Important Service Business Marketing Metrics and How to Measure Them

As a small business owner, there isn’t enough time in the day to keep on top of digital marketing by yourself. It might be difficult to figure out what makes someone qualified to do marketing for you, too, if you don’t know much about the field.

Luckily, marketing metrics aren’t as intimidating as they might sound the first time you hear about them. With a basic understanding, you’ll be able to create strong marketing strategies with your existing team. Or, you can use the knowledge as a reference for the quality of a person or team you’re considering hiring.

Conversion tracking for your SEO by CTM

What are the metrics that I should be paying attention to?

The metrics you should pay attention to depend somewhat on the kind of business you run and your goals. We’ll talk about important marketing metrics with a focus on service businesses.

  • Total Return on Investment
    • How much revenue do you make relative to the cost of marketing?
  • Average Order Value
    • How much are your customers spending for your services, on average?
  • Customer Lifetime Value
    • When you gain a new customer, how much can you expect them to spend at your business?
  • Average Cost Per Lead / Per Acquisition
    • How many new leads or acquisitions do you gain relative to the cost of your marketing efforts?
  • Website Traffic by Source
    • Where is your site traffic coming from? Why does it matter?
  • Average Time on Site
    • How much time are people typically spending on your site?
  • Bounce Rate
    • Are users viewing more than one page on your site?
  • How Customers Actually Interact With Your Website
    • How are people using your site? Are there trends pointing to a page’s strengths or weaknesses?
  • Conversion Rate
    • Out of everyone who visits your site, how many become new customers?
  • Reviews & Feedback Generated
    • What are your customers saying (or not), and how does it affect your business?
  • SEO Rankings
    • Is your site optimized to have the best SEO rankings possible so customers can easily discover your site?
  • Social Media Reach & Engagement
    • How does a social media strategy contribute to larger goals for your business?

These important metrics will help you create a marketing campaign, figure out if it’s working, and adjust it based on your company’s goals. If you’re working with a marketing team already, these metrics will help you identify what makes them successful.

Marketing Key Performance Indicators Are More Than Just Numbers

Metrics are largely comprised of numbers, and numbers can be overwhelming when you don’t know what they mean or how they’re relevant to you. Once you understand the numbers you’re looking at, you’ll find problems – and solutions – you might have struggled to find before.

For example, if customers are spending a lot of time on your site, but they’re not converting, then maybe there’s an issue with the information on or design of your website. Because you know how to interpret this metric, you realize you might need to rethink major components of your site.

You might hear these metrics referred to as “key performance indicators” (KPIs). KPIs can be found in many facets of your business and used to build growth in particular areas. Overall, there’s no significant difference in how KPI is defined from how we’re discussing marketing metrics here.

Total Return on Investment

Total return on investment (ROI) is exactly what it sounds like. In our context, you take the number of sales generated by marketing and subtract it from the cost of that marketing. The result is the amount you’ve earned from the money you’ve invested in marketing.

A tricky part about calculating a marketing ROI is figuring out what should be counted as a cost. Is it just the wages paid? Or does it include things like office supplies used for the marketing campaign? Generally, the more thorough the expense report, the more accurate your ROI will be.

There’s also the question of what number should be used to represent sales in an ROI calculation. For example, should it be the gross or net profit of sales? Different people have different answers.

ROI calculations are one way to determine how successful a marketing strategy is, especially when used alongside other tools. It’s important to keep in mind that – as with many metrics we’ll discuss – it’s not always accurate immediately.

ROI NetProfit|Investment

Average Order Value

Your average order value is the average amount a customer will spend when they call for service. The formula to calculate it is short:

The revenue of all sales in a given time frameThe number of sales made in that time frame

For example, if you’ve made $300 in a day, and you made 18 sales that day, then the math would look like:

300 ÷ 18 = 16.67

On average, then, a customer’s order will cost them $16.67.

The principle is the same if you take data from an entire month, quarter, or even year.

When you know the average amount a customer spends by using your service, significant financial decisions you might make will be better informed. Raising your average order value is one of the easiest ways to increase your revenue, for example.

Customer Lifetime Value

There are many ways to measure a customer’s lifetime value (CLV), and the formula you choose and how specific it gets depends on the type of business you run or the goals you’d like to achieve. The formula we’ll use for calculating a CLV will give a general result to tell service business owners what they should usually expect from new customers.

We’ll start with the formula for CLV we’re using, break it down, and then make up an example.

The formula has two steps:

  1. number of orders × average order value = all customers’ total average spent
  2. total average spent ÷ total number of customers = customer lifetime value

Theoretically, if you’ve been open for a few years, and you use all the customers you’ve ever had to make this calculation, then you’ll have pretty solid data to work with and refer to. You’ll figure out how much revenue new customers are going to spend, on average, when they choose your service.

In conjunction with information like your average order value, you can use CLV to hone your marketing goals.

Example chart for Customer Lifetime Value<br />

With the sum of the customers’ total average spent ($2,941), we can calculate a typical customer’s lifetime value:

2,941 ÷ 10 = $294.10

This data is much easier to calculate if you have a customer management system in place to track how many orders individual customers have made.

Using a more detailed version of the formula will give you information like customer retention and demographics. This information isn’t relevant for every business all the time, but it can tell you who your marketing campaign should target.

Average Cost Per Lead / Cost Per Acquisition

Knowing your average cost per lead (CPL) and acquisition (CPA) will help you identify the best places to spend your marketing budget. Let’s define the two:

  • Lead – A lead is typically measured as anyone who leaves some type of contact information, like a phone number or email address.
      • Make sure everyone on your team is using the same definition of “lead.” Otherwise, you might have conflicting numbers once you start calculating your CPL!
  • Acquisition – An acquisition is a new customer who has been acquired through your campaign or a given media channel.

Calculating either of these is fairly simple – divide the total marketing spend by the number of leads or acquisitions generated.

When you calculate either cost, it’s important to remember you shouldn’t only count the cost of the ads themselves. You should include employee or agency costs, or “ad management” costs.

So, your equation should look like this:

Total marketing costs (including ad spend + ad management)

Total number of leads or acquisitions generated

If your new ads cost $2,000, and your ad management costs $3,000, you’ve spent $5,000 on total marketing costs for this campaign. If you’ve gained 195 leads from these ads in the month since you started the campaign, then:

5,000 ÷ 195 = $25.64

In this example, is an average $26 per lead a good price to pay? It depends. What is your average income – after business expenses – from a customer? Ideally, you should never be paying more for a lead than you would earn from a new customer.

Not every lead will become a new customer. If you’ve acquired 39 customers from the 195 (about 20%), then the math turns out like this:

5,000 ÷ 39 = $128.21

Whether this is a good number, again, depends on your industry and financial aspects like what your average customer lifetime value is. If your average CLV is only $150, then this is a weak number. If it’s $750, then you might choose to raise your ad spending.

Overall, deciding whether it’s more important to use your CPL or CPA in relation to pay-per-click ads or marketing spending depends on your goals. Either way, knowing your average costs for one or both categories will help you immensely as you plan your budget and marketing strategy.

Website Traffic By Source

When you know the main sources of your website’s traffic, you get the most value for your marketing efforts.

There are five primary sources of website traffic:

  1. Organic search traffic, which comes from clicking onto your site from a search engine results page.
    This doesn’t count traffic from paid ads that put your site at or near the top of search results.
  2. Referral traffic, which comes from someone clicking a link to your website they found on another webpage.
  3. Direct traffic, which is when someone types your URL directly into the search bar or uses a bookmark to access your site.
  4. Paid (pay-per-click) traffic, which comes from ads (including ads that put your site near or at the top of search results).
  5. Social media traffic, which comes from social media platforms. In some cases, this overlaps with referral traffic.
    This is the hardest traffic to track because it’s not always clear where your link was placed in a thread or conversation. Also, the conversation might be inaccessible or completely erased after a certain amount of time.
    Since social media traffic is harder to track except where it overlaps with referral traffic, we won’t talk about it individually in this section. In a later section, we’ll talk more deeply about social media, reach, and engagement.

Best practice is to have as even a distribution of traffic sources as you can. This way, even if the source you get the most traffic from has a sudden, drastic drop in traffic, you’re still receiving a good number of site visitors.

Organic Traffic

The amount of organic traffic you receive is largely determined by your SEO rankings, which we’ll discuss in more depth later. Importantly, less than 1% of users will click any links on the second page of search results.

So, if your organic traffic is low and you’d like to raise it, your strategy automatically includes search engine optimization.

If your organic traffic is healthy, you probably have good SEO rankings! In that case, maintenance should be your focus. This usually means checking up on SEO keywords and updating site and marketing content every few months to a year, as needed.


Other factors that influence your SEO include:

  • Reviews left online about your services
  • How user-friendly your site is
  • How much traffic your site receives

Paid (PPC) Traffic

Paid ads can quickly bring a lot of good traffic to your website – as long as you know where your ads should be targeted. Otherwise, you’re basically wasting money.

Understanding your other marketing metrics – including where your current website traffic is coming from – is a critical component of deciding where to invest your ad money. As you plan, consider:

  • What are your goals?
  • How will you achieve them?
  • How are they relevant to your business?
  • Are they reasonable?
  • Can you communicate them clearly to your team?

Some use the SMART or SMARTER acronym to help guide their planning process. There are various ways you can define the letters of the acronym. This is one common way:

  • Specific
  • Measurable
  • Attainable
  • Relevant
  • Time-bound
  • Evaluate
  • Reevaluate

Referral Traffic

Referral traffic will help you identify where marketing energy should be focused. Is a particular website pushing a lot of traffic your way? Or a specific webpage on a site? As with many metrics, you can break your referral traffic down into pretty specific details, if you like.

Referral traffic should be on your mind for a couple reasons besides marketing strategy. First, if you receive a sudden spike in traffic, it’s probably referral traffic. Second, backlinks – the links people click on from one site to reach your site – increase how much authority within your industry SEO software gives you, which, in turn, improves your SEO rankings.

Direct Traffic

Direct traffic is one of the best kinds you can have because it means people value your service enough to bookmark your website or remember its URL. Customer retention is much cheaper than new customer acquisition, so if you have a high percentage of direct traffic, it’s a great sign about the quality of your business!

That said, the amount of direct traffic you receive is something you can’t really control. If your customer base types your business name into the search bar and clicks onto your page from the search results, there’s not a lot you can do to convince them to change their internet habits. But, it doesn’t mean you don’t have a loyal customer base!

Average Time on Site

The average amount of time someone spends on your site is available on Google Analytics. Usually, this metric can be listed by site domain, or URL, and so you’ll see what the average time spent on any given page is. Context is crucial to keep in mind when you think about a customer’s average time on site. Are they on your home page? A service landing page? A blog post? Length of time on these pages shouldn’t be the same.

For example, a short average time on your home landing page means customers are probably finding what they’re looking for easily, especially if your bounce rate is low. If they tend to spend a long time on your home page, though, it could mean they can’t find what they’re looking for or don’t know how to navigate the page. In this scenario, they’re likely frustrated by their experience. Even if they find the information or next page they need, it’ll impact their perception of your business.

The opposite applies for pages like blogs and even, to a lesser extent, your service pages.

If the average time spent on a blog post is very short, then people probably aren’t reading it. They are, at best, skimming it. If the average time spent on the post is long, then they’re likely reading it properly. A service page is the happy medium of the previous two examples. If people aren’t spending a lot of time on it, then they’re deciding pretty quickly if you have what they need, for better or worse. But, if they’re typically spending a few minutes on the page, then they’re probably looking at it more thoroughly in order to get a better understanding of your services.

Bounce Rate

Bounce rate is the percentage of people who exit a site without interacting with it beyond viewing the initial page they started on. Whether a page’s bounce rate should be low or high depends on the page.

An extreme bounce rate could indicate an issue with how your analytics tracker is set up. For the purpose of this section, we’ll assume your analytics tracker is running properly.

If your homepage or service pages have a high bounce rate, this could indicate one of a few things:

  • You’re reaching the wrong audience.
    • Someone in Charlotte doesn’t have a reason to stay on a Columbia business’ page, for instance.
  • The page isn’t user-friendly
    • User-friendliness includes usability across mobile and desktop devices!
  • The page is confusing.
    • Maybe its copy or navigation is overly complicated.
  • The page isn’t meeting users’ expectations and/or needs.
    • If someone clicks an ad about vacuum repairs, they expect to be shown information about vacuum repairs.

A low bounce rate is a good thing in most cases, but a high bounce rate doesn’t inherently mean a page is bad. For example, a blog with a high bounce rate but a long average time on the page is a sign it contains information people are looking for.

The same can be true for your landing pages. Maybe your FAQ section answered a user’s question; they were looking specifically for your phone number; or they had some other reason to use your site without exploring other pages.

Analytics for a CTM clients websites bounce rate

In short: Use context to identify trends and start troubleshooting, if necessary. If a page is (or several similar pages are) successful, think about why and how you could change other pages to be closer in style.

Remember – your exit rate and your bounce rate are different!:
–  Bounce rate: Someone clicks a link to your site and leaves without doing anything else.
–  Exit rate: Someone clicks a link to your site, visits another page on your site, and leaves your site from this new page.

Exit rates aren’t typically something you need to worry about. An exception would be if one particular page has a much higher exit rate than other pages on your site.

How Customers Actually Interact With Your Website

This section is related to the previous two topics. How are users interacting with your website? Where are they spending more time on a page? Where are they losing interest? Are they paying more attention to the sidebar than the navigation menu?

Especially if you’ve got someone designated to marketing, this is valuable information for them to track. If nobody is staying on a page, then a software that tells you exactly how people are interacting with it can give you a headstart on narrowing down the reason.

For example, users might lose interest at a certain point in several of your pages because there’s something confusing or difficult about it. Spotting this specific issue pattern tells you exactly what you need to workshop, rather than you shooting blindly in the dark and hoping you fix the problem.

At Cut Throat Marketing, we use MouseFlow to study how our clients’ sites are being used. We use this insight to help us develop a marketing strategy for our client moving forward.

Conversion Rate

Your conversion rate, as with most metrics, can be as general or specific as you’d like.

The basic formula is to divide the total number of site visitors by the number of conversions you have. The result is the percentage of customers who become leads. For example:

300 site visits ÷ 15 conversions = 20% of visitors become leads

Importantly, you can get much more specific than this. At Cut Throat Marketing, for instance, we use WhatConverts to track how many phone calls a client’s site generates.

By tracking the ways your potential customers come into contact with your company and eventually become leads, you know where to focus your strategy. If your conversions mainly come from phone calls, then you need to make sure you have adequate resources going to the phone lines.

Knowing what your conversion rate is will also allow you to establish attainable goals. It’s easier to show what a 15% conversion rate increase looks like when you already know your baseline.

A screenshot of WhatsConverts tracking phone calls

Reviews & Feedback Generated

In short: Reviews are critical to your business ranking well in search results.

The more online reviews and feedback your business has, the more trust a user is likely to have. They make it easier for users to find you on Google in the first place, too. Which, of course, increases the likelihood someone will become a lead or new customer.

The detailed explanation: Between 2017-18, 84% of Google searches were “discovery” searches, like “plumbers near me,” and 25% of customers found a business through Google Maps. Over half of global searches are now through a mobile device, so it’s not unlikely this percentage has grown.

BrightLocal’s 2022 Local Consumer Review Survey reported 77% of consumers “always” or “regularly” read online reviews. Almost half of consumers trust these reviews as much as they trust personal recommendations from a friend or family member.

Not only do customers usually read reviews before choosing a service provider, but Google uses those reviews, too – and your interaction with them – to rank where your business lands on Google Maps or other local discovery searches.

On top of it all, a significant percentage of Google searches end with zero clicks to any sites in the search results. 54% of all clicks go to one of the top-three search results. Assuming, that is, there are no ads or search result features, like a “snippet” answer at the top of a page excerpting one of the results.

The more positive reviews you have, and the more you respond to reviews – even when they’re negative! – the better your business will rank on Google and Google Maps. With so many local companies found on a regular basis via discovery searches, online feedback is not a resource to underestimate.

If you’re wondering how to increase your online reviews, we’ve got you covered: How to Get More Google Reviews with Less Work. You might also be relieved to know BrightLocal’s survey found more people considered leaving or did leave a positive review than a negative review.

SEO Rankings

Search engine optimization and ranking is a “secondary” key performance indicator because, unlike the metrics we’ve discussed so far, it doesn’t inherently carry information about how your business is doing or how customers view you.

Your SEO rankings are still important to keep track of because it impacts your website’s visibility, which affects most or all of the rest of the metrics we’ve talked about. If you’re on the second page of Google results, fewer than 1% of users will consider clicking onto your site. In fact, less than 1% of users click on any links on the second page of search results.

Some of the biggest influences to your SEO rankings include:

  • How much traffic your site receives
  • How user-friendly your site is
  • How much time users spend on your site
  • How many errors your site has, like 404 page errors, broken links, and similar issues with navigation
  • How well your site uses keywords

Many of these directly correlate to the other metrics we’ve talked about. If your site isn’t user-friendly, you’re probably not getting many conversions and your bounce rate may be high, for example.

Of course, your SEO rankings don’t always correlate to the success of your site. You can have a healthy amount of site traffic without being on the first search engine results page. For many businesses, though, the significant amount of organic traffic gained from being on the first page of results is traffic they can’t go without.

AHREFs for a clients SEO Rankings

Social Media Reach & Engagement

Like SEO rankings, social media metrics can be considered “secondary” key performance indicators (KPI). Still, it’s a popular method of maintaining your brand image, building and maintaining a connection with customers, executing marketing campaigns, and so much more.

Your social media reach is the number of unique users who see your content. Seeing it does not mean they pay attention to it, notice it, or otherwise interact with it.

Your social media engagement is the amount of actual interaction your content receives on the social media platform you’re using. This means likes, comments, shares, etc.

It’s also possible to track whether people are becoming leads, or at least clicking through to your site, through on your social media.

Using social media appropriately for your business’ needs will help you with

  • New lead generation
  • Increasing the number of visitors to your site
  • Improving the marketing channels you use to reach customers

A popular method for setting social media KPIs and goals is the SMART acronym:

  • Specific. Your goals should be tangible and easy to communicate with the rest of your team.
  • Measurable. You can’t track what’s working and what’s not if you have no way to assess your progress.
  • Attainable. If your goal isn’t realistic, everyone will have false expectations, and your team could lose morale.
  • Relevant. How does your goal relate to your business’ big picture? For example, if you want to increase social media engagement, how does that relate to raising the number of leads you get every month? How do these work together?
  • Timely. When is the deadline for determining success (or lack thereof) of your social media project? Keep attainability in mind. For instance, gaining 5,000 followers in a month for an account you’ve just created is probably too timely.

Your timeframe will also help you Evaluate and Reevaluate (optional steps to create the acronym SMARTER) your goals to change course, if necessary, at a good time.

If you decide you want 5,000 new followers in a year and to check progress every month, you’ll (hopefully) identify sooner than later if something isn’t working, if you’re moving faster than you anticipated, or some other reason you might need to adjust your original goal.

As with SEO rankings, your social media reach and engagement don’t inherently correlate with your business’ success. However, if you’re hoping to grow, you should keep in mind at least half of consumers learn about new brands through social media.

You could be losing a significant number of qualified leads because they have no personal connections to you, and you have no strong social media presence. This holds true if your social media isn’t optimized to reach leads who have a high potential to become customers, even if your social media is successful in terms of reach and engagement.

Use marketing metrics to create successful strategies and grow your business

It’s important to understand basic marketing metrics and what they indicate about your business’ performance. It allows you to create reasonable goals for your company and recognize when they’re not going as planned.

If you employ someone for marketing purposes, you’ll understand the information they’re giving you, be able to ask questions, or give useful feedback. In a worst case scenario, you might even be able to realize they’re trying to use these metrics to make their work look more successful than it is.

If you don’t have the time to handle marketing activities yourself or can’t afford the cost of a dedicated marketing employee, then outsourced marketing services might be a practical alternative.

At Cut Throat Marketing, we use analytics tools to study these key metrics and develop a personalized service plan for your business. We’ll produce significant results for you, starting with a free, 30-minute consultation to get to know each other.