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[Performance Based Ads] Use these 10 Metrics to Measure the Effectiveness of Your Digital Marketing Campaign


A home pastry chef worth his or her salt knows that precise measurement is the most important part of the baking process. If you don't follow the recipe exactly as written, you're liable to end up with an undesirable and not very tasty result. Online marketing analysis is sort of the same way.

While there's no one-size-fits-all online marketing recipe, there's certainly a systematic way to measure the success or failure of a particular marketing campaign.

These 10 online marketing metrics, also known as key performance indicators, can help you determine what's working with your marketing campaign and what might need to be fixed.

1. Total Return on Investment

Your marketing campaign's total return on investment, also known as your "marketing ROI," is sometimes referred to as the ultimate online marketing metric. After all, it effectively answers the most important questions about your marketing efforts: Are they working and, if so, how well?

Total ROI is measured by dividing your total revenue by your total marketing investment. In other words, how much did you have to spend to earn what you earned?

2. Average Customer Value

This is a measure of your total revenue divided by your total number of customers. It calculates how much you can expect the average customer to spend within a given revenue period or over the total lifespan of the relationship. Average customer value is useful when making marketing projections. For instance, it helps answer the question, "If our marketing efforts result in X new customers, how much should we expect our revenue to rise?"

3. Cost Per Sale

Your cost per sale measures the total amount of marketing "spending" necessary to close one sale. It's a great measure of the overall effectiveness of your lead-nurturing pipeline and customer relationship management efforts. Since it doesn't measure total revenue per customer, however, cost per sale doesn't provide accurate insights into your total ROI.

4. Cost Per Lead

Cost per lead measures the average amount you need to spend to produce one lead. Basically, it answers the question: "How effective are we at generating leads?"

5. Repeat Sales Ratio

Repeat sales are a great indicator of your marketing campaign's effectiveness over time. It can also measure your company's ability to create compelling product updates, loyalty deals and other initiatives designed to keep customers coming back time and again.

Since repeat sales are a critical revenue driver for many companies, it's important to nurture converted customers and keep them interested in and aware of your products and services.

6. Traffic Sources and Volumes

Let's back up to the beginning. If you think of your online marketing operation as a funnel, your company's website, together with all the website pages that attract traffic from other parts of the Web, represents the mouth of the funnel.
The off-site traffic sources that draw first-time visitors to your website, including your social media properties, pay-per-click ads and search engine optimization activities, represent spouts that pour visitors into your website's funnel.
By measuring traffic sources and volumes, you can determine which spouts are the widest, or in other words, which traffic sources are the best at funneling visitors to your website and turning them into leads.

Traffic sources typically take four distinct forms:

 Direct traffic: Users who type your main URL directly into their browser and go directly to your website

 Referral traffic: Users who click external links on third-party websites

 Search traffic: Users who conduct keyword searches and click on paid and organic search engine results

 Social traffic: Users who arrive by clicking links in your social media feeds 

7. Bounce Rate

Your website's bounce rate measures the ratio of visitors who stay on your site and explore around to the total number of visitors. If a visitor hits the back button on a page in a short period of time, they have “bounced” from the page. Lower bounce rates generally indicate higher levels of interest in your website's messaging and content. So in the case of bounce rates, lower is better.

8. Time on Site

Time on site is another proxy for user engagement and interest. The longer users spend on your website, the more likely it is that they like what they find. Moreover, users who linger on your site are more likely to take meaningful action and move past the mouth of your sales funnel.

9. Conversion Rate

"Converting" means different things for different businesses. For some companies, it simply means adding an email address to a mailing list or getting visitors to download a white paper that offers a soft sell on key products.
For other companies, "converting" is nearly synonymous with "closing the sale." Depending on your niche and the ways in which you define "converting," your conversion rate may fluctuate. Broadly defined, however, the conversion rate is the ratio of website visitors who take the action(s) that you define as "converting" to the total number of website visitors. 

Once you define what it means to convert, you can measure your rate with Google Analytics or a marketing automation platform like HubSpot. As you make tweaks to your marketing campaign, watch for conversion rate changes that could indicate what's working and what's not.

10. Lead to Close Ratio

Your website's lead to close ratio measures the number of total leads generated against the number of sales closed. Basically, it's a measure of how likely a given lead is to become a paying customer. It's a great way to determine whether your lead nurturing apparatus is effective.

Learn How to Measure Online Marketing Performance from the Pros

Do you feel a bit more comfortable with the concept of online marketing metrics and key performance indicators? The information provided above should be enough to get you on your way to a well-executed, well-measured digital marketing campaign.

On the other hand, every marketing campaign is different. What's more, plenty of "advanced" metrics and cutting-edge techniques haven't been explored here.

Source: Scott Lambert


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