The Definitive Guide to Strategic Marketing Planning

No matter your goal, it’s always better to have a solid plan with defined steps in place than to try and haphazardly complete tasks. With strategic marketing planning, you can ensure that every step your business takes, regardless of which team contributes, will all coherently move towards promoting your brand and attracting new customers. 

For guidance on how to identify problems before they become serious issues, Kissmetrics outlines the strategic marketing planning processes.

What is the Strategic Marketing Planning Process?

The strategic marketing planning process allows you to outline your company goals for reaching your audience and the steps of how to reach them. Each step of the process defines your business objectives, your customers’ needs, and how your products can meet those needs. As your goals are defined, the steps of the process also track your implementation and progress toward your objectives. 

Mission Statement

The first step for strategic marketing planning is to outline your mission statement. We describe in the section below what a mission statement is and how to write it to effectively describe your business objectives. 

What is a Mission Statement?

The mission statement is a short description of your long-term plans. These are your plans for your business as a whole, detailing things like growth plans, expansion ideas, and where you want to go. With each goal, you’ll need to add one or two objectives that build up to your overall success. 

How to Write a Mission Statement

A mission statement should be no more than three or four short sentences and should contain your long-term goals as a business. Your mission statement should be concise and inline with your North Star metric. Outline your objectives and ensure they can be measured. Then, break them out into examples so that your mission is clear. 

Situation Analysis

The second step is to evaluate the situation and analyze any internal or external factors that affect your business. Depending on your industry, these factors can incorporate a large number of possible aspects. Some examples of factors include:

  • Industry competitors
  • Available resources
  • Current sales revenue
  • Customer desire

Analysis Methods

There are many methods to analyze your business’s health, but the three most common ones are the SWOT, 5C, and PEST analyses. We cover each one in-depth in the sections below. 


SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. To break these down further, strengths and weaknesses refer to internal aspects which your company controls, whereas opportunities and threats are external. These assess what your business does well and areas where you could use some improvement. This part of the situation analysis requires you to be self-aware and use product analytics tools to gather data about your services.

Strengths might include competitive advantages, how your products stand out in the market, what you hope to improve or do with your services, or how your employees work together. Weaknesses might include limited resources, issues your business is facing internally, or areas where you aren’t reaching your goals.

Opportunities are external and therefore not under your control. It’s important to be aware of the socio-political climate to monitor your customers’ changing needs. For example, a company that produces cleaning products likely saw the COVID-19 pandemic as an external opportunity to take advantage of by producing more and increasing their advertising. Threats are the opposite of opportunities and present unpredictable problems that your company must notice and address immediately.

5C Analysis

The five Cs in the title refers to Company, Customers, Competitors, Collaborators, and Climate. These Cs include both internal and external factors to accurately analyze the entire situation for your business.

  • Customers – Who are the people buying your products?
  • Climate – What kinds of external factors affect your business?
  • Competitors – Which other companies are producing similar products?
  • Company – Do people know your brand name? What do they think of you?
  • Collaborators – Do you work with distributors, suppliers, or other affiliated companies, and how do they affect your business?

PEST Analysis

A PEST Analysis measures the Political, Economic, Social, and Technological factors that affect your business. Unlike the previous analyses, the PEST Analysis only measures external factors, so we recommend using it in addition to another type of analysis that measures your internal factors, so you can have the complete picture of your business.

The political aspect looks at the laws and regulations that influence your customers and their purchasing habits—economics shows how the stock market, taxes, and exchange rates affect your services. Social demonstrates the attitudes and lifestyle demographics that define your customers. Technical examines any patents, technologies, or production trends that might influence your product.

Marketing/Strategy Plan

With the data you collected in the prior steps, you can start brainstorming which metrics you want to collect and leverage. Depending on your industry, some metrics may be more valuable than others.

How Does a Plan Help

With a marketing plan, you can identify the audience you want to appeal to and define the best ways to reach them. You’ll also be able to estimate how your marketing efforts will affect your business by predicting the rough costs and benefits.

What to Include in Your Plan

Ideally, your marketing plan should include overall cost, how you’ll place your product or brand among your competitors, and what your predictions for customer reactions are.


As every company knows, not every product or service will appeal to every buyer. Buyers have specific wants and needs based on demographics like age, locale, gender, pet ownership, family size, the presence of children, and similar factors. Understanding which aspects make your product essential means that you can target your advertisements for your specific audience.

Using Kissmetrics, you can create a report documenting certain factors about your customers to see who is buying your product. You can also offer surveys and accept feedback from your customers to monitor their changing desires. Another option is to monitor social media interactions with your brand by your existing customers.


In order to see if your plan is working, you need measurable goals. The best goals are tangible, realistic, and have milestones for you to monitor during the timeline you choose. Your goals depend on what you want to achieve with your marketing plan. Do you want to grow your sales revenue? Brand awareness? Are you looking to increase the number of users on your website?

Be careful not to set any goals that are outside of your control. If you have a goal to increase the number of social media engagements on Twitter and a large number of people stop using that platform, you won’t be able to achieve the goal through no fault of your own.


Likely the first part of your marketing plan outlines the estimated budget. As with all plans, you should budget an extra amount for emergency funds, but you should be able to give a rough estimate of how much it will cost to create, implement, and monitor your plan.

Marketing Mix

Now that you’ve established what you want to achieve, who you are as a company, and what is happening inside and out of your business, it’s time to begin planning how you’ll actually accomplish your goals.


The first part is knowing what your company offers. What kind of product or service does your brand offer to your customers? How do you want them to interact with your offerings? The answers will dictate your metrics and how you measure your plan’s success. 


Knowing your customers also means knowing how much they’re willing to pay for what you have to offer. 


Promotion includes the platforms you plan on using to appeal to new and existing customers. Incorporating social media postings, a contact email, reviews, a phone number to call for support, and other communication methods are all essential for promoting your brand and spreading awareness. 


This aspect is more important for physical products because you’ll want to plan how you’ll get them to the customer. Are you planning to ship them from online orders? Will the customers need to come to your store to pick up their purchases? 

Implementation and Control

The final step means it’s time to put your plan into action. This means measuring your metrics over time and comparing them to your established objectives. As time goes on, you’ll likely need to come back to your marketing strategies to update them or change them in accordance with your company’s needs. 


With this knowledge about strategic marketing planning, you and your company can build the right plan to fit your business’s individual needs. Understanding the five steps and how they synchronize to provide valuable insights about your products and customers is the best way to spend your marketing dollars wisely. 



The Strategic Marketing Process: A Complete Guide |

Marketing Strategy: The Secret behind the World’s Top Brands |

Marketing Strategy: How to Plan Yours in 12 Steps With a Template |

What Is Marketing Analytics? Definition and Examples

Marketing in the digital age is moving quickly. Companies from all industries are taking advantage of this boom by leveraging on what is perhaps the most precious resource of modern commerce—data. 

Marketing analytics is the way companies use this data to their advantage.

What Is the Definition of Marketing Analytics?

Marketing analytics is when data is collected from marketing platforms to create complex models to visualize and understand user behavior. Businesses that use marketing analytics can ensure the money they allocate for advertising gets the highest return on investment (ROI) and that all of their marketing efforts remain lean. 

How Is Marketing Analytics Different from Digital Marketing?

Digital marketing is the overall process of using digital platforms to advertise a product, service, or company. Digital marketers use marketing analytics to make digital marketing efforts more efficient and more profitable.

Why Is Marketing Analytics Important?

Executives from the biggest companies in the world all agree that data is fueling the future of marketing. With proper insight and implementation of marketing analytics, you no longer have to rely on expensive trial and error with your advertising campaigns because the data you retrieve will help you continuously optimize your campaigns for higher returns. 

That means lower marketing costs, more valuable customers and more feasible and effective growth and scaling plans. 

What Are the Benefits of Marketing Analytics?

For a more concrete idea of how powerful marketing analytics is, here are a few of the benefits of implementing marketing analysis into an organization’s promotional strategy. 

Get to Know Your Audience

With marketing analytics, you can target the audience to which you intend to advertise through a process called behavioral segmentation

This means that you will understand what your customer’s purchase patterns are, what products they are most likely to buy, and what types of ads they click on the most. This is beneficial to your business. 

Not only will you be able to personalize your company’s advertising campaigns to suit specific target audiences, but you can use this information to improve your efforts continuously.

Identify Trends

You can use marketing analytics to identify various trends within your industry, especially in e-commerce. The volume of consumers who have taken your shopping efforts online has grown exponentially so the scope of e-commerce is continuously shifting. But there are clear patterns that unveil themselves by analyzing your marketing data. 

For example, one trend that can be identified is whether buyers tend to go to specialized websites during the holidays or more prominent and more general platforms like Amazon or eBay. 

Forecast Future Results

By looking at the marketing analytics patterns of previous marketing campaigns, you can more easily predict the outcomes of your future marketing campaigns. 

Measure KPIs

Marketing analytics is a way to determine whether or not a company achieves its Key Performance Indicators (KPIs).

When you run marketing campaigns, for example, one of the things you pay attention to is your conversion rate. A conversion rate is a desired action taken by the customer or user that is influenced by marketing efforts. 

With marketing analytics, you can tell if your marketing efforts are working because the associated conversion rate will either rise or fall compared to the previous month.

Optimize Campaigns

One word that can be used to describe the goals of marketing analytics would be ‘refinement.’ In the past, companies relied on more traditional methods to make sure their marketing efforts were working. 

Now, you do not need to resort to those methods as frequently because you have a wealth of data to use to optimize your campaigns daily.

How Can I Make Sure My Marketing Analytics Effort Is a Success?

As powerful as marketing analytics are, a company needs to actively make sure that its processes are well-defined and it uses best practices to make sure its analytics are effective. Here are some of those best practices.

Use Multiple Processes 

You should rely on multiple processes like conversion rate optimization and product positioning

Product positioning  is what consumers think about a particular brand. By using the data obtained through marketing analytics, you can make sure that your consumers know the value of your products and what makes your products stand out from your competitors. 

Product positioning  is the best way to highlight a unique selling point. 

Optimize Workflows

You can use marketing analytics not only to optimize advertising campaigns but to optimize workflows as well. This means that your company’s efforts will be a lot leaner, and your company will have more apparent objectives and a more well-defined process to achieve these objectives. 

An example of this is social media content creation. With marketing analytics, companies can eliminate the guesswork of which pieces of content are valued by their target audience, which ones get the most engagement, and which draw the most traffic to the company’s landing pages. 

You can then focus your efforts on the pieces of content most likely to be successful as well as creating more content that your audience loves.

Make Changes Based on Your Findings

You should use the information you obtain to create better success and to mitigate future failures. 

An example of this would be an e-commerce fashion brand adjusting to the information obtained for a particular clothing color during winter. 

After analyzing their data, the retailer found that specific colors were not popular among its buyers. Based on this information, it didn’t include this clothing color in  the following winter line to prevent low conversions.

Predict Customer Lifetime Value

Another important metric that a company should obtain about its customers is something called Customer Lifetime Value. Customer Lifetime Value is the amount of money that a specific customer will likely spend at their business over their entire relationship. 

Predicting Customer Lifetime Value can provide you with an indication of how your efforts influence your relationship with your customers. With marketing analytics, you’ll receive a clearer picture of your Customer Lifetime Values and get better ideas on improving these values. 

A very powerful aspect of Marketing Analytics is that you have the tools to predict how specific metrics will fare for the next few weeks and well into the future.


Data is now one of the most influential factors in marketing. 

Marketing analytics is a way of measuring your company’s marketing efforts. Greater insight leads to better profits and a more robust brand image. The information is readily available—marketing analytics is simply a way to give this information structure to visualize what needs to be done and take the appropriate action.

If you represent your organization and want to know how you can look deeper into your marketing analytics — Kissmetrics is a great way to start.



A Guide to Marketing Analytics. Marketing teams must rely on analytics | by Abizer Jafferjee (Waterfront Analytics) | Jul, 2020

The Need for Marketing Analysis. Exactly how analytics can transform… | by Muhannad Haj Ali | The Startup

How Data Is Fueling The Future Of Marketing | Forbes

What Are Conversion Paths in Inbound Marketing?

Attracting new visitors and converting them into customers for your brand is no easy task. For inbound marketers, this process often begins by changing website visitors into potential leads by persuading them to submit their contact information. How can your brand capture the interest of website visitors and entice them to come back for more?

That’s where conversion paths come in. In this article, Kissmetrics delves into the specifics of inbound marketing, a breakdown of conversion paths, and how to create your own innovative conversion paths. 

What Is Inbound Marketing?

Inbound marketing is the business strategy of enticing potential visitors and customers. By attracting them to your brand instead of simply presenting services or products, you get the customers to invest in learning new ideas and concepts before being pushed into buying something. 

Customers are attracted to innovative solutions and ideas. Reeling them in using conversion paths eventually leads to customers who are ready to complete a purchase because they’ve already invested time and thoughts into your brand. 

Inbound marketing has changed significantly for the digital marketing world. Traditional inbound marketing relied primarily on advertisements like TV commercials or spreads in newspapers and magazines. 

Unlike digital marketing, traditional marketing wasn’t interactive and had to present everything in a limited format. On the other hand, the internet gives brands innovative ways to pursue inbound marketing via social media, educational content creation, and search engine optimization or SEO. 

What Is a Conversion Path?

A conversion path takes a new visitor to your brand’s website and converts them into a potential customer. While the content and brands may differ, some aspects of a conversion path always come into play to entice visitors to register their contact information with your website. 

With digital inbound marketing, brands can now interact with customers socially instead of pushing themselves or being “sales-y.” This type of marketing is customer-oriented, so you must understand your customers’ demographics. 

Tracking your existing customers by age, locale, gender, and family structure are excellent starting points of information for structuring content.

Depending on your products or services, this content may demonstrate varying concepts, but the key is to relate the content back to your brand. For example, subtly show the reader that your brand is reliable and use a call to action to direct their attention towards your website’s landing page. 

As we discuss below, the journey has multiple elements that work together to convert visitors to leads. 

How Do Conversion Paths Work?

A conversion path guides the user from casual content reader to registered lead. Though they may not purchase at that time, they have signed up for your brand’s mailing list and will receive access to promotional offers down the line. With the right content and call-to-action, your brand can attract more potential customers.

An example of a conversion path at work may include:

  1. First, the visitor searches the question, “How do I know if my cat has fleas?”
  2. Your brand’s SEO content appears high in the search results with the title “How to Tell if Your Cat Has Fleas.”
  3. The visitor clicks on your brand’s content and learns relevant, accurate information presented in a friendly way.
  4. At the bottom of the page, there is a button or clickable link associated with a call-to-action that says, “Learn more about protecting your kitties from fleas and other diseases here.”
  5. Having become invested in the content, the visitor clicks the button.
  6. They are then directed to a page asking for their contact information to register with your website, where they can unlock a deal for a 30% discount for their first month of your brand’s flea and tick medication.
  7. The visitor registers and becomes a potential lead.
  8. The visitor finishes on a landing page thanking them for registering and where they receive a confirmation email with the discount code.

What Are the Parts of a Conversion Path?

There are five main elements of any good conversion path.

Well Written Content

The basic idea of giving a visitor answers to a question isn’t revolutionary. Many visitors will simply click on a webpage to get their answer and leave without giving it a second thought. Your brand’s content needs to stand out from the crowd and keep the reader interested with thought-provoking questions.

Well-written content is the beginning of your conversion path. It’s the first thing your visitor sees, so it needs to be excellent. Be sure to include credible sources throughout the page so that visitors will gain confidence in your brand’s credibility. 

At the end of your content, include a call-to-action as their next step of the conversion path. 

An Enticing Call-to-Action

A call-to-action turns the visitor from a passive reader into an active participant with more than just “Sign Up.” The best calls-to-action entice the visitor to learn more about the topic or explore products that can deliver the benefits mentioned in the content. 

Calls-to-action often appear at the end of your content and feature a clickable button or link that leads to a landing page on your website. 

Examples of calls-to-action include:

  • Discover more with YOUR BRAND
  • Try out YOUR BRAND risk-free!
  • Watch YOUR BRAND’s new video

Appropriate Landing Pages

The call-to-action leads your visitor to a landing page where they are asked to input their contact information in exchange for a discount code, access to more information, a free trial with your service, or something else of value. 

Of course, your offer must be valuable to them, or they won’t continue along the conversion path. 

A good landing page includes a high-level overview of your product or service, as well as the benefits of using them. Be friendly without overwhelming them. Don’t be too pushy, or the visitor may not decide to enter their information. The best landing pages are customized for your customers based on their personas. 

Optimized Thank You Pages

Once visitors have finished inputting their contact information, your conversion path will take them to a thank-you page. The thank-you page signifies that the visitor has nearly reached the end of the conversion path. 

Depending on the structure of your conversion path and the offer advertised, leads may be able to download their reward for sharing their information on this screen. The thank-you page can also include other items like additional links to related content, products, or complimentary services. 

Personalized Confirmation Email

The personalized confirmation email marks the end of the conversion path. If the user has signed up to utilize the website’s services, they may need to click through a link sent in the email, but it could also be another way to thank the customer and link them to related products or landing pages. 

For companies worried about users signing up using fake emails, it might be prudent to include a personalized confirmation email that contains the offer advertised in your call-to-action. 

Whether the discount code or other offer is sent through the confirmation email or is available on the thank you page depends entirely on personal preference. 

Creating A Conversion Path

To effectively create a conversion path, you need to know about your customer personas. One of the main aspects of a customer persona is the channels through which they interact. For example, tracking customer metrics might reveal that your customers primarily click through your brand’s Facebook ads instead of Instagram or Twitter ads. 

Understanding user behavior is critical for designing an appropriate conversion path that will initially draw new visitors and make them interested in completing the conversion. For example, understanding what steps the visitor went through, which pages they visited, and how long it took for them to become customers is essential to designing a successful conversion path for customers who follow.

Once you have created a conversion path, it’s vital to monitor the success. It’s best to make adjustments along the way to any of the elements if you don’t see the path living up to your expectations or gain new information about your customer personas. 


Inbound marketing in the digital age puts the focus on the customers instead of the brands. By opening up the conversation and including customer preferences in the equation, brands can understand what their customers want and deliver those products and services more effectively. 

Conversion paths are one way to take advantage of the social media era by rewarding visitors who want to learn more about your brand’s products. 

Kissmetrics can help you track user behavior to craft a more effective conversion path and generate more leads.



What Are Conversion Paths In Inbound Marketing? How Do They Work? |

Conversion Path |

Inbound Marketing |

The Proven Process for Developing a Go-To-Market Strategy

When your company unveils a new product or service, you must launch with a proper go-to-market (GTM) strategy. 

Without proper planning, it’s nearly impossible to know which  audience to chase, whether you’re too late or too early to the market, or how you’ll differentiate yourself from your competitors. You could also waste your time and valuable resources with inefficient processes and misprioritized projects. To avoid this, it’s of the utmost importance to craft a carefully thought out go-to-market (GTM) strategy. 

In this article, we’ll walk you through everything you need to know about developing an effective GTM strategy and the most common mistakes to avoid right off the bat.

What Does a Go To Market Strategy Include? 

A GTM strategy is an action plan that determines how a brand will reach its target audience and achieve a competitive edge. When defining your strategy, include information about your unique selling proposition (USP), positioning, messaging, sales and support materials, and customer journeys, personas, and use cases in your strategy. Here are the necessary components.

Your Unique Selling Proposition (USP): Why are you launching this product now? How does launching this product align with your overall business strategy? Understanding why you’ve decided to introduce your new product to the market in the first place is the foundation of your GTM strategy and will help you with later steps.

Definition of your product-market fit: How does your product fit into the current market? Answering this question should be at the heart of your GTM strategy. This doesn’t have to be in-depth — it’s just a way for you to get an overall sense of how your product sits in the market.

Create your marketing plan:  Your marketing plan is important no matter what stage a product is at — but if you expect your customers to find your product through ads, social media, or other content-heavy communications, then your marketing plan will make or break your product launch. Including information about branding, messaging, lead generation, content, where your marketing content will live online (i.e., a website, social media, etc.), and the types of events, advertising, and PR you’ll create surrounding your product.

Define a sales strategy and a sales support plan: Your sales team is the bridge between between your product and your target customers so a flexible sales strategy is imperative to  your product launch. What kinds of training support, tools, and resources will the team need to sell successfully? How should they go about generating leads and finding new customers? How can your product and marketing teams support your sales team so that everyone’s jobs are more efficient and effective?

Customer Support (CS): With any new product comes the inevitable customer service kinks and you want your CS team to be prepared. The best way to handle this is to try to anticipate things that could go wrong at launch and mitigate what you can. For everything else, engage your product and marketing teams to help develop scripts and CS protocols to fix the potential issues. By arming your CS team with the right tools and retention strategies, they will be better equipped to solve customers’ problems efficiently and satisfactorily. Also ensure there is a feedback loop that flows from CS back to product and marketing.

Determine which metrics will measure your GTM strategy success: To determine if your launch is a success, you’ll need to define what success is and decide which metrics will show you if your product is successful or not. One of the most common metrics used is conversion rate, i.e. how many users purchased your product or signed up for a demo. But there are many other metrics that could define success for your company. The key to determining whether or not you’re gaining traction in the market is to choose the right metrics for your company and the stage it’s in. You can find a good article about this here.

Proven Step-by-Step For a Go-To-Market Strategy 

Need help developing a successful GTM strategy? Here’s a step-by-step breakdown of how to do it. 

Step 1: Identify Target Markets, Assess Feasibility and Analyze Market Demand

Undoubtedly, one of the strengths of a GTM strategy is its ability to determine whether your new venture is feasible and your product is in demand. It will help you identify your target market and how to get their buy-in. But first, you have to do the research. Conduct the necessary market research and feasibility studies before you even think about creating a GTM strategy or product plan. 

Step 2: Develop a Product Plan, Product Roadmap, and Other Tools

The next step involves the logistical outline of how you’ll build your product or execute your project. Naturally, this is quite an involved process on its own, but it can be especially difficult if you didn’t do Step 1.

Building on your research is the key to developing a product plan and product roadmap that works from the very beginning. The goal is to set yourself up for success later on down the road by creating a flexible roadmap that allows various teams to sync seamlessly on any project — whether it’s a marketing campaign or a new feature that will get your customers excited. 

You can read more about product planning here.

Step 3: Develop a Marketing Strategy 

Buyer personas: Who is your target market? Describe all the different cohorts that exist in that specific market. 

Buyer journey: What is the process a customer takes from first discovering your product or service to ultimately buying? 

Messaging: To develop your messaging, ask yourself these questions below:

  • What pain points are you addressing?
  • How are you solving the problem?
  • How can you make your audience feel empowered? 
  • What is the biggest fear of the buyer you are selling to? How can you leverage this fear through your messaging?
  • Can you address your current users and prospective buyers at the same time? 
  • What paid avenues will be most effective for reaching your target market?
  • What are your marketing strategies to reach prospects at each separate stage of the buyer’s journey?

This is the first time your target audience will be introduced to your product (and perhaps your company), so the way you talk to them and about your product will leave a lasting impression. Craft your messaging carefully. 

Common Mistakes To Avoid 

Creating an effective GTM strategy can be tricky — you need a well-thought-out, well-planned roadmap and a thorough understanding of your customer and product or service category. But thankfully, a little insider’s knowledge will go a long way, too. 

Here are three common mistakes to avoid right off the bat:

Price to Value Miscalculation

A Price to Value (PTV) miscalculation is also known as underpricing your product or service. Price is rarely ever the key consideration for a  purchase — especially in the considered purchase environment. 

On their own, customers will determine the value of your product or service in their everyday lives — and in doing so — may be willing to pay a little bit more if it resolves their issues. In fact, according to controlled, measured price testing scenarios, we’ve seen higher sell prices consistently convert at the same rate (or higher) than a lower price. 

Underestimating Pain Points for Your Product

Certain consumer categories (i.e., wellness, home improvement, etc.) are perfectly positioned for facilitating immediate transactions and engagement. If your product falls into one of these categories, does your sales infrastructure support speedy delivery to customers? Or the immediate download of purchased material? Or direct contact with a rep? How about quick add-ons that increase your average order value

It’s critical for your business that you understand your target markets mindset and not just its demographics.

Going to Retail too Soon

We get it. You’re full of enthusiasm and are eager to secure quick retail distribution of any kind. After all, your product will be in stores, right? Well, the truth is that without the required advertising support, sales can — and typically will — languish at the store level. This can lead to a wide variety of problems, including putting your price integrity in jeopardy if units are marked for reduction too early in your launch. 

The Bottom Line 

A successful GTM strategy helps you develop a clear path for launching new products or services and to carefully assess all the aspects of your future operations. Apart from solidifying your vision, it will help you to look at your offerings from the buyers’ perspective and work out the optimal presentation and marketing of your new products and services. 



Examples of Advertising in the Wrong Market

3 Reasons Home Improvement Is The Fastest-Growing Retail Category, And What To Watch For

The Buyer Persona Manifesto

Why You Need To Do A/B Testing | Marketing 101

When marketing gurus create landing pages, design call-to-action buttons, or write email copy, it can be tempting to use intuition to predict what will make customers click and convert. But basing important marketing decisions on a “feeling” can be detrimental to your results. 

Rather than relying on assumptions or guesses to make these essential decisions, you are much better off running an A/B test — sometimes called a split test. 

A/B testing is valuable because different audiences behave differently and something that works for one brand may not necessarily work for another. That’s why conversion rate optimization (CRO) experts despise the term “best practices” simply because it may not be the best practice for you, specifically

A/B tests can also be intricate, and if you’re not careful, you may make incorrect assumptions about your visitors — crucial decisions that could easily misinform other parts of your marketing strategy.  

What is A/B Testing? 

In a nutshell, A/B testing is a way to compare two versions of an email, web page, or other marketing asset and measure the difference in how they perform. 

You do this by giving one version to one group and the other version to a different group. Then you can see how each variation performs. It’s best to think of it as a competition — you’re pitting two versions of your assets against one another to see which comes out on top. 

Understanding which marketing asset works better can help inform future decisions regarding email copy, web pages, or other campaign assets.

How Does A/B Testing Work? 

Conducting an A/B test requires performing a series of steps you might see in a scientific study. Like any scientific experiment, you’ll pick one variable to test. Your variable can be anything you like: the color of a banner ad or the placing of a navigation menu.

With A/B testing, the possibilities for maximizing your marketing campaign and website’s full potentials are at your fingertips. Here are the steps for conducting an insightful A/B test. Once you’ve picked your variable, you:

  1. Develop your hypothesis. (What do you expect from the result?) 
  2. Create a “control” and a “challenger” group based on chosen criteria.
  3. Randomly split your sample groups into equal-sized sub-groups.
  4. Determine your sample size (if applicable to your test).
  5. Define what qualifies as a statistically significant result. 
  6. Make sure you’re only running one test at a time on any campaign. (Running more than one test at a time can compromise results, rendering your test pointless.)

To illustrate how A/B testing works, here are some examples. 

Example #1: Imagine you have two different slogans, and you want to know which one converts more customers.

After you create your slogans, you give one to Group A, and you send the other to Group B. Then, you analyze how each performed using metrics, such as click-throughs and sales. 

Example #2: For this example, imagine you have four landing page variations, and you want to see which converts more customers. 

Just like the first example, you provide one landing page (LP) to each group. Then, you see how each LP performed using metrics such as clicks, traffic, or conversions. You can then start digging into why that is, which will help you to create more effective landing pages in the future. 

Conducting Your Own A/B Test: Do’s and Don’ts 

A/B testing is extremely beneficial for businesses at any stage. But if you’re unfamiliar with it, A/B testing can be an overwhelming project to start. While you want to use logic and basic user psychology to conduct your tests, sometimes it can be surprising what actually works and what doesn’t. Here are five dos and don’ts of A/B testing.

DO: Test Multiple Variables

Variables that can influence the conversion and sales of your website are not scarce. They are always available for testing on different grounds. For instance, you can effectively test these variables:

  • Size
  • Color
  • Offers
  • Subject line
  • Layout
  • Templates 
  • Messaging
  • Images
  • Checkout process
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Identify and test as many variables as you can. The more variables you test, the better insights you gain in your marketing strategy.

DO: Test Simple Variables To Start Off

Rather than diving in headfirst, dip your toes into the A/B testing pond by testing something simple like your offer or call-to-action. There’s nothing wrong with simple tweaks before gradually advancing your approach.  

DO: Always Be Testing

You should  always be  testing something. If you happen to have the bandwidth to do so, you can try to run two tests at once. For one test, measure the effectiveness of the CTA on one page. In another test, measure the layouts of two other pages. 

The more data you can generate at one time, the more quickly you can optimize your marketing efforts. 

DON’T: Test All Variables at Once

Marketers that use A/B testing understand the importance of focusing on just one variable during each test. If you’re testing the effectiveness of one offer over another and you modify different variables, how will you isolate the reason one offer is more effective? 

Stick to one variable per test, so there is absolutely no guesswork involved in determining why one test subject worked better than another. 

DON’T: Be Afraid To Level Up With Advanced Testing

Once you feel comfortable with simple A/B tests, don’t hesitate to graduate to more complex tests such as A/B/C tests, page-level test designs, mobile testing, and so on. Advanced testing structures will provide two almost completely different page designs to test.

How Can A/B Testing Help My Conversions? 

Accurate A/B tests can make a major difference in your conversions and, ultimately, your bottom line. Using controlled A/B tests and gathering empirical data, you can figure out exactly which tactics work best for your brand and your product or service. 

When you figure that one marketing mix might work better than another, the idea that you would conduct promotions without testing starts to seem a bit ludicrous.

The Bottom Line 

A/B testing is arguably one of the most powerful ways to strengthen sales and marketing efforts. It gives you guidance on the tactics that convert the most customers and shows you which messaging brings you your most valuable customers. 

When you pair your A/B testing with a web analytics solution, you’ll be able to segment your data in a way that makes the most sense for your company. That way, you can make smarter decisions that boost your bottom line.



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Product Planning Fundamentals You Should Know

When you have a unique idea for a new product or feature, the temptation can be to dive right in. The idea is that the sooner your product is out there, the sooner you can drive sales and generate revenue.

But this perspective overlooks the crucial product planning steps that are integral to your product’s journey. Without proper product planning, your great idea could fall flat. 

So why is product planning essential and what are the fundamentals you should know?

What Does It Mean To Product Plan? 

Product planning is the research, development, creation, and market strategy involved with launching a product. It’s also an ongoing process that allows you to continually market a product to your target audience by monitoring customer interaction with it.

Product Planning: The Step-by-Step 

Product planning encompasses every stage of a product’s life cycle — the road mapping, Minimum Viable Product (MVP), iterations, and product maturity. It’s a crucial exercise for product teams as it allows them to successfully manage a product throughout its lifecycle and every stage of the customer journey.

Here are the five key steps of product planning for developing a new product or feature:

Step 1: Create your product roadmap.

A product map can be a great tool for product marketers and product developers because it’s high-level, can be easily understood by all, and can be referred to at any growth stage of your product life cycle. It outlines your product vision, short- and long-term goals, and your product life cycle and is intended to help you visually map your product’s direction and how it will reach business objectives. 

It will guide various product teams — particularly product managers — through your product’s introduction to the market, its growth, and, eventually, to its maturity. A well-planned roadmap has clear timelines showing when full product maturity is expected.

Think of it as a living, breathing document because you’ll continuously adjust your roadmap throughout the product life cycle. 

Step 1a: Conduct market research.

Market research is where you will learn about your competitors. Here, you’ll identify what they do well, where their weak points are, and how you can establish a unique place in the market for your product. 

Pay close attention to the following when sizing up your direct competition:

  • Who is their target market?
  • How are they marketing to their audience?
  • What are they doing really well?
  • What are they doing poorly? 

Step 1b: Define a high-level product vision.

The first crucial step to developing your product roadmap is to define your product vision. It will give concrete shape to the vehicle you’ll be driving down your roadmap and provide a high-level outline you can use to pitch your product idea to potential customers. This high-level outline should detail these points:

  • What your new product or feature does.
  • What problem your new product or feature solves. 
  • Who, specifically, could benefit from using your new product or feature.
  • Why your new product or feature is better than the competition.

While a product vision describes the nature of your new product, it should be more than just that. It should be aspirational and motivate your teams to see this as not merely another job, but an essential mission that fulfills an important need. 

Step 1c: Estimate your timelines.

Your timelines should balance input from the engineering, marketing and sales teams with business objectives to arrive at realistic goals.

Step 2: Plan your MVP

The next step is to plan how you’ll build the Minimum Viable Product (MVP). The MVP is important because you want to get a real-life product in the hands of potential customers as quickly as possible so they can look at it, test it, and provide feedback. 

Entire books have been written about the process for successful MVP planning. Below, we’ve pared it down for you:

  • Identify business and market needs: To understand your business and market needs, ask yourself: Who needs your product, and why do they need it? You may cover some of this when you conduct your market research in Step 1a.
    These answers are the key to establishing long-term goals and success criteria for your product. The more clearly you define these, the greater your edge on the competition.
  • Map out the customer journey: You’ll need to gain insight into your customer(s) from a buyer standpoint. With this insight, you can identify who they are, the actions they’ll take during their customer journey, and what the outcome should be.
  • Decide on your features: With a deeper understanding of your customers, you will be able to discern which features to include in your MVP. The features you decide to have in your MVP should serve your overall product goal.
    Tip: Remember, quality product design also utilizes the customer perspective.

Step 3: Plan your product iterations

You won’t know the exact shape future product iterations will take or the features you’ll build and in which order, because these will all depend on the user data you collect. But you can plan for how you’ll determine which features to build and bugs to fix and the order in which to do it. To plan your product iterations, define the metrics you’ll use to measure: user engagement, user adoption, power users and anything else that’ll help you determine what’s working and what isn’t. 

Step 4: Flesh out what product maturity looks like.

Product maturity is the final stage of your product’s life cycle, and it happens once the market becomes saturated and product sales peak. Competition at this stage will become fierce and you’ll use your product roadmap to keep you in the ring.

Best Practices in Product Planning 

Product planning is a broad concept. Using these best practices can help guide your journey:

Agile Product Planning

The three stages of agile product planning include:

  • Vision: This is a common goal that all can work towards but isn’t about any particular product. It reflects how your company views the world and the problem it’s trying to solve.
  • Product Strategy: This is all about how the product will enable the objectives and goals of your vision to be reached. It includes identifying the target group, the target group’s demands, the benefits of the product being offered to the target group, and the company itself. 
  • Product Tactics: This focuses on the basics of functionality, user interaction, design, and sprint goals. 

Know Your Audience

You need to be clear from the start on all of your customer’s needs. If you lack the opportunity to speak with them directly, ensure you work closely with your internal stakeholders who speak on their behalf.

Create Multiple Roadmaps and Be Flexible
It might be obvious, but because every internal team has differing priorities, multiple product roadmaps can help you organize various product tasks and nail down timelines that are more realistic. 

For example, your Marketing team wants to know the feature set and appearance of your product to more effectively market it, and Sales wants information about when the product will be ready for purchase (i.e., when it will be brought to market). Avoid hard publishing dates and instead, go with time ranges that allow for maximum flexibility.

At the end of the day, you want your product roadmap to be flexible and allow for cross-team collaboration.

What Are the Benefits of Product Planning?

Product planning is a crucial part of every product’s implementation journey. It allows for secure product development as it helps to gauge possible risks as well as threats. Product managers use the assumptions of product planning to achieve best practices and outcomes. 

Product planning is beneficial for:

Effective Brand Image

Defining a high-level product vision — the first step in our product planning process — will help to create and maintain an effective brand image. Vision and branding go hand-in-hand because, without a vision for your product, your brand message won’t be clear and effective.

Better Customer Awareness

If you’re doing product planning right, you’re constantly checking in with how the customer is using your product, where they get stuck and what seems to work well. This doesn’t just lead to a better product, it also helps Customer Success teams anticipate issues and provide better support. 

Optimum Resource Utilization

When a product is adequately planned, it results in the optimized utilization of available resources. This reduces waste and the overall cost of the product or feature. Product planning also assists in exercising better control over raw-materials — which contributes to more effective purchases.

Better Inventory Control

An effective system of product planning and control helps manage inventory at proper levels so you don’t end up with excess product.


An effective product plan lays the foundation for successful product management. It provides the basis for your marketing team to plan, develop, and introduce your new product into the marketplace. It ensures product managers identify the appropriate target audience and niche market crucial to your new product’s success. And it keeps the engineering and business teams aligned.



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What Are Monthly Active Users (MAU)?

Many product teams swear by monthly active users (MAU) as a metric to measure the health of their overall product strategy. Others say it’s just a vanity metric that you should ignore. Which of these is closer to the truth? Can any valuable information be gleaned from this KPI, or should it be abandoned for more fine-grained metrics? 

In this article, we’ll look at MAU as a metric and discuss how to calculate it.  

What Does MAU Mean? 

Monthly active user or MAU is a term that refers to the number of unique customers who interacted with a service or product of a business within a month. 

Essentially, MAU is a key performance indicator (KPI) that measures online user engagement. Many online businesses use this metric, including online gaming, social networking, and mobile app companies. But other types of companies use MAU as well.

Investors generally look closely at the number of MAUs of a business. Why? Because the metric provides a quick overview of the business’s user growth. Furthermore, MAU delivers some crucial insights into the business’s ability to attract new customers and retain the existing ones. 

Although this helpful metric is a measure that is not recognized by current accounting standards, it’s still reported by public companies in their financial reports. For instance, social network titans such as Twitter and Facebook both devote a substantial amount of time to discussing the trends of MAUs in their quarterly reports. 

What Can Measuring MAU Tell Me? 

From a business standpoint, it’s helpful to know how users interact with your brand’s website or landing pages, and MAU is an accurate metric to determine this. A high MAU number indicates that customers are frequently interacting with your product. It’s an indication that your product receives good customer engagement and retention over a certain period. 

By measuring, you can better position your company to assess the efficacy of its marketing strategies and customer experience. Thus, monthly active users come in handy to provide a rough overview of your company’s general health and act as the basis for calculating other essential metrics.

How To Calculate Monthly Active Users 

Even though almost all online businesses calculate and report the number of MAUs, there’s still no industry standard regarding the definition of ‘active users.’ Because there is no standard, calculating MAU is not as straightforward as it may seem.

For instance, some businesses define active users as those who just visited their site, while others include only actual users of their product in their MAU figures. Thus, each company uses its methodologies to identify the monthly active users. Twitter’s definition of MAU is the following:

Twitter Monthly Active Users: A Twitter user who logged in or was otherwise authenticated and accessed Twitter through the website, SMS, mobile website, mobile, or desktop apps, or registered third-party applications or websites in the 30 days ending on the date of measurement. 

Facebook, on the other hand, defines this metric slightly different:

Facebook Monthly Active Users: A registered active user who logged in and visited Facebook through the website, messenger application, or mobile app in the last 30 days as of the date of measurement. 

Generally, the number of MAU is calculated using a business’s internal data. The recognition of unique users is executed using an identifier such as an email or even a username. Additionally, companies must carefully monitor the number of false, duplicate, and spam accounts that can substantially distort MAU data to ensure they are getting accurate information. 

Many businesses adjust their MAU figures for such items to prevent the artificial inflation of the metric. 

Issues with MAU by Itself 

As we’ve mentioned, there are no uniform standards for the individual components of monthly active users. Other metrics used to qualify trends in social media can be highly inaccurate and myopic. You simply won’t get the whole picture. 

In 2015 Facebook revised its MAU definition as a response to skepticism about its monthly active users’ accuracy. It would no longer include “third-party pings” — that is, individuals who are not active Facebook users but who share content only via another website integrated within the Facebook login.

Did the other social media sites also make this change in their monthly active user calculation?

For years, social media giant Twitter has asked investors to judge its daily active user (DAU) — not its monthly active user — growth. On its 2015 fourth-quarter earnings call, investors asked Twitter to explain why it had lost a whopping four million monthly active users during the previous quarter. 

The reason? It turned out that most of those four million “users” did not use Twitter at all. It turned out that Apples’ Safari web browser counted them when it performed an automatic Twitter data pull. 

However, Twitter only began sharing its daily active user data back in February 2019. Switching from MAU to daily active user counts showed that the brand was gaining — not losing.

It’s up to you whether MAU is the best way to measure the number of users on your website. But you should be aware of the pitfalls of using MAU on its own without the insight of other KPIs. 

But what other KPIs can you use in conjunction with MAU to more accurately measure user engagement, and ultimately, a successful product? 

Key Performance Indicators (KPIs): The Basics 

A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. By now, we know that MAU is a powerful KPI — but are there others that go hand-in-hand that are just as important? 

  • Daily Active Users. We touched on this metric a little earlier. Rather than calculating the monthly active users, DAU calculates active users daily.
  • Customer Churn Rate. This crucial KPI is the percentage of customers lost during a given period. For eCommerce, that means customers who fail to make repeat purchases within a time frame established by the company, such as 30 or 90 days. For Saas or mobile apps, that means customers who end or cancel their subscription.
  • Customer Acquisition Cost (CAC). CAC is your company’s average expense of gaining a single customer.
  • Customer Lifetime Value (CLV). Sometimes referred to as LTV, this critical KPI is the average revenue a single customer is predicted to generate throughout the time they hold an account with your business.
  • User Cohort Retention. A cohort is simply a group of users that share a common characteristic. Cohort analysis looks at the retention analytics of those users over time. This metric is so critical because growth distorts MAU and DAU counts — if your app is rapidly growing, new user signups will mask where your existing users are dropping off in your MAU and DAU numbers. And if you only look at MAU and DAU, you’ll be blind to retention issues that’ll kill your app if left unaddressed.  

Best Practices for Analyzing and Utilizing KPIs 

Like any tool, KPIs — including MAU — are most useful when they’re used and analyzed properly. Any metric is meaningless unless you know what you want it to tell you. Some KPI best practices include:

  1. Setting KPIs that are aligned with business goals.
  2. Tracking only the metrics that help answer questions, prove, or disprove hypotheses you have about your business goals. 
  3. Ensuring that key performance indicators are achievable.
  4. Determining how frequently you will measure each KPI.
  5. Setting short and long-term goals for the performance indicator.
  6. Sharing KPIs with the company and stakeholders.

For KPIs to be helpful, you might also consider developing key performance questions (KPQs) or the questions that determine whether you have met the objective. 

When crafting these questions, try to avoid simple yes-or-no questions such as, “Have I met my sales quota?” and try to come up with open questions that are thought-provoking such as, “How well am I marketing my product or service portfolio?”

The answers to your KPQs will provide you with the information you need to make well-informed decisions and set more productive goals.

The Bottom Line 

The ability to segment your audience is valuable. You can discern between groups of active users — those who are prospects and those that are clients. 

When using a powerful analytics marketing tool, you’ll know details of everyone that has visited your site, what they browsed — from the very first time to the last — and you’ll gain a grasp of why the return users keep coming back and why your lost users leave. 



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Top of the Funnel Marketing Explained

We have all been in various stages of a marketing funnel. All of us — every consumer — is likely engaging with different sets of multiple brands’ marketing funnels at this very moment. Each time you click on a post, fill out a form field, engage with an advertisement, open an email, begin a free trial, and eventually click buy — you’re taking action within a funnel. 

Marketers are tasked with bringing in new qualified leads and pushing potential customers from awareness to consideration, intent, evaluation, and ultimately purchasing. They must also maintain customer engagement and interest during each stage.

While converting prospects into buyers is the ultimate goal, marketers first feed leads into a brand’s lead sequence — also known as top-of-funnel marketing. 

What is Top of the Funnel Marketing? 

When marketers refer to the top, middle, and bottom of the sales and marketing funnel, they are referencing the concept of pulling in a large pool of individuals that may be eventually interested in your services or products. They might sign up for a newsletter or demo or simply visit your website. 

As these consumers move down the funnel, the pool gets smaller — like the neck of a funnel. Those interested in buying your products or services continue to engage with your company and learn more about your offerings. Those not interested simply leave the funnel. 

Marketers maximize content output at the top of the funnel to reach a vast pool of potential customers. They do this by pushing great content through many different channels and tactics, such as:

  • Social media
  • SEO
  • Influencer outreach
  • Blogs and websites
  • Video marketing
  • White papers
  • Free trials
  • Paid advertising

The top of the marketing funnel has very little to do with services and products and has everything to do with your buyer’s needs and interests. 

What Are the Goals of Top of the Funnel Marketing? 

There are two primary goals at this stage:

  • Drive brand awareness
  • Generate leads

You’re trying to get your target market’s attention and convince them that your brand provides value. Once your buyers begin to think of your brand as a thought leader (i.e., a resource for interesting and helpful information on topics they care about), they will be more willing to opt into communications to access your insights. 

This opt-in is a value exchange — and the goal of top-of-the-funnel marketing is to facilitate that exchange.

How To Use Top of the Funnel Marketing To Drive Sales

Top-of-the-funnel marketing is all about content. If content is king, then the top of the funnel is where it truly reigns supreme. 

A crucial aspect to recognize about top-of-the-funnel marketing is that it’s consumer-centric, meaning it needs to address how your target customers and your company are a good fit for each other. What interests your customers? What kind of information might they need, and how can you help?

Top-of-the-funnel marketing should aim to inform your target audience about topics related to your company rather than trying to sell them. Research what kind of content your target audience wants, either by conducting your market research or using a website analytics tool like Kissmetrics to give you insight into your website visitors. 

For example, an online clothing boutique might produce entertaining content on the latest fashion trends. In contrast, a financial services company might have educational content on how to save money for retirement or information about how 401(s)s work. Both qualify as top-of-the-funnel content.

At the top of the funnel, you also collect website visitor information to develop prospective leads. To do this, you can ask for an email in exchange for a valuable whitepaper or even a free ebook that they couldn’t find elsewhere — you need to demonstrate that you are a thought leader that will add value to your customers’ lives.  

You should also include a great call-to-action (CTA) at the bottom of your content, like whitepapers and blogs that compel readers to visit one of your product landing pages. In that case, it’s their choice to click your CTA, and you’re not trying to sell them on anything until they get to your landing page.  

Examples of Top of the Funnel Marketing and the Real-Life Audiences They Reach 

If you want to grasp how to create great top-of-the-funnel content, you need to see it in action. 

Here are a couple of examples of top of the funnel marketing and the real-life audiences they reach:

MINDBODY targets small business owners in the health and wellness industries such as fitness, spa, and beauty. Their clients share a familiar story that starts with passion and then evolves into a dream and grows into a business. Tapping into that deep, emotional experience creates brilliant and engaging buyer-centric content. 

EA Sports introduced a brilliant NFL Draft promotion called “Free to Play” weekend, which allowed Madden gamers to download and then play the game for free for a short promotional period.

EA Sports created an influencer marketing campaign by partnering with nearly half of the first-round Draft picks to promote Madden on their personal social media channels targeting sports fans from all around the world. In total, the posts shared by these athletes earned almost a whopping two million social media engagements.  

How To Improve Your Top of the Funnel Marketing Strategy 

Here are a few tips to help you improve your top of the funnel marketing strategy:

Analyze Your Own Customer Data

Many valuable tools can help you mine your existing customer data to find patterns and provide you with target companies and contacts that are look-alikes. Some refer to this process as “predictive analytics” or “predictive lead generation.” 

Predictive analytics uses a combination of machine learning, statistics, and data repositories to help identify your ideal customer profile. Although you have many predictive technology choices, the best ones analyze your customers on three levels: digital footprint, firmographics, and tech stack. 

All predictive lead generation is based on a simple premise: You are much more likely to succeed in the market sectors where you have had success in the past. 

Use Social Data to Improve Targeting

If you already know a good amount about your users, you can enlist other methods to learn outside data connected to them, ultimately improving targeting precision. 

For instance, if you know what topics your top consumers are likely to discuss on their social media feeds, you can employ social listening tools to identify other prospects discussing these topics. This tactic is a clever and effective way to harvest candidates relevant to your service or product. 

Reach Your Customers By Testing Channels

Most brands fail not because of product failure but rather because of traction failure, which stems from working in the wrong channels. Double down on a few traction channels that show the most promise — based on your tests. Once you’ve identified your key targets and the optimal channels, reach out on all platforms that have proven to create traction. Evidence suggests that the confluence of multiple touches moves a prospect to action. 

So be tenacious no matter what channel you’re using, as most sales reps give up too early. 

The Bottom Line 

Streamlining your marketing tactics throughout the funnel will cut costs while improving retention and conversion rates, especially for your top-of-the-funnel marketing efforts. 

You’ll see a knock-on effect as you pick up better leads, leading to a more effortless nurturing stream and better conversion and retention rates. You’ll also see more interested first-time customers who are more likely to become happy repeat patrons and brand advocates for your business in the future.

Thankfully, the tools you need to make that happen are easily accessible and, more importantly, more accurate than they were just a couple of years ago. Kissmetrics is a tremendous behavioral analytics tool that consolidates your audience data into valuable buyer personas. 

Within minutes, your marketing campaigns can personalize your advertising with pinpoint accuracy so you can reach the audience that’s interested in what your brand has to offer.



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Customer Lifetime Value: What It Is, and How to Calculate It

From repeat purchase rate to average order value, there are many metrics to keep up with as a marketer. But if there were a marketing metric competition bracket (think “Marketing March Madness”), we’re pretty confident that customer lifetime value (CLV) would make it pretty far in the tournament — possibly to the championship. 

CLV measures a customer’s value to your company. By knowing who your most valuable customers are, you can analyze their characteristics to find more like them or, more importantly, to encourage those customers to buy more.

According to recent statistics, there’s a 5–20 percent probability that you’ll sell your service or product to a new customer, whereas the chance of selling it to an existing customer is around 60-70 percent. So successful marketers don’t focus solely on strategies and techniques for acquiring new customers. They also develop tactics to retain profitable customers and stimulate them to buy more. 

And that’s because the more profitable your customers, the less money you have to spend to increase sales. And the less money you spend to increase sales, the more money you make. 

But what exactly is customer lifetime value, and how is it calculated?

What is Customer Lifetime Value? 

Customer lifetime value (CLV or LTV) is the total profit a customer has brought to your business during your relationship with them. It helps you predict future revenue, measure long-term business success and estimate how much you should invest in retaining a customer. 

CLV is a snapshot of a customer’s value to your company at the time of calculation. As time goes on and both parties spend more money, that value will change. But you can make future predictions based on past data.

Understanding the lifetime value of a customer allows you to answer these questions:

  • What future revenue can you predict?
  • How much can your brand afford to spend on marketing and sales?
  • How much money should you invest in customer retention?
  • How can you optimize acquisition cost for max value?

How to Calculate Customer Lifetime Value 

Now that you understand how vital CLV is to revenue growth, let’s discuss how you can calculate it. 

First, calculate the value of your average sale, the average number of transactions, and the duration of your business relationship with a given customer. 

Next, calculate the lifetime value by multiplying the average value of a sale, the average number of transactions, and lastly, the average customer retention period. 

Because you calculate a customer’s lifetime value in gross revenue terms, you’ll need to multiply it by your profit margin to get the true customer lifetime value.  

Customer Lifetime Value = Average Value of Sale x Number of Transactions x Retention Time Period x Profit Margin

Or simply:

Customer Lifetime Value = Lifetime Value x Profit Margin

Real-Life Customer Lifetime Value Example 

For a quick example, let’s calculate the customer lifetime value of a hypothetical online clothing retailer. 

The average sale this online clothing retailer makes to this customer is $50. The customer purchases from the retailer three times per year for two years. So the lifetime value of this specific customer is calculated as follows:

  • Lifetime value = $50 x 3 x 2 = $300

After calculating the cost of goods or COGS, marketing, overhead, and all other administrative expenses, the online clothing retailer’s profit margin is 20%

  • Customer Lifetime Value = $50 x 3 x 2 x 20%

= $300 x 20%

= $60

This simple calculation reveals that a specific customer’s lifetime value for this hypothetical online clothing retailer is $60 — much less than the lifetime value calculated above. Retailers can use this to project cash flow and understand how many new customers they must acquire and retain to reach desired profitability. 

Why Should I Care About CLV? 

CLV determines the financial value of each of your customers. In and of itself, that’s an important reason to care about Customer Lifetime Value. However, CLV is also unique in that it can look forward. Customer profitability, on the other hand, measures past activities to gain insights. CLV can forecast future activity to increase revenue generation and improve your bottom line. 

Here are some of the advantages of understanding Customer Lifetime Value: 

  • CLV allows you to measure the financial impact of your marketing campaigns, initiatives, and other activities. 
  • It can also change how your brand thinks about marketing in relation to creating loyalty objectives or focusing spend on underutilized areas. 
  • CLV can help you find balance in terms of long-term and short-term marketing goals and develop a much better understanding of which investments produce the highest return. 
  • It encourages better decision-making by teaching marketers to spend less time acquiring customers of a lower value. 
  • Understanding CLV leads to effective management of your customer relationship — which ultimately leads to increased profitability. 

How To Improve CLV 

  1. Create a Loyalty Program

Loyalty programs incentivize customers to make repeat purchases. The accrual of “points” itself is satisfying, and studies show that customers tend to spend more than they would otherwise when they have a coupon or discount.  So incentivize repeat purchases, and you will automatically increase your customer retention along with the lifetime value of your customers.

  1. Improve Customer Relationship Management

Offering quality customer service and a consistent positive user experience will keep your customers satisfied and lengthen your average customer lifespan. It will also give you insight into what needs improving and where you can cross and upsell, further boosting your CLV. 

  1. Target Your Most Valuable Customer Type

When you calculate your current Customer Lifetime Value, you can quickly identify your best and most profitable customer type and use that crucial information to improve your CLV moving forward. Refine your marketing campaigns to target those high-value customers who are more likely to make repeatedly larger purchases throughout their lifespan. 

A Final Word 

CLV is one of the most important metrics marketers can track to gain insight into the effectiveness of their campaigns and spend. It can also indicate areas of improvement to the product team and help the finance department project future performance.

To track CLV and gain insight into your most valuable customers, you need a behavioral analytics tool like Kissmetrics. Our reports will show you which customers are the most valuable, the products they bought and the features they used, and the marketing campaigns that drew them in so you can increase revenue, reduce churn, and gain greater insight into what your customers need.

Schedule a demo with us today and see the power of data.



E-Commerce Conversion Rates – Where Should Yours Be?

Since COVID forced the world inside their homes, the online shopping market has grown at record speeds, and it shows no sign of slowing. With the exponential growth of e-commerce, online businesses and brands need to be vigilant about their actions and strategies, which means focusing on conversion rate optimization (CRO).

To determine your optimal conversion rate, you’ll need to understand what a conversion rate is, why it’s essential, and which factors affect e-commerce conversion rates. 

What is an eCommerce Conversion Rate? 

A conversion is any desired action taken by the customer and a conversion rate is the rate or percentage of potential or existing customers that take said action within a specified period of time. An eCommerce conversion rate is just the conversion rate on an eCommerce site or platform.

An e-commerce site might designate any of the following as conversions:

  • A sale of a product or service.
  • Add products to a wishlist or cart.
  • Signup by a user on the e-commerce platform.
  • Any other user action that makes sense for your company.

Generally speaking, the more traffic you drive to your site, the higher your chances of converting visitors — but this isn’t always true. Countless factors can affect a user’s journey from the first visit to conversion. That’s why it’s imperative to use conversion rate in conjunction with other critical metrics to gauge what’s working and what isn’t. 

Why is My Conversion Rate Important?

Conversion rate measures what happens once users are actually on your site. It can be used to test the effectiveness of certain initiatives like marketing campaigns and tweaks to the UI/UX and the attractiveness of your offer and overall product quality. The reason conversion rate is a more accurate indicator of performance than conversion count is that a robust marketing campaign could send more potential customers to your site, increasing the number of overall conversions. But if the marketing effort wasn’t well-targeted or your UI/UX leaves the customer confused or doesn’t present your product attractively, you could actually convert a lower percentage of visitors. And the lower your conversion rate, the more money you have to spend to make a sale.

Conversely, if both your conversion rates and conversion counts are higher, you know your UX design is working, and your marketing message is reaching the right kind of customers. 

Perhaps the biggest reason to increase your conversion rate(s) is important is: increasing your conversion rate can increase your profit.

If you can make more sales off of existing marketing efforts by tweaking your UI/UX, or by retargeting your marketing to reach people more likely to purchase, then you will have to spend less to make each sale. And the less you spend on each sale, the more profit you turn.

What are the Biggest Factors that Affect Conversion Rate? 

Now that you understand what e-commerce conversion rates are and why they’re so important let’s explore some of the most significant factors that affect conversion rates. 

Poor UI/UX Design

No doubt about it: design decides whether a web page is going to convert or not. When working on UI and UX, designers should think about user engagement, usability, and the overarching conversion goal; specifically, what are you trying to get visitors to do? Based on input data like buyer persona profiles and conversion goals, designers can start developing an effective UI/UX design. 

Here are a few quick tips that can help designers to come up with effective UI/UX solutions:

  • Know the goal.
  • Make the design responsive.
  • Know what users expect. 
  • Balance brand and user goals.
  • Test.
  • Iterate, then test again. 

Traffic that isn’t Relevant

What’s better: Getting more traffic in hopes of more leads or increasing the conversion rate with current traffic?

Answer: It doesn’t matter unless you’re driving the right (i.e. relevant) traffic to your site. 

If you’re trying to increase conversions, first check the quality of the traffic your web pages are getting. If the traffic is targeted, meaning you’re attracting people who belong to desirable cohorts, focus on optimizing your site and customer journeys for conversion. On the other hand, if your conversion rate is high and you can’t think of any changes that can improve it, look at your PPC campaigns to drive more traffic. 

Your chances to convert users into customers are pretty high if those users are potentially interested in your service or product. Wasting your marketing spend on fake or irrelevant traffic will only cause a high bounce rate. So, as a rule, always check the traffic quality and relevance consistently. 

Having a Poor Offer 

Do you feel like your product or service offer is attractive? Today, when the marketplace is saturated with different services and goods, it’s harder than ever to find something truly unique and exceptional. So if the offer your company makes isn’t valuable to your target audience, then all the marketing and design efforts made towards CRO will be useless. 

From the very start, list the benefits your users get from your service or product and define the advantages that distinguish you from your competitors. In other words, establish your value proposition. Then make it obvious.  

Ask someone to look at your web pages to see if they effectively communicate your unique value proposition (USP). If people can’t tell you in just a few words what you’re offering and what they can gain from your specific offer, then you should revise your site. 

Make sure your value proposition touches on the following:

  • What your service or product does.
  • The value you can bring.
  • What makes your offer different from competitors.
  • Who will benefit from your offer?

Your promise should be precise and manageable, especially since it determines the potential of your conversion rate. 

How To Calculate Conversion Rate

So, how exactly do you calculate your conversion rate? Here are three simple conversion rate formulas to use:

  • Conversion Rate = (Total number of conversions / Total number of leads) X 100
  • Conversion Rate = (Total number of conversions / Total number of sessions) X 100
  • Conversion Rate = (Total number of conversions / Total number of unique visitors) X 100

All three of these conversion rate formulas are valid. The best way to calculate your conversion rate depends on what exactly you are defining as your conversion event and how you plan on measuring your traffic. The numerator is the number of conversions (i.e. the action you’re measuring), and the denominator is your total pool of traffic (which is generally leads, session count, or unique visitors). 

Here is a quick example for calculating conversion rate:

If your online store receives 5,000 visitors and 50 conversions for a set period, that means your store’s conversion rate is 1%.

Simple as that — divide conversion into visitors, and you have your conversion rate. 

The Bottom Line

Tracking your eCommerce conversion rates is essential to understanding  health, the quality of your product, your UI/UX design, and the effectiveness of your marketing campaigns for your e-commerce site and business. Kissmetrics is an analytics tool that makes it easy for you to not only track conversions, but also understand who your customer is, where they come from, what they buy and the most effective customer journey for your site. 

Ready to see for yourself? Request a demo with us today.



The Future of Ecommerce: How Ecommerce Will Change in 2021 and Beyond

The Average Website Conversion Rate by Industry (Updated by 2020)

Market Saturation Definition.