There is plenty of information out there on strategy and tactics for digital marketing (not all of it is sound advice, of course), but if you don’t know how effective your efforts are it’s impossible to know what’s working, what’s not, and how to improve upon what’s working.
“Half the money I spend on advertising is wasted; the trouble is I don't know which half.” - John Wanamaker
This is still true, but the good news is that with the data available today we can minimize the amount we waste on marketing. Again, though, we need to look at the right numbers. Choosing the right KPIs is critical to success in marketing. Here are 4 high-level KPIs that are a great starting point for any company wanting to get more out of their marketing budget.
Macro and Micro Conversion Rates
As you might guess, macro conversions are those larger, obviously important actions you want users to take, and micro conversions are smaller steps along the path the larger conversion. For example, a macro conversion might be filling out a Request a Quote form on your site. The micro conversions then might be clicking to a service page which contains a CTA (call-to-action) for a free quote, clicking on the CTA, and filling out the form.
Macro conversions are important to track because they generally indicate someone that is interested in your services or sharing your brand, and these are people that you want to follow up with. Micro conversions are important because they show you your biggest opportunity to increase macro conversions. Let’s look at some specific numbers using the example above:
- Traffic to site: 1000 unique visits/mo
- % Visiting services section with CTA: 50%
- % Of visitors to services who click on CTA: 5%
- % Of those who click who fill out the form: 80%
Based on these numbers, I might want to look at either making the services page more prominent and/or enticing, or improving the CTA. If you just were just looking at the number of leads from the form (macro conversions) you might try to modify the form page and miss the low hanging fruit earlier in the process.
Average Sale for each Channel
While conversions look at quantity, this metric looks at quality, and this is determined by the average sale per lead. Notice that we’re not looking at ROI here, we are looking at sales to determine lead quality. While it seems obvious that lead quality is hugely important, it is forgotten surprisingly often. Watching the number of leads go up is fun, but it means nothing if you’re just bogging down your sales team with garbage!
It’s also important to separate this out by channel, again to help determine where to focus efforts. Social media visitors may be initially less ready to buy than say someone coming in via PPC (pay-per-click), but they also might be a higher value when they do buy.
Cost Per Acquisition
CPA, or cost per acquisition, basically tells you how efficient your marketing is. This is not something you can influence directly; it comes from improving other factors like conversions, site traffic, social media reach, and more. Here’s the trick - improving conversions, traffic, etc., costs money (doesn’t everything?). So, initially, your CPA will go up, which may look bad. When this happens, don’t cut improvement efforts - over time those efforts will pay for themselves.
Increase in Channel ROI
The two previous KPIs - cost per acquisition and average sales per lead - are the basis for the ROI metric. So, if we’re already measuring those, why do we need to look at ROI at all?
First of all, it helps for planning purposes. If you are going to increase your marketing budget and know your ROI, you’ll know how much operations needs to prepare for. More importantly (from a digital marketing perspective), ROI is THE metric that sums up the effect of everything else you’re doing. Since it’s impossible to track every single factor that plays into successful marketing, looking at the movement of ROI will tell you if there’s something important you’re missing. Maybe there’s some key data you’re not considering, or there’s an error in the calculation of another KPI, or the sales team is biffing it. ROI won’t tell you which, but it will raise a red flag for investigation.
How to Start
Begin with your goals. Is it to increase leads that come from a certain form? Start there and work backwards to create a path going back to the traffic source (how the traffic comes to your site), identifying conversion points along the way. You can also take our quick-yet-thorough self-audit to identify problem points.
Next, set up the tools you need. Google Analytics can be set up to track traffic sources and conversions. I would also recommend looking into heatmapping software such as Crazy Egg that can show you where people click on each page and how far down they scroll.
Start Measuring. Set up regular intervals at which to look at your KPIs. Just watch them for a month to get a baseline (unless you’re in urgent need of more business). Then you can start adjusting and measuring results.
Good luck - if you’d like some help, let us know!