The Business Academy

Marketing Health Check

Know your numbers. Know your gaps. Know where every dollar of marketing spend is actually going.

Marketing score

— / 100

The framework behind this tool — read before you start ▼

Most businesses are flying blind with their marketing. They spend money, hope it works, and never actually measure whether it does.

We teach that marketing exists for one reason: to close the gap between your revenue today and your revenue target. Everything else is noise. The question is whether you are doing that efficiently — and whether you even know.

The three numbers that tell you whether your marketing is working are CAC, LTV, and MER. Most business owners know none of them. The ones who know all three can scale with confidence. The ones who don't are gambling every time they increase their spend.

CAC — Customer Acquisition CostTotal marketing spend ÷ new customers acquired. Include ad spend, agency fees, creative costs, staff time — everything.

LTV — Lifetime ValueAverage order value × average purchases per year × average retention in years. This is the gross profit a customer generates over their life with you.

MER — Marketing Efficiency RatioTotal revenue ÷ total marketing spend. For every $1 you put in, how many dollars come back? This is your system's report card.

The Hormozi principle: if you can make a customer worth more to you than to your competition, you can outspend them on acquisition and still win. LTV is the lever. The business that wins long term is the one that makes each customer worth the most — not the one that spends the least to get them.

Revenue = Traffic × Conversion Rate × Average Order Value. There are only three levers. This tool tells you which one is weakest and therefore which one to pull first.

The second half of this tool covers the five systems that determine whether your marketing engine actually works — channel discipline, CRM, message clarity, conversion tracking, and referral/retention. You can have perfect numbers and still fail if the systems aren't in place.

How to use it: Part 1 is your marketing numbers — enter what you know, leave blank what you don't (blanks count against your score, which is intentional). Part 2 is five rated questions on your marketing systems. Score updates live. Benchmarks at the bottom explain what good looks like and why.

Part 1 — your marketing numbers

Enter what you know. If you don't know a number, leave it blank — that itself is important information and will affect your score. These are the inputs that separate businesses that can scale from businesses that guess.

Monthly revenue ($) Your total monthly revenue is the denominator for your MER calculation and your marketing budget percentage. Use actual cash received — not invoiced. If revenue fluctuates, use a 3-month average.

Monthly marketing spend ($) Include everything: paid ads, agency or contractor fees, content creation, photography, software tools for marketing (CRM, email platform, scheduling), events, sponsorships. If you only count ad spend, you are underestimating your true CAC. Real marketing spend is the all-in number.

New customers per month How many new paying customers did you acquire last month? Not leads, not enquiries — paying customers. This is the bottom of your funnel and the number that makes your CAC real. If you don't track this, your marketing budget has no accountability attached to it.

Average order value ($) The average amount a customer spends in a single transaction or per month. Formula: total revenue ÷ total number of orders in the same period. This is one of the three levers of revenue — Traffic × Conversion × Average Order Value. Increasing AOV through upsells, bundles, or packaging is often the fastest and cheapest way to grow revenue without spending more on acquisition.

Average purchases per year (per customer) How many times per year does a typical customer buy from you? For subscription or retainer businesses this is 12. For transactional businesses it may be 1–3. This directly multiplies your LTV calculation — a customer who buys 4 times a year at $450 is worth 4× more than one who buys once. Retention and repeat purchase rate are the least expensive revenue levers available to any business.

Average customer retention (years) How long does a typical customer stay with your business? For project-based businesses this may be less than 1 year. For subscription or service retainer businesses it could be 2–5+ years. This is your most powerful LTV lever. Doubling retention doubles lifetime value without acquiring a single new customer.

Part 2 — your marketing systems

Rate each statement from 1 (not at all) to 5 (completely). Be honest — this is for your benefit, not anyone else's. Most marketing problems are system problems, not spend problems.

We have a clear, defined primary acquisition channel and we know it is working.

Most businesses spread thinly across 5–6 channels and get mediocre results from all of them. The most efficient marketing machines are built by dominating one channel first, then adding the next. We call this channel discipline. If you cannot name your #1 channel and its conversion rate, you do not have a channel — you have activity.

1 = not at all 5 = completely

We use a CRM to track every lead, enquiry, and customer — and our pipeline is up to date.

A CRM is not a nice-to-have. It is the difference between a marketing system and a marketing hope. Every lead that enters your business and is not tracked is a lead you are paying for and then throwing away. Revenue = Traffic × Conversion × AOV. If you are not capturing and following up every lead, your conversion rate is artificially suppressed — and you are leaving money on the table that you already paid to acquire.

1 = not at all 5 = completely

We have a system for turning existing customers into repeat buyers or referral sources.

Acquiring a new customer costs 5–7× more than retaining an existing one. Yet most marketing budgets are 90% acquisition and 10% retention. We teach that LTV is the ultimate marketing lever — and LTV is determined almost entirely by what happens after the first sale, not before it. A referral system and a retention strategy are the two highest-ROI marketing investments available to most businesses.

1 = not at all 5 = completely

A stranger could read our website or social media and immediately understand who we help, what we solve, and what to do next.

Conversion is 90% offer clarity. If someone lands on your website and cannot instantly answer "what do they do, is it for me, and how do I get it?" — you have a messaging problem, not a traffic problem. More ad spend on a confused message just means more people get confused faster. We see this as the single most common — and most fixable — marketing failure in the businesses we work with.

1 = not at all 5 = completely

We know our lead-to-sale conversion rate and review it regularly.

Your conversion rate is the multiplier on everything else. A 2% to 3% improvement in conversion rate produces 50% more revenue from the same traffic and the same spend. Without knowing your conversion rate, you cannot diagnose where your funnel is leaking — and you will keep spending money to drive more traffic into a broken pipe. This is the metric that most directly determines whether more marketing spend makes you more money or just more busy.

1 = not at all 5 = completely

Your overall marketing score

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out of 100

Score by area

Fix this first

What does good look like? — benchmarks explained

LTV : CAC ratio

Target: 3:1 minimum. 5:1 is strong. Below 1:1 means you are losing money on every customer. This is the single most important ratio in marketing. If you spend $200 to acquire a customer who is worth $600 over their lifetime, your ratio is 3:1. Below 3:1 means your unit economics are broken — no amount of volume will fix that. Above 5:1 means you likely have room to increase marketing spend aggressively. This ratio determines whether scale makes you more profitable or just more broke.

MER

Target: 3.0+ for most service businesses. 2.0+ for product businesses with healthy margins. MER (Marketing Efficiency Ratio) is revenue divided by all-in marketing spend. It is your blended return on every dollar of marketing investment — ads, agency, creative, tools, everything. Below 2.0 means your marketing is consuming too large a share of revenue. If you do not know your MER, doubling your ad spend is gambling. If you do know it and it is above 3.0, doubling spend is a calculated investment.

Marketing as % of revenue

Target: 5–15% for most SMEs. Early-stage growth businesses may invest 20–30%. There is no single right number — it depends on your margin, growth stage, and unit economics. What matters is that the number is deliberate, not accidental. We see many businesses spending 2–3% and wondering why they are not growing, and others spending 25%+ with no idea whether it is working. Know your number. Know your MER. Then decide whether to increase or reduce it.

CAC

Target: your CAC must always be significantly lower than your LTV. There is no universal CAC benchmark — a $50 CAC is excellent for a $500 LTV business and catastrophic for a $60 LTV business. The only way to evaluate your CAC is against your LTV. We measure it as an all-in number: ad spend plus agency fees plus creative plus staff time attributable to marketing. Businesses that only count ad spend are systematically underestimating CAC and overestimating performance.

CRM usage

Target: 100% of leads captured, tracked, and followed up within 24 hours. Speed to lead is one of the most studied variables in sales conversion. Responding within 5 minutes of an enquiry produces up to 100× better conversion than responding within 30 minutes. A CRM is not software — it is the system that ensures no lead falls through the cracks. Every lead you paid to generate but failed to follow up is money directly wasted.

Conversion rate

Benchmarks vary by channel and business type: ecommerce 1–3% (strong: 3–5%+), service/coaching 5–15% (strong: 15–25%+), high-ticket 10–20% (strong: 25–40% from qualified ads). A 1% improvement in conversion rate produces more revenue than a 50% increase in traffic spend. Fix your funnel before you scale your spend. If you do not know your conversion rate, your marketing budget has no diagnostic power — you cannot tell what is working and what is not.

Disclaimer: This tool is for educational purposes only and is designed to prompt marketing awareness and reflection. It does not constitute financial, marketing, or business advice. Benchmarks are general guidelines — your industry, business model, stage, and individual circumstances will significantly affect what is appropriate for you. All calculations are based solely on the inputs you provide. CAC, LTV, and MER figures are estimates and should not be relied upon as accurate financial projections. Please consult a qualified marketing or business adviser before making significant investment or strategic decisions.

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