Focusing On Right KPIs Can Help Marketers Survive Economic Downturns

The current economic downturn is creating growth challenges for businesses everywhere.

A recent Crunchbase report showed that startup financing dropped across all stages in the second quarter of 2022, declining by27% from Q1 of this year and 25% year over year.

In June, U.S. consumer spending also dropped for the first time this year. According to consumer spending data shared by the Commerce Department, “purchases of goods and services, adjusted for changes in prices, decreased 0.4% after a downwardly revised 0.3% gain a month earlier.”

To overcome growth stagnation, optimize revenue, and survive a stretch of economic uncertainty, marketers must adopt strategies that shift attention to the right KPIs.

These three KPI strategies will help you build a more resilient, efficient, and profit-driven business in the months ahead:

Track and optimize your burn multiple. Venture capitalist David Sacks coined “Burn Multiple” to help businesses young and old measure capital efficiency.



In a 2020 Medium article, Sacks wrote, “as the economic crisis deepens, capital efficiency becomes a more pressing issue for startups. Not only is it necessary to maximize runway, it also plays a larger role in how investors evaluate companies."

To find your Burn Multiple, divide your net burn by net new revenue for a given period.

The lower your Burn Multiple, the more efficient your growth. The higher the Burn Multiple, the more you have to burn to achieve growth.

You can lower your Burn Multiple by lowering your customer acquisition costs, improving your LTV with non-paid channels, or cutting costs to improve your gross margin.

Increase customer lifetime value (LTV). The Pareto Principle, when applied to sales and marketing, states that 80% of your revenue should or could come from the top 20% of your customers.

Too many marketers focus on customer acquisition and fail to maximize the value of the customer after the first purchase. It’s also much more expensive to acquire new customers than to retain and monetize existing customers.

If you’re not launching tests and campaigns to increase the lifetime value of your best customers, you’re leaving money on the table.

Tactics like email/SMS messaging to garner reviews, referral and loyalty programs, and post-purchase upsells can sharply increase a customer’s LTV without an extra dollar in ad spend.

Kill last-click attribution and measure incremental impact. Although it’s a KPI that marketers love to cling to, last-click attribution rarely tells the full story of which channels and campaigns actually drive buyers to act.

You’re much better off when you understand and accept that multiple touchpoints contribute to the purchase journey.

To understand the incremental impact of your marketing efforts and channels, experiment with lift testing, match market testing, and media mix modeling.

All the above strategies can accommodate tighter budgets; you can spend less and stay afloat if you’re focused on the right metrics. This comes with a significant bonus: You’re building durability into your marketing that will pay off as the economy continues to shift.

Next story loading loading..

Discover Our Publications