The Top 5 Metrics to Review Before Setting 2025 Goals
From understanding how much a customer is worth to you over time, to pinpointing your most effective marketing channels, and even uncovering areas where you can increase profitability—the metrics below provide insights that you can’t afford to ignore.
Having BHAGs (Big Hairy Audacious Goals) in your business is essential, but setting those goals takes more than dreaming big.
When you set a BHAG, while it should be totally audacious, as Dallas Travers says…it needs to be 51% achievable. Otherwise, the motivation just isn’t there.
That’s why it’s essential to take a hard look at the numbers that shape your success.
Without a clear understanding of where you stand, it’s frustrating to set realistic, impactful goals for the year ahead.
But…
Not all metrics are created equal.
It's tempting to focus on vanity metrics like follower counts or page views.
But the reality is the numbers that matter highlight revenue and growth opportunities.
If you are going to spend your valuable time reviewing your year, each metric you look at needs to be
Actionable
Specific
Designed to give you a clearer picture of your business performance.
From understanding how much a customer is worth to you over time, to pinpointing your most effective marketing channels, and even uncovering areas where you can increase profitability—the metrics below provide insights that you can’t afford to ignore. By the end of this post, you’ll know exactly what to measure, how to calculate it, and how to turn those numbers into strategies for a stronger, more profitable 2025.
Metric 1: Customer Lifetime Value (CLV)
What It Is
Customer Lifetime Value (CLV) measures the total revenue you can expect to earn from a single customer throughout their relationship with your business. This vital metric tells you how much a customer is "worth".
With this information in hand, you can make smarter decisions about marketing budgets, retention strategies, and growth plans.
How to Calculate It
To calculate CLV, use this formula:
CLV=Average Purchase Value × Purchase Frequency × Customer Lifespan
Here’s what each component means:
Average Purchase Value: The total revenue divided by the number of purchases. For example, if you earned $50,000 from 1,000 sales, your average purchase value is $50.
Purchase Frequency: The number of purchases divided by the number of customers. For instance, if your 1,000 sales came from 500 customers, your purchase frequency is 2.
Customer Lifespan: The average time a customer continues to buy from you, measured in months or years. If your typical customer remains active for three years, your customer lifespan is 3.
Example Calculation
Imagine your business has the following metrics:
Average Purchase Value: $75
Purchase Frequency: 3
Customer Lifespan: 2 years
Your CLV would be:
CLV=75 × 3 × 2 = 450
This means each customer is worth $450 over the course of their relationship with your business.
Why It Matters
CLV is critical because it helps you:
Determine how much you can afford to spend on customer acquisition while still remaining profitable.
Identify opportunities to increase revenue by boosting purchase frequency or extending customer relationships.
Prioritize strategies that focus on the long-term value of each customer rather than one-time wins.
How to Use It for 2025 Goals
Once you’ve calculated your CLV, you can use it to:
Refine Marketing Spend: If your CLV is $450 and your cost per acquisition (CPA) is $150, you’re in a strong position. However, if your CPA exceeds your CLV, it’s time to revisit your marketing strategies.
Develop Loyalty Programs: Increase CLV by incentivizing repeat purchases or rewarding long-term customers.
Upsell and Cross-Sell: Introduce additional products or services that align with your customers’ needs to increase their average purchase value.
Focus on Retention: Extend the customer lifespan through improved customer service, ongoing engagement, or personalized offers.
Metric 2: Conversion Rate by Channel
What It Is
Conversion Rate by Channel measures the percentage of users who take a desired action
—such as making a purchase, signing up for a newsletter, or booking a consultation—
on a specific marketing channel.
This granular approach lets you see which platforms or campaigns drive meaningful results, so you know where to focus.
How to Calculate It
To calculate the conversion rate for each channel, use this formula:
Conversion Rate (Channel)=
(Number of Conversions from Channel/Total Visitors from Channel)×100
Steps to Calculate
Determine Total Visitors per Channel: Use analytics tools (like Google Analytics, Meta Ads Manager, or your email marketing platform) to track the number of visitors or impressions from each channel.
Count Conversions per Channel: Track the number of desired actions taken on each channel. This could include purchases, sign-ups, or downloads.
Apply the Formula: Divide the number of conversions by total visitors for each channel, then multiply by 100 to get the percentage.
Example Calculation
Suppose you run a campaign across three channels:
Google Ads: 5,000 visitors, 100 conversions
Email Marketing: 2,000 visitors, 150 conversions
Instagram Ads: 4,000 visitors, 80 conversions
Your conversion rates would be:
Google Ads: (100/5000)×100=2%
Email Marketing: (150/2000)×100=7.5%
Instagram Ads: (80/4000)×100=2%
Why It Matters
Conversion Rate by Channel shows you the effectiveness of your marketing efforts:
Pinpoints high-performing channels where your audience is most engaged and likely to convert.
Identifies low-performing channels where improvements or reduced investment may be necessary.
Helps allocate budget and resources more strategically to maximize ROI.
How to Use It for 2025 Goals
Double Down on High-Performing Channels: Channels like email marketing with a 7.5% conversion rate (in our example) are worth scaling. Focus on building campaigns or offers specifically for these platforms.
Optimize Low-Performing Channels: For channels with lower conversion rates, test new strategies. This might include refining ad copy, targeting, or visuals for Instagram Ads, or A/B testing landing pages for Google Ads.
Refocus Resources: If a channel consistently underperforms despite optimization efforts, consider shifting efforts to a higher-performing channel.
Set Channel-Specific Conversion Goals: Instead of general conversion goals, set benchmarks for each channel (e.g., increasing email conversion rate from 7.5% to 10%).
Nerdy Tip
Track conversion rates regularly to identify trends. Seasonal shifts or changes in user behavior may influence performance and help you adjust your strategy in real-time.
Metric 3: Net Profit Margin
What It Is
Net Profit Margin measures the percentage of your revenue that remains as profit after accounting for all expenses. This metric is crucial because it shows how efficiently your business turns revenue into profit, so you are always aware of your financial health and sustainability.
How to Calculate It
To calculate Net Profit Margin, use this formula:
Net Profit Margin=(Net Profit/Total Revenue)×100
Steps to Calculate
Calculate Total Revenue: This is the total income your business generated within a specific period (e.g., monthly, quarterly, yearly).
Determine Net Profit: Subtract all expenses (including operational costs, salaries, marketing, taxes, etc.) from your total revenue.
Apply the Formula: Divide Net Profit by Total Revenue, then multiply by 100 to express the result as a percentage.
Example Calculation
Suppose your business generated $200,000 in revenue last year and incurred $150,000 in total expenses:
Net Profit Margin=((200,000 - 150,000)/200,000)×100=25%
This means 25% of your revenue translates into profit, giving you a healthy margin to reinvest or save.
Why It Matters
Net Profit Margin isn’t just about how much money you’re making—it’s about how efficiently you’re making it.
Shows Operational Efficiency: A high margin indicates that your business is managing costs effectively while maintaining strong revenue.
Reveals Profitability: Low margins can signal inefficiencies or pricing issues that need addressing.
Guides Strategic Decisions: Whether to scale, cut costs, or shift focus to higher-margin products or services.
How to Use It for 2025 Goals
Improve Operational Efficiency: Analyze your expense breakdown and identify areas to reduce waste or streamline processes. For instance, could automating tasks or renegotiating supplier contracts lower costs?
Focus on High-Margin Offerings: Identify products or services that yield higher profit margins and create strategies to promote them more aggressively.
Increase Prices Strategically: If your margins are tight, test modest price increases for your products or services while communicating added value to customers.
Set Margin Targets: Establish a specific net profit margin goal for 2025 (e.g., increasing from 25% to 30%). Use quarterly reviews to track progress.
Nerdy Tip
Regularly monitor your margins by product or service line, not just at the overall business level. This allows you to identify which areas are most profitable and prioritize them for growth.
Metric 4: Customer Retention Rate
What It Is
Customer Retention Rate (CRR) measures the percentage of customers who continue to do business with you over a specific period. Retaining customers costs less than getting new ones. The higher your retention rate, the higher your customer satisfaction and loyalty.
How to Calculate It
To calculate Customer Retention Rate, use this formula:
CRR=((Customers at End of Period - New Customers During Period)Customers at Start of Period)×100
Steps to Calculate
Identify Customers at Start of Period: Count the total number of customers at the beginning of your chosen timeframe (e.g., a month, quarter, or year).
Count New Customers Added During Period: Note the total number of new customers gained in the same timeframe.
Count Customers at End of Period: Determine the total number of customers at the end of the timeframe.
Apply the Formula: Subtract the new customers from the total customers at the end, divide by the starting number of customers, and multiply by 100.
Example Calculation
Suppose your business had:
500 customers at the start of the year
200 new customers acquired during the year
550 customers at the end of the year
Your retention rate would be:
CRR=((550 - 200)500)×100=70%
This means 70% of your customers stayed with you throughout the year.
Why It Matters
Retention Rate is a key indicator of customer satisfaction and business sustainability:
Costs Less Than Acquisition: Acquiring a new customer is typically 5-7 times more expensive than retaining an existing one.
Signals Customer Loyalty: A high retention rate suggests strong engagement and satisfaction with your products or services.
Drives Long-Term Revenue: Retained customers are more likely to spend more over time, boosting their CLV.
How to Use It for 2025 Goals
Launch Retention Programs: Develop loyalty rewards, personalized offers, or exclusive perks to encourage repeat business.
Improve Customer Experience: Conduct surveys or gather feedback to identify areas where you can enhance service quality or solve recurring issues.
Proactive Engagement: Use email campaigns, social media interactions, or regular check-ins to keep your customers engaged and informed.
Measure Progress: Set a specific retention rate goal (e.g., increasing from 70% to 80%) and track it quarterly to assess improvement.
Nerdy Tip
Focus on re-engaging lapsed customers. Segment your email list or CRM to identify those who haven’t interacted recently, and send them personalized offers or content to bring them back into the fold.
Metric 5: Cost Per Acquisition (CPA)
What It Is
Cost Per Acquisition (CPA) measures how much it costs your business to acquire a new customer. This metric provides insight into the efficiency of your marketing and sales efforts, helping you determine whether your strategies are sustainable and profitable.
How to Calculate It
To calculate CPA, use this formula:
CPA=Total Marketing Spend/Number of New Customers Acquired
Steps to Calculate
Determine Total Marketing Spend: Add up all costs associated with acquiring customers, including ad spend, software, agency fees, and personnel costs for marketing and sales.
Count New Customers Acquired: Identify the total number of new customers gained during the same period.
Apply the Formula: Divide your total marketing spend by the number of new customers.
Example Calculation
Suppose your business spent $50,000 on marketing in a quarter and acquired 200 new customers:
CPA=50,000/200=250
This means it cost you $250 to acquire each new customer.
Why It Matters
Understanding CPA ensures your marketing and sales efforts are delivering a solid return on investment:
Evaluates Marketing Efficiency: A low CPA indicates your campaigns are cost-effective, while a high CPA may signal inefficiencies.
Guides Budget Allocation: Knowing your CPA allows you to focus on channels and strategies that deliver the best results for the lowest cost.
Supports Long-Term Planning: Comparing CPA to Customer Lifetime Value (CLV) helps you decide if your acquisition costs are justified.
How to Use It for 2025 Goals
Reduce CPA on Key Channels: If CPA is high, experiment with new targeting options, refine ad copy, or optimize landing pages to lower costs.
Increase Marketing Efficiency: Focus on campaigns that consistently deliver high-quality leads at a lower cost.
Align CPA with CLV: Ensure that your CPA does not exceed a sustainable percentage of your CLV (e.g., CPA should be no more than 30-40% of your CLV).
Set a Target CPA: For example, aim to decrease CPA by 10% in 2025 by reallocating your budget to more effective channels.
Nerdy Tip
Track CPA separately for each marketing channel. Averages across all channels can obscure inefficiencies—focus on improving the specific channels with the highest CPA.
Rock 2025 By Looking at 2024
Setting audacious goals for 2025 is important, but you need to anchor them in data.
By calculating and analyzing these five essential metrics—
Customer Lifetime Value (CLV)
Conversion Rate by Channel
Net Profit Margin
Customer Retention Rate
Cost Per Acquisition (CPA)
—you’ll have a clear, actionable picture of where your business stands and where it can grow.
These metrics give you the power to prioritize high-impact strategies, refine underperforming areas, and set realistic, measurable goals that align with your vision for success.
Before you set those Big Hairy Audacious Goals for 2025, take the time to crunch these numbers.
They’ll not only boost your confidence in your plan but also increase your chances of turning those goals into tangible, profitable results.
