marketing activities to revenue and long-term success.
Below, we break down the essential marketing ROI metrics every CEO should demand from their marketing team.
Your CAC measures how much you’re spending to acquire a single customer. This metric is fundamental for assessing the efficiency of your marketing efforts.
Here’s the simple method for calculating CAC: CAC = MCC ÷ CA
MCC: Total marketing campaign costs related to acquisition
CA: Total customers acquired
Here’s the complex method for calculating CAC: CAC = (MCC + W + S + PS + O) ÷ CA
MCC: Total marketing campaign costs related to acquisition
W: Wages associated with marketing and sales
S: The cost of all marketing and sales software
PS: Any additional professional services (e.g., consultants) used in marketing/sales
O: Overhead
CA: Total customers acquired
Your CAC helps you determine if your marketing spend is sustainable.
It provides insights into whether campaigns are cost-effective.
It reveals whether you need to optimize your funnel to reduce wasted spend.
To get a clear idea about your CAC, you need to ask your marketing team some questions:
How does CAC vary by channel (e.g., LinkedIn Ads vs. organic SEO)?
Are there opportunities to lower CAC by shifting resources?
Lifetime Value measures the total revenue you can expect from a single customer during their entire relationship with your business.
LTV = Customer Value x Average Customer Lifespan
Customer value is the average amount of Euros they spend at your company. Average customer lifespan refers to how long they are a client at your company. This may look like a simple formula, but finding out the right numbers is trickier than it looks. The simpler your business is, the easier it will be to figure this out.
It helps determine if your CAC is justified. (Hint: Your LTV should always be higher than your CAC.)
It enables better decisions around upselling, cross-selling, and retention strategies.
How does LTV vary by customer segment? If they don’t know, make sure they put measures in place to find this out.
What efforts are in place to increase LTV through upsells or renewals?
The MQL-to-SQL conversion rate tracks how effectively your marketing team is generating leads that your sales team can close. Ideally, you convert as many MQLs as possible into SQLs, but losing some MQLs along the way is inevitable. The thing is: you do need a certain amount, and that is different for every business.
How do you calculate this?
MQL-to-SQL conversion rate = SQL/MQL × 100
It reflects the quality of your leads.
It indicates how well your marketing and sales teams are aligned.
It highlights bottlenecks in your lead qualification process.
Are we targeting the right audience? (A buyer persona workshop can do wonders here)
How are MQLs being scored, and is this scoring effective?
What steps are being taken to improve alignment between marketing and sales?
An obvious first step is to make sure that there is a shared vision on the technology your organization should use. It’s also rarely really the case for organizations to have that shared vision. So first of all, you need to make sure that every department understands how collaboration contributes to your overall organizational goals. Open communication and transparency about priorities is key here. Once there is a shared vision, you can take further steps.
Pipeline velocity measures how quickly leads move through your sales pipeline. This metric provides insights into how effective your marketing and sales teams are at driving prospects to close.
Pipeline Velocity = (Qualified Opportunities x ACV x Win Rate) / (Sales Cycle Length / Days in Lookback Period).
ACV = Average Contract Value
This equation reflects the dynamics of the sales process.
It helps you understand how fast your business is generating revenue.
It shows where marketing can help shorten the sales cycle.
It reflects the health of your overall funnel.
Are there specific stages of the funnel where leads are stalling?
What campaigns are driving faster sales cycles?
Can we reduce the length of the sales cycle by targeting better-fit leads?
CPL measures how much it costs to generate a single lead. This metric is particularly useful for benchmarking campaign performance across your channels.
This is a simple formula:
CPL = marketing spend / Leads generated
You can also break this down by channel or campaign to zoom in on specific campaigns you ran in the past or to evaluate how channels compare to each other in terms of CPL.
It helps you assess the efficiency of specific campaigns or channels.
It provides clarity on whether your targeting is cost-effective.
It enables smarter budget allocation.
To find out your CPL and how to improve it, here are some questions you need answers to:
Which channels have the lowest CPL?
Are there campaigns with high CPL but low conversion rates?
What’s being done to improve lead quality while managing costs?
As a business leader and certainly as a CEO, staying laser-focused on ROI metrics is non-negotiable. Metrics like CAC, LTV, MQL-to-SQL conversion rates, pipeline velocity and CPL ensure that your marketing team stays accountable and aligned with your business goals.
So as a business leader, empower your marketing team to track and optimize these metrics, and you’ll gain the clarity needed to drive sustainable growth. It is a shared responsibility to get these insights and make data-driven decisions. Remember, marketing isn’t just a cost center, it’s an investment in company growth. But like any investment, its success depends on careful measurement and strategic oversight.
Put in your data in our ROI calculator and get a clear idea of the ROI you can get by working with our team of dedicated specialists.
