The essential marketing finance metric, and in business, profit gives you a life outside the business.
I recently worked with a business who was all over the shop, and they had no profit. They hardly took on any of my advice. Absolute insanity in my eyes.
Net Present Value
This and the next two are considered the finance for marketing metrics and really utilised by CMO. When you calculate Present Value aka the time value of money, you've added money in for the annual marketing budget, that same money value increases based on not needing to acquire a customer again, year on year.
NPV = PV - Cost
Internal Rate of Return
Rate the money is compounding internally to the campaign. Also called the 'hurdle rate'.
You as a marketer have probably been told 'lower the barrier to entry'.
All funnel marketers will talk about this. But what they are really telling you is to have products that soften you up for the sale. So that mapping of softening up can be scientifically done through Internal Rate of Return.
This the time it took for the customer benefit to equal the cost.
A great rule of thumb in decision-making processes. If you're trying to do anything within your marketing, know how long it takes to Payback the cost.
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