In business, your marketing needs to deliver results that can be measured by key performance indicators (KPIs)—the numbers that allow you to determine what’s working and what’s not in your marketing.
Here are the 9 Digital Marketing KPI’s You Need to Watch if you want your marketing to deliver for your business.
1. Click-through-rate (CTR)
The CTR measures what action a prospect takes once they see your advertisement.
Imagine your business is running an ad on Facebook.
Every time a prospect clicks the ad and goes to your website, that increases your CTR, which means your ad’s messaging is effective—it’s moving people to engage (click) and learn more.
The opposite is also true.
If you're presenting your ad to visitors and they’re seeing it (something called “an impression”) but they aren’t clicking, your CTR will go down.
2. Cost-per-click (CPC)
The CPC is the cost assessed every time your ad is clicked.
That fee could be a few cents or several hundred dollars per click, depending on how competitive the keyword is.
Keyword competition is based on how much other advertisers are willing to pay to create an ad for it. These advertisers will typically pay a high cost for these keywords if the customers gained from it are worth the upfront advertising costs. For example, in personal injury law, a given keyword may be $100 a click. But getting just one good personal injury case may bring back a six-figure settlement at a later time.
In the legal industry, a competitive keyword like “best DUI attorney in Los Angeles” could cost more than $300 per click.
However, a term with a low search volume may have an extremely low cost per click, for example: “I need a Los Angeles DUI attorney very badly, please help me Google,” simply due to a lack of competition.
Ideally, you want your CPC to be as low as possible while delivering as many qualified leads to your website as possible.
3. Cost-per-action (CPA)
The CPA is the cost associated with acquiring a new client or customer.
Anytime a prospect commits to an action there is a cost to it. Was your advertising campaign designed to push newsletter sign-ups? Okay, what was the cost of the total advertising campaign compared to the number of sign-ups you received?
If you spend $100 dollars on a new ad campaign and get 5 customers, your cost per acquisition is $20.
A lead is anyone who’s demonstrated an interest—filled out a contact request form, called your business, demoed one of your products, etc.—in your business.
Leads can be hot, warm, or cold, depending on the level of potential interest.
A cold lead is a lead that fits your target market and has the same qualities as previous customers but does not show interest in buying or learning more about your products or services at the moment.
A warm lead is a marketing-qualified lead (MQL).
These leads are highly-qualified and interested in being marketed to (with Ebooks, case studies, testimonials, etc.) because they’re actively researching the products or services you offer.
A hot lead is a sales-qualified lead (SQL).
These leads are essentially MQLs that have been properly nurtured with content designed to inform, inspire, persuade, and is now ready to purchase the product or service you’re selling.
5. Conversion Rate
Your conversion rate is the rate at which your prospects take a given action.
For instance, if you have a contact form on your landing page that 100 people have seen, but 50 have filled it out, your conversion rate is a stellar 50%.
Your conversion rate speaks directly to the efficacy of your messaging and call-to-action (CTA) so you want it to be as high as possible.
6. Customer Acquisition Cost (CAC)
Your CAC is the total marketing cost of acquiring a new customer.
What is the total value of every advertising dollar spent on getting a new customer? Combine these costs together and weigh them against the value of a new customer.
If it costs $50 per acquisition and every customer has a lifetime value of $100, you’re doing something very right.
7. Customer Lifetime Value (CLV)
The CLV is the value of a customer or client over the life of their patronage of your business.
Let’s say you’re an electrician.
Your typical customer hires you once a year to do about $500 worth of work.
Furthermore, that typical customer will use you three years in a row, before they leave to work with another electrician.
In this scenario, your CLV is $1500.
Obtaining an accurate CLV takes time but it will provide insights about your business that are worth their weight in gold.
8. Churn Rate (CR)
Churn rate is the rate at which customers leave your business.
If you have 1000 customers and you lose 100 a year, your churn is 10%.
Keeping churn as low as possible is essential to the health of your business. To keep it low, you need to do two things:
Improve your lead qualification process
Do a better job of keeping customers engaged and committed
9. Return on Investment (ROI)
ROI is how you stay in business.
It’s what you’re getting OUT from what you put IN.
If things are bad you’re spending $1000 dollars to get $1000 back and aren’t growing (an ROI of 0%).
If things are really bad, you’re spending $1000 dollars and only getting back less than what you’re putting in—say $500—for a negative ROI.
If you want to get more out of your marketing efforts you have to consistently fine-tune your processes. Study your data analytics with free tracking tools like Google Analytics, and learn how well your marketing efforts are performing firsthand. Amplify what’s working and remove what isn’t. Marketing works best when it’s lean, efficient, and predictable, so treat yours like a well-oiled machine if you want your business to run smoothly.
Marketing isn’t worth much without the ability to track your results. If a marketing piece performs well how would you know what worked exactly? And more importantly, could you repeat it and get the same result? Tracking your digital marketing KPIs is the first step to understanding the relationship between your efforts and your results.
So, study them, learn, and use them to grow your business.
If you’re interested in developing better tracking practices for your digital marketing efforts
Give us a call today at (866) 344-8852 or visit us at Scorpion.co