In today’s increasingly data-driven economies, there is a question that often comes back when it comes to drafting up business strategies – can I measure that progress?
As the saying goes, what cannot be measured, cannot be improved; and that is even more valid with online marketing. To know how a campaign is progressing, how an ad is performing and to learn from your work, you need to implement performance indicators that will give you a strong tracking on the evolution of your activity. You’ll want to see which ad is a total hit bringing a lot of new customers and which one is a dud, and investigate the reasons why, so as to avoid doing the same mistake in the future, or so as to reproduce the best practice.
Marketing is specifically unpredictable, hence the need to implement solid metrics to limit the risks, even if no risk can ever be totally avoided. Ideally, when you launch a campaign, your set up a couple of metrics to track beforehand, that you will then visualize on effective live dashboards. Such dashboards are a great advantage when you want to grasp the whole of your activity in once glance, but also to analyze the different metrics conjointly.
To help you out with that, we have summarized here 5 important online marketing KPIs that you should track.
1) Traffic Source
Knowing where your traffic is coming from is a first step in getting to know your audience. You can find it in the “Acquisition” part of your Google Analytics, and is more useful than the “total visits”, as these won’t give you any indication on the origin of your visitors, and on which channel is outperforming others. Thanks to these insights, you can adapt your digital marketing campaigns and focus on the sources that are working the best. There are four main channels to watch:
- Organic Search: every visitor coming from a search engine (Google, Yahoo!, Bing, …).
- Direct: every visitor who visited your site directly.
- Referral: every visitor coming from another website who displayed your link.
- Social: every visitor who came from a social media (Linkedin, Facebook, Twitter, …)
2) Bounce Rate
The Bounce Rate is an interesting metric to know whether your visitors found what they were looking for or not. A “bounce” is when a visitor comes and leaves the page right after. It usually shouldn’t be measured independently because many factors are involved in a high or low bounce rate, and coupling it with other indicators like the session duration or the pages per session can help you get a broader understanding. The idea is to decrease the bounce rate over time, while increasing the session duration and pages per session.
3) Landing Pages Conversion Rate
The landing pages are your website pages on which a user arrives. The objective of these pages is to be effectively designed so that they complete their goal – whichever you choose it to be: subscribe, buy, share, you are to choose. To be effective, your message must be clear and so must be the action you want the user to take: to do so, you can limit the options for a visitor so as to guide him/her towards and intended goal.
The expectations for a Landing Page conversion rate should be aligned with the degree of commitment you expect from your users: a simple email sign up for a free handbook, or a request to enter bank card number? In latest case scenario, of course the conversion rate will be lower. Another factor is the channel source – where is the user coming from? An organic search will not convert the same way as a trusted referral.
4) Customer Acquisition Costs (CAC)
The Customer Acquisition Costs refer to all the costs involved when signing up a new customer, from the product costs to the research done and marketing campaigns launched to attract new customers. According to Lon Safko, coach for social media strategy and professional speaker, “every business should look at its cost of customer acquisition at least twice a year and after each campaign”. Indeed, a mistake often made by young companies is to under-budget these costs, but also to measure the data poorly.
For a more accurate evaluation of your acquisition costs, I would highly recommend splitting them into the different channels (Paid Traffic, Organic Traffic, Social Traffic, …), and to ask specific questions relative to these channels.
5) Customer Lifetime Value (CLTV)
The Customer Lifetime Value is another extremely important KPI to measure, because it will help you determine how much you can spend on acquiring new customer (the previous CAC metric). To calculate the Lifetime Value of a customer, you should subtract the acquisition costs to the average revenue you generate per acquisition (ie. how much money you made out of one new customer).
The higher your CLTV is, the more sustainable your business is. By using that metric, you can identify where you spent too much money on acquiring a new customer that in the end was not worth it.
The idea is to use these metrics to compare your different campaigns and channels, see how they perform and identify the ones you should invest more money in the future. Tracking these metrics and visualizing them on marketing dashboard is a best practice that will help you in your analysis, and save a lot of time in the long run. With these insights, you can adapt and adjust your strategy accordingly in order to have the best return on investment possible.