Monitoring your marketing metrics is of critical importance to understanding how effective your campaigns are being run. By setting marketing KPIs, you can see what areas are working, those that require more resources and those which you ought to drop altogether. Let’s get to it.
Perhaps the least specific marketing metric, reach (also known as impressions) is simply the amount of people that your advert has ‘reached’ – or made an impression on. How specifically reach is defined depends upon the platform you are using. For instance, if you are using Facebook Adverts or Facebook remarketing, reach could comprise of the amount of people who had the advert displayed to them in the:
Right hand column
Additionally, reach may take into account the amount of time that a user has viewed your advert. If skippable, this may mean that the user has seen less than a second of your advert, or alternatively might mean they have watched the whole thing.
As such, by itself ‘reach’ may not be a good indicator of how effective your campaigns are running. It should be used as a base upon which you can understand other marketing metrics.
Response Rate or Click Through Rate
The response or click-through-rate (CTR) is simply the amount of people who who clicked or responded to the advert, divided by the amount of people reached:
Clicks/Impressions = CTR
This will give you an understanding of how well targeted your adverts are. A higher click through rate might mean that you have created an effective campaign, have targeted the right demographics or both.
Source: Rich Media Gallery
Above are the UK-wide benchmarks for CTRs on display advertising in the UK according to Google’s Rich Media Gallery. This is defined as the ratio of clicks to an external URL to the number of impressions of the Ad. This is a general statistic across all sectors, all advertising space, and all campaigns.
Interactions are defined as:
Mouses over the ad for 1 continuous second
Clicks an Exit link
Makes the ad display in Full Screen mode
Expands the ad
For more specific benchmarks use Google’s tool here: http://www.richmediagallery.com/tools/benchmarks
Customer Conversion Rate
The customer conversion rate is the percentage of prospective customers who take a specific action or complete a goal that you have set.
(Sales/Leads) x 100 = Conversion Rate
This could be used to describe the percentage of website visitors that:
Make a purchase
Create an account
Download an item
Make a phone call
Fill out a form
Or effectively any goal that you want your users to complete. This is one of the most important marketing metrics because it is purely results driven, and can be monitored using a variety of tools including Google Analytics. However, this can be a complicated process for the average business owner and it’s recommended that you bring in a conversion rate optimisation expert to really get the most out of your website.
No. Coupon Codes Redeemed
With 96% of consumers using coupons at some point, chances are that you are giving your customers the option. However, do you know how effectively your discount code campaigns are running? In order to understand this you need to be monitoring:
Where your discount code is being displayed. (i.e. is it on voucher websites? Social media?)
Email open and click-through-rates for discount codes.
The amount of discount codes being used.
How to calculate the discount code redemption rate:
(Redemptions/Impressions) x 100 = Discount Code Redemption Rate
According to technology solutions company Inmar, the average online coupon redemption rate as of 2015 was 3.5%. However, year upon year, coupon usage is growing at an astronomical rate, so this number is likely to be outdated. Mobile coupon usage, for instance, has grown to 100million users in 2016 according to ReadyCloud, a growth of 12.42% increase from the previous year.
Taking this into account, we are likely to be seeing an online coupon redemption rate in 2017 or over 4.5%.
Average order value
The average order value (AOV) gives you an understanding of the amount of money spent each time your customer places an order through your website. In order to calculate the average order value, you divide the total revenue by the number of orders placed.
Σ revenue/orders = AOV
For example, if last year you made £1.5 million in sales and had a total of 15,000 orders placed, your average order value would be £100.
How To Use Average Order Value
You can set the timeframe to calculate AOV for as long as you want, however most businesses will evaluate their AOV month over month or quarter over quarter. This will give you the scope to evaluate your marketing and pricing strategies by helping you understand how the value of individual customers is changing over time.
In many cases, business owners feel that focusing on increasing traffic to their website will lead to the biggest increase in revenue. Whilst it’s certainly a factor, it is often easier and more economical to focus on increasing the average order value.
This can be achieved using the following techniques:
Free shipping for a higher minimum purchase
Coupons on next shop
Donations to charity for minimum purchase price
When it comes to benchmarking the average order value for your business, as we said above, it’s best to focus on what increase or decreases you are seeing month to month. This way you can measure the effects of your marketing and pricing strategies. However, when it comes to understanding what AOV means to your business and your customer base, there is a key fact that you need to keep in mind:
Top eCommerce Customers Spend 30x More Than The Average
Which leads us onto the next most important marketing metric…
Customer Lifetime Value
Retaining customers, increasing their order numbers and average order values are of paramount important to any eCommerce business. Combined together these give you one of the most important marketing metrics: the average life time value (LTV) of a customer. Calculating the LTV of your customers is a complex process, but one that will help you better understand whether you are retaining customers adequately, offering them the best you can and encouraging repeat custom. In order to begin understanding the LTV of customers to your business, start here:
You will also need the following:
With this information, you can then calculate the life time value of a customer using one of the following formulae:
52a x t = LTV
t x (52 x s x c x p) = LTV
m (r/(1 + i – r)) = LTV
For more information on how to calculate this value check out Kissmetrics’ infographic here.
Further Marketing Metrics
· Campaign: Number landing page page impressions
· Campaign: Number of times seen, impressions
· Campaign: Number of clicks and bounces
· Campaign: Number who stayed more than 10 pages
· Campaign: Number of orders
· Campaign: Average order value
· Campaign: Sales per thousand impressions