Define Your Goals

The tactical goals for your project generally come down to a simple goal:

You want more ________. This may be leads for services, product sales, newsletter subscriptions, PDF downloads, views of a video, and so on.

Calculate Your KPIs

You need to establish the maximum amount you can pay for a customer and still be profitable.

An overview of the Key performance indicators (KPIs):

● Find the average order value (AOV). Divide the total revenue for the period by the number of orders to get the average value for an order. Some customers may buy a single item; other customers buy several items at different prices. Use these to find the average value of an order.

● Find the customer lifetime value (CLV). Multiply the AOV by the average customer’s number of annual purchases and length of customer lifetime (usually, several years) to get the CLV. This is how much the customer is worth to you in revenue.

● The question is then how much you’re willing to spend to acquire that customer (in other words, how much you invest to get a certain amount of revenue). In many companies, your finance team tells you that you must achieve a certain return in order to get the funding for your project. For example, for every dollar you spend, you should get four dollars in revenue. Use the PRR to calculate this.

● Find your close rate (CR), which is the number of leads you need to get customers. If you need 100 leads to get 20 customers, that is a 20% CR.

● Multiply the CPA by the CR to get the target CPL. This tells you how much you can spend to get a lead.