How do you define what success you are having with your social media posts, your website traffic, your online presence? You need some metrics to determine how you’re doing, and this industry is full of jargon. This will be a very intact, short and to the point article on the metrics that are used to define success in this industry, what they mean, and how you can use them to determine your online strategy.
I will go into more details in further articles, particularly regarding how you can use your analytics to influence your digital strategy, but also how to set up your analytics, which platforms are the most useful, and how you can interpret and manipulate (split-testing and other experimentation within your strategy) the data to provide a better return on investments in your advertising.
I did say short – let me begin, here are the online metrics that you will commonly see used, what they mean, and a summary of how you can use them.
Traffic Metrics (website)
When you are measuring your results online, first thing you want to measure is to do with your traffic. You want a larger audience, you want to reach more people, you want to grow your brand in order to ultimately reach more customers and convert more people online.
When you are measuring the traffic, there are some specifics you should keep in mind:
- Site traffic – how many site visits are you getting?
- New visitors vs return visitors – how many site visits are from new users, and how many are from existing users?
- Time spent on website – how long, on average, are users spending on your website?
- Bounce rate – do people leave when they first get to your website (without going to another page)?
- Exit rate – are people exiting your website without taking any actionable steps to converting?
Performance metrics (ads)
I’ll go through these in a bit more detail, as I feel they need an explanation of how you can actually use these to measure your performance in the long-term.
Click-through rate – the amount of times an advertisement was clicked compared to being seen (two clicks in a hundred views would be a 2% click through rate)
Your average analytical platform will showcase your click-through rate. This can be effective to use when you’re looking at several advertisements to see which are performing best, and also helps you optimize your advertisement copy to ensure your target audience are engaging with your advert.
Increasing the click through rate will obviously help you decrease your advertising costs when looking at driving traffic to your website.
Cost per click – the amount of money it costs for someone to click on your advertisement
What is the cost per click on your advertisement? This can be set by your Google Ad Rank (on Google Adwords) or can be optimized in your digital display advertisement when you are targeting the right people with the right message, and ultimately helps inform how well your advertisements are working to drive traffic.
A lower cost per click is obviously the game plan here.
Conversion rate – how many visitors do you need to visit your website, or landing page, to convert a customer?
Your conversion rate determines how many people are converting into customers after they land on your piece of content, landing page or website.
If you have 100 site visitors, and 5 of them make a purchase, you have a 5% conversion rate. It seems obvious, the higher the conversion rate, the more optimized your message and advertisement to your target audience.
A conversion can be measured as someone making a phone call through your website, submitting a contact form or perhaps downloading an E-Book or subscribing to your email mailing list – it’s not just about “converting into a customer” – it all depends where they are in your sales funnel.
Qualified leads – how many leads they come through to your sales team are qualified to do business?
It’s alright have people contact you after reading your article, or submitting a contact form and generate a “lead for your business.”
How many of these are actually qualified and ready to do busy? If you are getting a lot of leads, but they’re not closing and turning into clients or customers, you have to look at your marketing material and if it is driving the right engagement from an audience that is relevant to your product.
Sales metrics (leads/return on investment)
Cost per visitor vs revenue per visitor – how much does it cost to drive one visitor to your website, what is the average value of each visitor?
A cost per visitor can be worked out when you look at your site traffic, and dividing the number of people who have visited your website by the amount of money you have spent on marketing.
The revenue per visitor can be worked out by looking at how many people have visited to your website, to how much revenue has been made through online sales.
Cost per acquisition – how much does it cost to acquire a new customers?
Cost per acquisition is used in certain situation and is used to explain how much money it takes to acquire a customer within your marketing efforts online. This can be worked out by taking your monthly budget, alongside a monthly amount of customers you have attained from your marketing efforts. If you have spent £10,000 on advertising and got ten customers, you can safely say your cost per acquisition is £1000.
Return on investment – what would be my return if I was to invest £XXX
What is your return on investment with your advertisement?
If you spent £10,000 on advertisement within the month, and your online sales and revenue brought in by those efforts were £30,000 – you have a 300% return on investment.
A return on investment is usually determined by using the metrics above in order to determine and segment the different efforts and how they are driving traffic, conversions and qualified leads to your company.
Ultimately, it’s what companies look for when they spend money. A return on investment. Throughout the times, marketing has been hard to measure, but as we move forward as an industry it is becoming easier and easier to analyse exactly how effective our marketing is, and what our return on investment actually is. Remember when you had the choice of TV, Radio, Billboards or Newspapers? Where were the metrics to study your success then? There were none, you waited until the end of the month (or year) and you said “Yes, I made a profit and my marketing worked”, or you said “No, I did not make any more money and my marketing was a failure.”
At least we have something…. it’s just making use of all the data that is available and ensuring it informs your strategy… that’s the issue now.