In digital marketing, it is a universally accepted tenant that performance analysis is pivotal for any effort. But more than simply monitoring campaigns to make slight adjustments, it’s important to measure ‘success’ across a variety of metrics so as to strengthen overall business development.
Thus, you have the great debate about KPIs, or Key Performance Indicators. KPIs function as variable value markers, determining what data is worth collecting and influencing how it is collected.
While there are many schools of thought as to which KPIs indicate the greatest success, businesses anchored in data driven decision making tend to focus on a specific criteria.
1. Traffic Volume – Site AND Content
Traffic volume may seem like the obvious place to begin, but it’s not always as simple as how many people go to your site in a day. Don’t just look at who shows up on your online doorstep – go further and examine who’s interested in your content.
Content sections on your website, such as whitepapers or blogs, are the center of your digital efforts. Make sure you’re analyzing which pages and articles are popular, as well as what kinds of traffic is drawn to them.
Remember: your goal is to achieve diversity from your traffic sources. It’s important to determine what percentage of your traffic is coming from search engines, social channels, and any other places you advertise.
If your organic traffic is lacking compared to paid traffic, you’ll see notable impact in your KPI’s. This makes traffic monitoring one of the best key performance indicators to measure, as it tells you bundles about the strength of your online presence and marketing campaigns.
2. Traffic Source – Active PPC Measurement
As any of our paid search analysts will tell you: If you’re not monitoring incoming PPC traffic sources and related conversions, you’re playing it all wrong.
PPC traffic volume is a necessity to monitor for any active paid ad campaigns so as to avoid draining your marketing budget. For paid search, KPI’s are all about measuring return on your investment.
If your benchmarks are being consistently hit, you have an exact equation for profit. If they aren’t being hit, you know you’re losing money and need to adjust your strategies before they consume your revenue.
3. Time on Site –Page Views Per Visit/ Click-Through Rates
Everyone knows that the more time your visitors spend on your site, the more likely they are to turn into conversions.
It’s important to measure the average length of each visit, as it indicates how effective your web pages and their content is performing. If visitors are barely on your website and don’t end up converting, you need to optimize your pages’ content, or even reevaluate your look.
Page views will also inform you about traffic distribution. If visitors jump to the homepage, hang around there for a while and bounce, it indicates that they haven’t engaged. However, if your pages per visit KPI is strong, it lets you know that content and message isn’t where you need to improve. This helps let you know that your online traffic is more ready to convert on any buying propositions you are offering.
Another important part of this equation is click-through rates, which should ideally be compared with overall conversions to determine how successful your paid marketing campaign is. If you have high click-through rates and low conversion rates, your money isn’t being used properly.
Conversely, if you have low click-through rates and high conversion rates you see immediate opportunity to increase revenue by increasing this one KPI.
4. Conversions – General Rate AND Cost Per Convert
Many will argue that conversion rate is the most important KPI to keep track of, and they can make a solid argument.
Conversion rate tells you about the performance, opportunities, and weaknesses of your entire digital marketing effort. You could have strong success across most other KPIs mentioned, but if your conversion rates are low then you’re ultimately missing something pivotal. The conversion rate KPI is so valuable because it helps you refine your marketing campaigns and improve services so quickly. After all, if enough people aren’t making it completely through the funnel then you know there’s a big problem.
Cost per conversion is also majorly important here, acting as a measurement indicating how much you pay for each completed action. The most important aspect here is to clearly define what a conversion is and where that action is in the sales funnel.
Whether looking at purchases, downloads of whitepapers, or trial signups to software, you can imagine the sustainable cost you pay for each action may vary greatly. Knowing cost per conversion is important for informing your business what it can pay per conversion in order to still generate acceptable profits.
5. Acquisition Ratio – Number of Leads Converted and Costs Per Acquisition
A core aspect of strong ecommerce marketing strategy is lead generation. Not every site visitor or online follower is ready to buy at first contact. Many times it’s important to “incubate” users via a series of actions.
These actions can be anything from offering coupons, downloads, software access, etc. all in exchange for an email address.
This, in turn, generates a lead to nurture and eventually turn to a conversion. The rate at which you’re able to change a lead into a customer is the lead to acquisition ratio, which in itself makes a valuable KPI.
You are always spending some sort of money on every customer acquisition. Generally the idea is to minimize how much you spend on converting a customer to increase profits, but this can only be accomplished with careful monitoring. In 2017, this is a hugely valuable piece of data to track, as the war for online attention is more intense than ever.
6. Customer Lifetime Value
Every client or customer provides revenue at the time of purchase, but you can’t stop there! There is so much more to the story of every customer you acquire, and tracking this KPI will help you uncover that story.
You shouldn’t tank campaigns that don’t turn a profit based on the cost per acquisition and average order value, as you fundamentally can’t determine if you are profitable until you analyze how much a customer spends over time.
Customer lifetime value is an evolving metric, and cross-selling, up-selling, and improving client retention should all be points of focus for increasing overall customer worth.
Still searching for more expert insights and ways to improve your digital marketing efforts? Download our 2017 Ecommerce Paid Search Report for the latest trends and opportunities that ecommerce merchants will definitely want to be aware of.
Looking for more help? Measuring data driven success for your business can be challenging to get a complete grasp on, but ROI Revolution can assist! Schedule a complimentary 20-minute consult. Our team of experts will take a look at your website, landing pages, or emails and give you actionable takeaways to move your business forward and improve your KPIs.