Step back from your online business for a minute, and imagine you opened a brick and mortar store.
Every night of the week, you run cool promotional deals, hold awesome live demonstrations, and in terms of foot traffic, you’re blowing the competition out of the water.
You even put out free coffee and donuts every morning and find both empty within the first hour of opening.
In just one month, you’ve had thousands of people walk through your doors, all of whom leave your store with happy, smiling faces.
Ok, now time for a little pop quiz: based on the information described above, do you consider your brick and mortar store a success?
- Absolutely. I love seeing happy, satisfied people in my store
- Yes, but there are always improvements to be made to get even more people to my store
- No, I’m getting claustrophobic and tired of people drinking all my coffee
- Couldn’t say. How many of these people are actually buying something?
If you’re a non-profit or running a charity, feel free to answer A or B guilt-free. You could even answer C with a little guilt (I won’t judge).
But if you’re running a business with real bills to pay and a family to feed, the answer should be unequivocally D.
Unfortunately, that answer is lost on most online businesses.
Luckily, after this article, it won’t be lost on you. That’s because we’re going to take a deep-dive into:
- What’s the real problem with tracking traffic
- What’s the difference between a metric and a KPI
- How to create an efficient marketing report with concrete KPIs
Most people probably don’t realize that 2020 is a pretty great year to be a consumer. So many companies have found success with content marketing strategies, that they’re creating killer content to educate, entertain, and engage their clients.
Oh, and the majority of this content is 100% free.
Companies are learning how to write niche-specific blogs, record high-quality videos, make detailed infographics, produce eBooks, and...well… create all the other types of content people have come to know and love.
Most businesses are doing all this in an effort to attract more people to their website store. Marketing teams learn the ins-and-outs of SEO and read blog posts like "Skyrocket Your Traffic in 3-6 Months" with a headline image that looks like this:
And there’s nothing wrong with that, either. Getting more traffic to your site is something every company should strive for.
Here’s the problem: simply drawing more people to your website doesn’t guarantee your success.
Put more simply, lots of traffic ≠ revenue. So why do we put so much value on traffic, sessions, users, and bounce rates?
Because they’re easy metrics to look at and feel good about. But, they’re not valuable KPIs.
And the key to growing as a company is understanding the difference.
The difference between metrics and key performance indicators (KPIs) is like the difference between furniture and La-Z Boy chairs: the latter is always the former, but the former isn’t always the latter.
In this case, KPIs are always metrics, but metrics aren’t always KPIs. To make matters trickier, any metric can become a KPI at any time you want.
I know.... messy, right? Let’s break it down a little further.
Your metrics show you the status of a particular system. When you check Google Analytics for your monthly traffic, you get a number that tells you how many people visited your site for the month.
That number is a neutral piece of data. It simply tells you the status of your current traffic rate.
On the other hand, your key performance indicators tell you how well your system is working toward a specific goal you’ve previously set.
If your objective at the start of the month was to specifically increase traffic by 20%, then checking the traffic is no longer just a metric, it’s a KPI. That piece of data tells you whether or not your system is working as well as you want it to.
But when you don’t make a distinction between marketing efforts and sales efforts, everything becomes a KPI.
Because whenever we see a neutral piece of data, we have a need to compare it to something to determine its worth.
That’s why you hear about companies proud of their high traffic, even if sales have plateaued for months. Or why content writers feel so proud about 5,000-word resources (even if only 250 of those words are any good).
If you really want to start using data to measure your business’s success, then you need to make sure your marketing department is intentional about their KPIs and are getting a good return on investment (ROI) for their efforts.
This is a question I get quite a bit. People want to know what KPIs they should be measuring to indicate their marketing success.
Usually, I see marketing teams look at Users, Sessions, Bounce Rate, and Session Duration. Why?
Because those are the 4 that show up on Google Analytic’s homepage:
Then they use GAs color-coded system to mentally turn those metrics into KPIs. If it’s green, goals are on their way to being met. If it’s red, something needs tweaking:
But these aren’t the best KPIs to measure how successful your marketing campaigns are. Not by a long shot.
So what are the right KPI metrics to measure? The answer to that question is unsurprisingly anti-climatic:
There simply isn’t a "one size fits all" approach to choosing the right KPI metrics for your business. However, here are 5 KPIs that most marketing teams should include in their weekly, monthly, and yearly reports.
1. Cost Per Lead or Cost Per Acquisition (CPA):
Calculating your cost per lead is easy. You take however much money you spent on your marketing campaign and divide it by how many new leads you gained_ through that specific campaign.
This gives you a tangible idea of how much your lead generation system costs.
A lot of people think that counting your cost per lead is only applicable to pay per click (PPC) ads. While it’s certainly the easiest to calculate (because you have a concrete amount of dollars to divide for a specific campaign), it certainly isn’t the only one.
Nor the most accurate.
Even if you are gaining leads through organic traffic, you can still calculate the cost per lead. How?
With time, rather than dollars.
How much time did a certain campaign take to build, and how many leads did it generate? How much are those hours costing? How much are the tools you’re using costing?
The point is that too many people confuse "organic traffic" with the word "free." It isn’t. Nothing is.
So start tracking the actual costs of your marketing campaigns so you can develop a real KPI metric that shows your company whether or not your marketing efforts are paying off.
Remember: The number of leads you gain is simply a metric. You make it into a KPI once you set that number against the backdrop of a financial goal.
Need some help? LeadFeeder has a cool (and free) cost per lead calculator that could be worth checking out.
2. Traffic-Lead Ratio (Conversion Rate):
As we already mentioned, most companies view their traffic as a KPI when they see a number is either increasing or decreasing. But, really, your traffic is simply a metric.
You turn traffic into a valuable KPI when you divide it by the number of leads you’re acquiring. This will give you a much better idea of your marketing campaign’s ROI.
By dividing your overall traffic (from a specific campaign) by the number of leads you’re generating, you avoid falling down the vanity-metric rabbit hole we talked about at the start of this article.
But rather than knowing how much traffic your campaigns are generating, you want to know what kind of traffic your campaigns are generating.
In other words, is your campaign targeting the right kind of traffic? The kind of traffic that will eventually convert into customers.
Until you can specifically tell your team that, you can’t judge whether or not your inbound marketing campaigns are truly a success or not. Which leads into our next KPI.
3. Lead-to-Customer Rate:
This is closely related to the last KPI we saw. You now know how much of your traffic is turning into leads, but how many of those leads are becoming customers?
Now, I know what you’re thinking: Isn’t that the sales department’s problem?
Kind of, but not as much as you might think.
Just like we saw with a campaign bringing in the right kind of traffic, it also needs to bring in the right kind of leads. And yes, there is such a thing as a wrong kind of lead. Here’s an example:
One popular method of generating more leads is through online contests and giveaways. You’ve probably seen this all the time, "Enter the contest for a FREE Mac Notebook Pro!"
This is super good at doing two things: driving traffic and generating leads.
But, it’s also really bad at doing two things: driving the right kind of traffic and the right kind of leads.
What most marketers find who run these types of giveaways is that no one really cared about the business running the contest, they just wanted the prize.
In this example, you would likely have a high traffic-lead ratio, which is good. But then you’d find you have a really low lead-customer ratio, which is (obviously) bad.
Now, take the same example and change the prize to something related to your niche that your target audience would like. You’ll likely get less traffic from this giveaway, but you’ll get more of the right traffic, which is far more valuable.
Unless you create a lead-customer ratio for your marketing campaigns, you may end up with a false impression that your campaign is a success. After all, it brought in TONS of new leads, right?
4. Landing Page Conversion Rates:
This KPI pretty much speaks for itself. You should be tracking each type of landing page in your marketing campaigns.
And yes, there is more than one type of landing page. In fact, there are tons. The three most common for marketers, however, are squeeze pages (for email capture), pre-sell pages, and sales pages.
Be careful in tracking your KPIs for each different type of landing page, though. For example, your squeeze page will measure its success based on both a traffic-lead and a lead-customer ratio.
Your sales page, however, will simply look at overall traffic divided by revenue generated.
Regardless of your landing page, you need to define what you consider "successful" so you can determine whether or not your landing page web copy is getting a large enough ROI.
5. Conversion Rates from Social Media Traffic:
Again, another KPI that should speak for itself. As social media has grown in popularity, you should be tracking each platform individually.
Avoid looking at how much traffic is being generated. For this, look at each platform to analyze your traffic-lead and lead-conversion rates. The fact is that some platforms are more suited to some campaigns than others.
Despite that fact, there are loads of companies that create identical posts across multiple platforms.
They then make the mistake of thinking, "I’m getting loads of traffic from this platform, so I should go all-in on that!" All the while, they’re unknowingly getting lower traffic but higher conversions from some other source.
By creating specific KPIs on conversion rates coming from each social media platform, you’ll get a more accurate idea of which one is best for your marketing efforts. Or, at the very least, you’ll be able to tweak each campaign to be more successful to the specific social site you’re relying on.
Your marketing reports don’t have to focus on money, but they do need to focus on a specific goal that is more narrow than the green and red indicators on Google Analytics.
That means you need to come up with KPIs that show everyone on your team how successful each of your marketing campaigns has been in terms of generating high revenue or high revenue potential.
For each marketing campaign you create, you should have a very concrete answer to the following questions:
- What was the marketing campaign you launched?
- What was the specific goal of that marketing campaign?
- Why is that goal something your company should be worried about?
- How successful was that marketing campaign in reaching that goal?
- If it was successful, can it be improved? If it wasn’t, should the campaign be tweaked or shut down?
Then, you need to be able to report the answers to those questions to people outside your marketing team in a way that is clean, quick, and efficient.
In other words, if you can’t answer those 5 questions in under 2 minutes for a particular campaign you launched, it shows you’re not 100% clear on your goals and their outcomes.
How can you gain some clarity on that?
By building a weekly, monthly, and annual KPI metrics marketing report. And I know what you’re thinking…
That sounds like a lot of work.
Fortunately, it’s just the opposite!
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