For small business owners, marketing can feel like a gamble. You can spend thousands of dollars on a social media advertising campaign and never really know if it worked. How do you know if your marketing budget is actually gaining customers for you? Track metrics called key performance indicators (KPIs).

Tracking KPIs is common once your business reaches a level at which you need to really understand the value of your marketing spend. There are many good, reliable tools available to do the tracking, making it easy and affordable. Free platforms like HubSpot make it easy for small business owners to access dozens of marketing metrics.

Here are five marketing KPIs every small business owner should watch and learn from.

1. Social media followers

For many small business owners, social media is the centerpiece of their marketing strategy, and it’s easy to see why. It’s free. It’s simple to get started. And, in theory, any post has the potential to reach millions of users.

In practice, it’s a bit more complicated. Gaining and keeping a following requires a lot of work, including but not limited to consistent, quality content. Still, when brands get it right, the rewards are high.

The number of social media followers is a useful metric in itself—these are warm leads, after all. When a local ice cream shop with a strong social media following posts a July 4th BOGO deal, they’ll almost certainly see a bump in business.

It’s also a rough-and-ready proxy for brand awareness. Chances are, the number of people following your brand will increase alongside the number of people who have heard of your brand.

Pro tip: Pay attention to the shares, likes and comments to measure the engagement, not just the number, of followers.

2. Website traffic

For businesses of all types and sizes, a website is an invaluable marketing asset. When leads visit your website, they can learn about your brand, research pricing and become customers. So, are people actually seeing it?

To find out, look for metrics like “unique visitors” and “sessions” in your marketing dashboard. The number of unique visitors tells you how many people visited, while the number of sessions tells you if the same person came back multiple times.

3. Click-through rate

Let’s say a dog grooming business invests in a Google Ads campaign. If 1,000 people see the ad “Click here for a discount on dog grooming” and 50 click on it, the ad’s click-through rate (CTR) is 5%.

Full disclosure: 5% would be a ridiculously good CTR. The average CTR for an ad that shows up in Google search results is a little less than 2%.

Pro tip: To improve your CTR, you have to track your CTR. When you run multiple campaigns, you can assess which one performs better in a process called A/B testing.

4. Conversion rate

Your lead is on your website. Great! Now what?

You want leads who visit your website to become customers—or at least get one step closer to becoming customers. Depending on your business, this could mean downloading an e-book, signing up for a free trial or purchasing an item.

The conversion rate is the number of sessions on your website divided by the number of people who take action.

Let’s return to the earlier example of the dog grooming business. If 50 people clicked the link with the discount code, then 10 people used that discount code to book an appointment online, the conversion rate is 20%.

5. CLV/CAC ratio

This indicator is a two-for-one: the customer lifetime value (CLV) and the customer acquisition cost (CAC). These two belong together. Divide your CLV by your CAC and get the CLV/CAC ratio: the real value of a customer to your business.

The customer acquisition cost, or CAC, is your marketing budget divided by new customers. A hair salon that spends $1,000 on marketing and gains 10 customers has a CAC of $100.

The customer lifetime value, or CLV, is how much profit a customer will make you over time. To calculate CLV, multiply the average purchase value by the number of times the average customer will make a purchase. For example, if a typical customer nets a beauty salon $40 per visit, comes once a month, and keeps coming for a year, the CLV is about $500.

That salon could gain $5 for every $1 it allocates to marketing. They’re getting a great return on their marketing investment and could afford to up the budget.

These numbers vary widely between businesses. The salon’s CAC may be $500, but a law firm’s CAC could be $30,000. As a result, the law firm could spend a lot more per month and still gain enough clients to justify it.

Key takeaways about KPIs

With the tools available today, small business marketing doesn’t have to be a gamble.

HubSpot, Sisense and Zoho are just a few examples of tools that track KPIs. And they can track a lot more than that. From an online marketing dashboard, small business owners can measure campaign performance and grow sales—no marketing department required.

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