Taking that idea into our current world is not difficult to do with all of the analytical tools that are available today for business owners and the growing need to keep up with your website traffic and customer behaviors.
In this post, we will examine the most important digital marketing metrics for smaller startup businesses. We will also go over why metrics for marketing are so important for business marketing success.
No matter how good your business is doing or what your new business idea is, the market is unpredictable. You don’t know what is going to happen with customer demand, product availability, or even customer needs until it happens.
Paying attention to the top digital marketing metrics is one way that you can minimize and even manage unpredictability.
Digital marketing metrics, in short, is just another word for “indicators.” These business campaign performance indicators are little things that tell us how your website and business are doing using specific factors.
Metrics bridge the gap between risk-taking and the effective use of a company budget.
If you want to get the most out of your digital marketing strategy and marketing budget, you need to educate yourself in measuring your metrics. Knowing how to measure metrics effectively helps you to see where your marketing or business performance needs to improve. They are also useful when you need to prove success to interested parties.
Digital Marketing KPIs vs Digital Marketing Metrics
Metrics are indicators of performance on your sites and blogs. They are helpful because they show you what is happening with your website visitors. But sometimes, these marketing metrics are not specific enough.
If you want to make a difference in your website performance, you need to use measurable values that illustrate how effective your marketing campaigns are on your sites.
In contrast, a key performance indicator (KPI) is a measurable value to measure performance. KPI metrics help demonstrate how effectively a company is achieving key business objectives. Organizations use key performance indicators at multiple levels to evaluate their success in reaching target goals. This is an excellent approach to making sure you are on track with your business.
Advantages of Marketing KPIs
Marketing professionals, like those at Digital Logic, use both digital marketing metrics and digital marketing KPIs to measure their performance.
When looking at a digital marketing campaign, here are some of the key characteristics of KPIs:
- Lets you apply various metrics in different ways
- Totally aligned with your marketing goals
- Helps you zero in on ROI
- Help keep you on track with your marketing goals
By using marketing KPIs, you know that you (or your marketing team) are always following the path to your marketing goals. We advise that you keep a list of your marketing goals with you while planning your KPIs so that you have everything coordinated.
Marketing Metrics and KPIs: Profit and Cost
Keeping your KPIs in line with your marketing goals will help you measure your profit and keep up with your profit/loss. For example, if a key performance indicator is to save money on inventory for the month, you should see your spending metric going down in the “loss” column.
You can work on multiple KPIs at the same time, but to gain the most improvement, you may want to focus on one at a time in a given month.
One way to do this is to create a line graph or a bar graph (histogram). This shows the gains you’ve made in specific categories. Graphs are a great way to show your progress to a board of executives or investors or even your staff. This would do wonders to informing others about your progress while also getting everyone on the same page about what is essential for company growth.
What is Profit?
Simply put, profit is the amount of revenue you are generating after all of your expenses, inventory, and other expenses are subtracted. Profit is not measured in percentages like other metrics, so you have to do simple math to see your profit. In essence, profit is what is referred to as “the bottom line.”
Your goal regarding profit should always be to increase your profit margin as you build your business. Some ways you can achieve this are listed below.
All of these ideas will work if you focus on them enough. Decide which ones will work best for you.Notice that one of our tips is to find suppliers with a lower wholesale cost. That is great if you want to increase your inventory because buying in bulk often means you will save more money. But if you need to cut down on your inventory, you may find it a bit harder to find a lower-priced supplier. Still, it can be done by shopping around. Many times, working with a digital marketing agency that truly understands marketing analytics and user behavior will bring in more qualified leads, which in turn, leads to more paying customers.
Return on Investment
Most business professionals refer to return on investment as simply “ROI.” The return on investment is the most important metric that you need to consider when doing business.Whether your business is online or operating out of a physical location, your ROI is all that matters when predicting whether you will be in business five years from now. Businesses fail because they are not making enough profit to justify staying in business. That is why it is so important to understand how to manipulate your return on investment to increase your profit and decrease your loss. Unlike other metrics, ROI is measured with a percentage, and it can be more than 100%. Depending on the profit that you experience at any time, you may find that you can increase your profit by as much as 300% or more simply by doing something a little different with your ad spend or branding efforts.
Formula for ROI
While many business owners realize the importance of ROI, they don’t realize there is a formula for determining the actual return on investment they need to sustain their business performance.
You simply take your revenue and subtract the cost it takes to run your business. Then, you divide this figure by your revenue to get the percentage of profit.
Here’s a simple example:
Your revenue is $1,000. Your cost is $500.
Step 1: Revenue – Cost = Profit
Step 2: Profit/Revenue = Percentage of Profit
Using this easy ROI formula is a simple way to figure out your overall profit percentage as you go. This is very important to look at on a consistent bases, so you can see how your profit margin is growing as you find better suppliers and marketing strategies.
As they say, do the math!
Customer Acquisition Cost
Customer acquisition cost accounts for the cost required to acquire one customer that you retain over the specific period that you are measuring.
In most cases, investors and others interested in your company will want to see how well you maintain customers at a specific, predefined cost. Investors will usually require customer acquisition costs for about 12 months. But of course, you can check your marketing performance and compare it with other periods as you keep the metrics associated with your digital marketing efforts for any period of time.
This data is not interested in your business’s click-through rate or website traffic. With customer acquisition cost, you’re not interested in anything other than the amount of money that it takes for you to actually convert a customer to a sale.
Here’s the formula for traffic acquisition or customer acquisition:
Total cost of marketing efforts/number of converted customers = customer acquisition cost
Keep in mind you are only looking at your conversion rate when planning your Analytics and using the tools that you use to gauge your progress on conversions. You can create digital pixel images through Facebook and Google AdWords, as well as other platforms that allow you to tweak and measure your performance with your actual profit based on a specific conversion rate or various conversion metrics.
Revenue growth is one of the most important to consider when looking at your ad campaigns. This figure shows how your website traffic has improved since the last time you measured your total revenue.
A company that is solvent and continues to grow is one that continues to enjoy high growth throughout one year or more. You can measure this metric using the tools available through Google Analytics, various business software, and other tools like expense management software.
Measuring this metric is very important because it shows how much your marketing or media strategy has paid off. It is considered one of the most important key performance indicators among professional marketing agencies.
Marketing Metrics and KPIs: Qualitative Data
Customer Retention Rate
Now, we come to the marketing performance indicator that is related to your KPI, as well as to your profit margin. That is your customer retention rate.
Your customer retention rate is also related to your customer acquisition rate. You, along with your sales team, should be looking at the factors that are most likely to result in increasing your customer retention rate, and this is directly related to your ROI, as well.
In order to keep a paying customer or increase your average customer lifespan, you’ll either need to create multiple unique products that truly solve a problem, or you’ll have to guide more customers along the marketing funnel more adequately than your competition.
There are also psychological factors involved in a sales funnel and how you appeal to your target market’s limbic brain or emotional system regarding online sales.
Here are a few ways to ensure your business gets a steady stream of new customers and retains existing customers as long as possible:
Invest in a Search Engine Optimization Strategy
Many business owners turn to social media platforms to market their businesses. However, they fail to harness the power of the largest online traffic driver there is–search engines.
Search engine optimization (SEO) uses the power of organic search to drive new customers directly to specific landing pages on your website.
SEO includes a host of marketing efforts targeted towards traffic from search engines, specifically. A few of these include content marketing, link building, and technical coding in order to help a website rank higher on search results. This, in turn, brings in more qualified leads via organic search traffic.
By providing this direct traffic with valuable content on more than one page, you’re more likely to lower your bounce rate and increase the average value searchers place on your website.
Customer Churn Rate
Customer churn rate is the number of customers that your business is losing over time. Like the other metrics, you can measure this on a yearly, monthly, or weekly basis.
In order to improve your customer churn rate, you can segment your audience and retarget your campaigns with paid ads, email marketing campaigns and a targeted social media campaign.
Customer Lifetime Value
Increasing your customer lifetime value is also important for your digital marketing campaigns. This applies to the number of repeat customers that you can gain over the lifetime of your business.
There are many major brands that have successfully done this, such as Coca-Cola and others, where customers return again and again because of the perceived value of the company or brand.
Measuring customer lifetime value needs to be watched and observed over an extended period of time. This metric can help business owners determine which factors are the most influential for loyal customers.
Statistically, loyalty is built by consistently offering great products and improving marketing experiences over a long period. The businesses that have done the best with customer loyalty also traditionally provide the best customer service so the customers feel they can trust them.
Cost Per Lead
Is your website a leads magnet? If not, how can you make it one?
Do you write engaging copy that will draw searchers to your site and make them want to come back to see what you will do next? Hosting giveaways or offering impressive customer reward systems, and offering valuable content are all methods to help lower your total cost per lead.
If you don’t really understand Google Ads or if you don’t have the time to adequately monitor and optimize your campaigns, you will lose more money trying to do it yourself than if you’d just worked with a Google Ads professional.
How SEO Helps Improve Cost Per Lead
Whatever you do to decrease this cost will help. While the cost per lead is associated with a PPC campaign, there are also tactics, like investing in quality SEO services and/or content marketing services, that will help you make gains in this area.
Because when a searcher clicks on one of your Google ads, they’ll land on a single page that is associated with that ad if you have your ads set up correctly (most business owners don’t, unfortunately).
From here, the quality content on your landing pages will help ensure that your website traffic is genuinely interested in the content on that specific website URL. SEO professionals understand content marketing and interlinking strategy. Working with a reputable SEO agency will help lower your bounce rate and improve your cost per lead.
Simply writing an informative blog post (like how much does Google Advertising cost) or creating a live video event may do wonders in this area. It is generally considered that you should calculate your cost per lead before calculating your ROI since it is directly related to your overall return on investment.
Another metric you should study and watch is your lead-to-customer ratio. This is the number of leads you need to generate a sale.
You can measure the quality of your leads and delete the low-yielding ones that are not resulting in sales. If you have a low lead-to-customer ratio, this suggests you need to focus on improving your lead quality and bounce rate.
To improve this, you can look at your Google Analytics account to see if you should be running Google Ads for other keywords. Or, maybe it’s time to consider adding another marketing channel to your marketing mix.
Increased Traffic vs Quality Traffic
Increased traffic will not help your business make more sales, but increased quality traffic will.
If you want to increase your market share and improve your results, you must know your audience and what your ideal customer looks like.
You can use surveys, customer service videos, emails, and other tools, like Google Analytics, to understand your targeted audience better.
Google Analytics, Kissmetrics, and Salesforce may also help you to take a deep dive into the psychological and demographical information about your potential customers.
If you study no other digital marketing metric, ensure you understand your conversion rate.All else being equal, this is the bottom line and the goal of online advertising in marketing. If you are not converting customers from your advertising, it is not working, and you’re losing money. Because this is directly related to your return on investment, as a business owner, you need to dedicate more time to studying Google Analytics and tweak the factors that you believe may improve your conversion rate over time. If you’ve been running your own paid ads for a while and aren’t seeing success, working with a PPC manager can drastically improve the outlook for your business. At Digital Logic, we offer free consultations. Our PPC campaign managers know our capabilities. If we can’t make you more money or if the cost of hiring us doesn’t justify the outcome FOR YOU, we will 100% tell you. We don’t have strict contracts for our PPC campaigns. Your Google Analytics and Ads accounts belong to you. Our company doesn’t hold websites or accounts hostage if you wish to discontinue our services. Are you converting enough leads? Let us take a look!
Marketing Metrics and KPIs: Increasing Customer Engagement
Engagement is the level of activity that existing customers do to interact with your brand. You need to study the abandonment rate, which is behavior that indicates people are leaving your site before making a purchase. Some may even put items in their shopping cart and then leave the site before making a purchase.
Why are they leaving?
In order to determine what specifically is affecting your customer abandonment rate, you’ll need to turn to metrics, again.
Some business owners can improve their conversion rate by simply improving their offers. There are several forms of automation software and techniques to accomplish this.
In many cases, having a better message and a better product that compels your target audience to purchase and actually follow through with that purchase is enough to improve this metric.
Types of Customer Abandonment
There are several types of customer abandonment that you should be concerned about and analyze:
Click Through Rate
Whenever a customer clicks on your links from one specific location, Google Analytics records these clicks and compiles your click-through rate. Even if no purchase is made, it’s still recording the data. So, this is important data to understand when studying your digital marketing metrics.
You should always think of your website as a study in progress.
To see the most business success, you need to consistently measure how effective your current content is by encouraging users to click on your links. Also, you can generate organic traffic through SEO, pay-per-click traffic via digital advertising, or social media links that lead to your page.
All these are examples of lead generation based on your click-through rate. Generally, the CTR is going to be around 2% if you have marketed your brand well to draw in your target audience.
Further, if you can make a sale for every 100 clicks, you have about a 10% conversion rate from your CTR.
Do you know what your bounce rate is? If you don’t, you should study this in Google Analytics.
Essentially, your bounce rate is the number of users who visit only one page of your website and then, leave. For most businesses, a decent bounce rate is less than 50%. However, many businesses operate at a bounce rate that’s much higher.
Your website’s bounce rate is influenced by many factors.
Perhaps the most influential factor for a high bounce rate is poor marketing.
High bounce rates typically occur because a searcher clicks on your ad or link, thinking that you offered what they were looking for when in reality, your messaging was off.
You can improve and lower your bounce rate by simply using better keywords. Your keywords should adequately describe what you offer. This helps ensure that Google matches the search queries with products or services that your target audience is actually interested in.
If you have a high bounce rate, you should request a free SEO website audit from Digital Logic. In many cases, we see more in 5 minutes than business owners do over several years of attempts.
Pages Per Visit
A “session” is nothing more than a recording of the time a person visits your website.
Visiting specific pages or the number of pages visited is more detailed and needs in-depth information than just a session.
Don’t spend time on general data. Move on to specifics by measuring the length of visits to specific pages and the behaviors that you see on the pages.
If you notice that a person visited only a few pages, it’s possible your content is not eliciting the right response from your target audience. Or if you see that they are going to too many pages, your site may be a bit too difficult to navigate, or perhaps, people are getting lost on your site due to clutter or lack of focus.
Keep in mind that a “session” is the entire duration of time spent on your site, even if the visit was not productive regarding a lead or sale.
Finding the Right Digital Marketing KPIs and Metrics For Your Marketing Efforts
It’s important to remember not to get lost in the data and to focus on what is most important to you.
Go back to your goals sheet and determine which digital marketing KPI you want to focus on the most in order to reach your most important goals. You should consider your KPI goals as you build your marketing plan and refer to it often so you will always keep on track.
Other Digital Marketing KPIs
Here are some of the other metrics you should look at to dig deeper into why you are getting (or not getting) the results you need.
Earning per email/click
Using Google Analytics for Digital Marketing KPIs
Google Analytics is one of the best places to keep up with your metrics.
It’s easy for those who don’t really understand the platform to get lost in the metrics that don’t really matter. If you don’t want to work with a professional digital marketing agency, focus on the metrics and kpis that give you the most insight.
For example, if you create a post on a social media platform and want to measure performance, you can use factors such as reach or level of engagement. Levels of engagement include actions taken like “likes” and shares and other factors to measure their effectiveness.
Knowing your quality score and continuing to improve it will change your business’s online presence.
Only choose metrics that are most likely related to your business goals. Using data and analytics to reach your goals is the most effective use of your resources and money.
Spend your advertising and marketing dollars wisely by measuring what’s happening.
Just remember the old saying, “What you observe, you also change!”