Back when I was an Internet newbie, I had no idea what numbers to focus on.
I would look at Google Analytics. I would see lots of numbers. And I would be confused.
So, what did I do?
I did what most people do. I focused on vanity metrics.
What are vanity metrics?
Vanity metrics are numbers. That might sound all data-driven and growth-hacky.
But vanity metrics are numbers that don’t lead anywhere. As Eric Ries said,
…they don’t offer clear guidance for what to do.
Examples of vanity metrics:
- Raw number of pageviews or site visitors
- Number of downloads
- Number of subscribers
I’m not knocking these metrics completely.
After all, if you are involved in the world of Internet marketing, metrics are one of the single most important things you can learn, understand, interpret, and act on.
If you’re not tracking your metrics, you’ll never be able to figure out how you can improve your marketing performance and, by extension, your revenue.
But you have to choose which metrics to focus on.
This is why establishing specific KPIs, or key performance indicators, is one of the most valuable things you can do for yourself, your team, and your bottom line.
But which metrics should you be tracking? And more importantly, which metrics should inform your marketing decisions?
This is the question I faced early on in my Internet marketing career.
What metrics do I focus on?
Eventually, I came around to the right perspective on things.
Here’s how it happened.
- First, I realized that revenue was my single most important metric.
- Then, I worked backwards to find out what numbers most impacted my revenue.
- I used those numbers—my KPIs—to track my progress toward revenue.
With so much variability in marketing techniques, it’s easy to get bogged down in minutia and focus on metrics that do not significantly affect your revenue.
To help you on your quest for maximum revenue, I’ve compiled a list of some of the most important KPIs you can track for maximum performance, maximum ROI, and maximum revenue.
Each of these metrics should be tracked on a daily, weekly, monthly, and annual basis so that you can see the complete picture with regards to your marketing efforts.
Tracking them is only the first step.
Acting on these metrics is the real deal.
If you want to be able to develop effective content and digital marketing campaigns, you have to track your web traffic so that you can understand what’s working and what’s not.
Unless you are tracking your web traffic, you will never be able to truly gauge the effectiveness of your different marketing methods and increase the amount of traffic your website receives.
For example, by tracking your web traffic, you may find that when you are consistently posting on Facebook and LinkedIn, your traffic soars, but whenever you focus on Instagram and Twitter, your traffic plummets.
Luckily, tracking your web traffic is fairly straightforward.
“Traffic” is, of course, a pretty broad term.
Traffic can encompass a lot of the more detailed features of your website audience, all of which are important to pay attention to.
Your website traffic tells a story—a story of how engaged and active your audience is, how frequently they visit you, and how likely they are to purchase from you.
The better you know your traffic, the better you’ll be able to achieve your revenue goals.
2. Customer Acquisition Cost (CAC)
This is one of the most important metrics any company, especially startups, should know.
Chase Hughes wrote about this metric on Kissmetrics. He called it “the one metric that can determine your company’s fate.”
I’d say that’s a pretty important metric.
So, what is the customer acquisition cost?
Here is a simple definition:
CAC: The price you pay to convince someone to purchase your product or service.
Don’t be deceived by the simplicity of that definition.
The CAC should include the cost of market research, software, team salaries, paid analytics platforms, and, of course, the price of any paid advertising.
If you want to be able to effectively grow your company through your marketing efforts, you have to know how much it costs to acquire a new customer.
In spite of its complexity, this is actually fairly easy to calculate.
All you need to do is add up the monthly marketing budget and then divide that number by the number of new customers you acquired that month.
For example, let’s say you spent $2,000 a month on marketing and acquired 5 new customers. This brings your total cost of customer acquisition to $400.
You can calculate the number on an annual basis, as in this example:
With this knowledge, you now know how to effectively budget for marketing, depending on the number of customers you wish to acquire.
Using the above example, if you wanted to acquire 20 new customers in a month, you would need to spend roughly $8,000 in marketing efforts.
While this number may vary month to month based on how effective your marketing campaigns are, averaging the cost of acquisition over three months will give you a good idea of what you need to spend on marketing to attract your desired number of new customers.
To better understand your CAC, it’s helpful to break down the specific channels you’re using to acquire customers.
For example, you may be using several marketing methods: paid search, social media, and email marketing.
Each channel has a different associated cost. Knowing how much you’re spending per channel gives you a more accurate assessment of your CAC.
Every industry will have a different method of tracking CAC. In some industries with a long sales cycle and more “touches” for customers, the CAC will be higher and more complex.
While it’s important to know your CAC, it’s just as important to know how to act on it.
If your CAC is too high, for example, you have a problem. The customer’s value must exceed the CAC in order for the business to function.
Navigating the delicate balance between CAC and LTV is something that marketers need to understand and take action on.
3. Social media reach
Social media marketing has become one of the most popular methods of marketing your content and your company.
With more than 2 billion people using social media around the world, there has never been—in the history of the human race—a platform that could allow you to have as much reach and influence as social media can today.
In addition to their massive reach, most social platforms, such as Facebook, Twitter, LinkedIn, and Pinterest, provide you with the tools to track your reach within the applications.
If you want to maximize the amount of revenue you generate each week, month, and year, you need to track the effectiveness of your social campaigns and understand the ROI of each platform.
How do you do this on Facebook?
- Go to your company Facebook page.
- Click on “Insights” at the top of the page.
Facebook Insights provides you with data to help you fully understand what your audience is doing, how it’s interacting, and how it’s impacting your business.
When you know this data, you can develop a rock-solid social media strategy to maximize your reach and revenue.
4. Landing page conversion rates
If you truly want to maximize your revenue and send your conversion rates through the roof, you have to make sure that each of your landing pages is fully optimized.
You need to know which landing pages are leading to conversions and which ones are underperforming so that you can effectively craft landing pages that will increase your revenue.
You may find that one landing page has a high amount of traffic while another—with a lower rate of traffic—actually has a higher conversion rate.
For this reason, it’s crucial to track at least four major metrics on landing pages specifically:
- Bounce rate
- Exit rate
- Click-through rate (CTR)
- Conversion rate
Each of these numbers contributes to the overall picture of your conversion rates and keeps you from being locked into a skewed perspective.
One way to help broaden your perspective is to understand what an “average” conversion rate is. It’s hard to nail down an “average” because of the variety of industries, channels, and types of conversion that exist.
When you start, don’t expect to instantly explode with a 5% conversion rate. Most of us are lucky if we can get a 2% conversion rate.
Again, conversion rates vary a lot based on the channel. Here’s a breakdown of the range of variation of conversion rates by channel:
By monitoring all the important metrics around your landing page and combining the best working elements, you can create high-converting pages.
5. Email marketing metrics
Despite the growth of social media, email marketing remains one of the most effective ways to acquire and keep customers.
Email marketing allows for a more personal and targeted style of marketing, and if you are willing to pay attention to the metrics, it will lead to more sales and revenue than you previously thought possible.
It’s important to track all the metrics related to email marketing. Here are the ones I suggest you track:
- Delivery rate
- Open rate
- Click rate
- Conversion rate
What kind of expectations can you have for these metrics? Here’s Ciceron’s research:
Depending on the complexity of your email marketing, you may wish to analyze your metrics even further:
- Unique open rate
- Unsubscribe rate
- List growth rate
- Bounce rate
- Inactive user rate
- Forwarding rate
- Earnings per email
- Earnings per click
- Complaint rate
How do you take action on this kind of data?
If you see that you have a low open rate but a high conversion rate, you should probably work to improve your headlines or cut back on the number of emails you send.
Conversely, if you notice a high open rate with your emails but a low click-through or conversion rate, you should probably improve your copywriting within the email to incentivize readers.
It makes sense to use email marketing and then act on the data you glean from analyzing its performance.
If you can learn to effectively track the important metrics of your business, you’ll be able to see how your marketing efforts are affecting your revenue and have a better understanding of how you can improve and optimize your marketing efforts.
But like with anything in the business world, this is something you have to track proactively. You cannot just set it and forget it—track one or two metrics and then leave it for months at a time.
If you can be consistent with tracking your metrics, focusing on how every decision you make affects the bottom line, you can maximize your revenue and take your business to new heights.
Keep in mind that you are focused on one top metric: revenue.
When you lose sight of revenue, you’ll easily get distracted by meaningless metrics that don’t show you where you’re actually going. Worse, those metrics may fool you into thinking you’re making progress when you aren’t.
To be truly effective, your marketing metrics should show you a path forward—how to earn more revenue.
Metrics really are the magic key that can unlock marketing success. But they are a double-edged sword.
Read them wrong—and your marketing is doomed.
Read them right, act on them—and your marketing will push your business forward.
What are the most important KPIs you currently track?
The post How to Become a Marketer Who’s Obsessed with Metrics appeared first on JZ-ART.
Source: JZ-ArtHow to Become a Marketer Who’s Obsessed with Metrics by Charles