Which Marketing Lever is Biggest?
January 21st, 2009 by Doug BrightAs marketers, we only have a few levers to really impact the bottom line. We can acquire customers more cheaply, acquire more valuable customers, increase customer purchasing amount and frequency, and improve retention rate. We only have so many resources to devote to moving these levers. Which one should get attention first?
The answer becomes clearer when you ask the question this way. How much additional profit does a 1% improvement in the following drive?
- Customer acquisition cost
- New to repeat customer conversion rate
- Average order value
- Average orders per customer per year
- Retention rate
Earnings are likely more sensitive to some of these metrics than others. If you have a fixed amount of resources to throw at a problem, consider using them to improve metric that impacts earnings most. In an economic environment like this, it pays to focus on high leverage.
Tags: Marketing Metrics, sensitivity
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