Too much talk about Facebook ‘likes’ and Twitter ‘followers’ is dumming down your analytics.
If you were asked for the most important metric you track related to your online marketing efforts, what would you say? What is the very first thing that came to mind?
Depending on your responsibilities within your organization and the goals for your website, there are bound to be a variety of responses.
Social media managers might say “share of voice” or “social mentions”. Or maybe they will point to traffic sent to the main website from their social activities such as Facebook pages, Twitter or YouTube videos. Let’s hope they didn’t say Facebook likes or Twitter followers as their core measurement focus.
Content strategists might say they focus on measuring their most popular pages or possibly the most popular landing pages (there is a difference). This is good information and easy to obtain. I hope they didn’t say they measure the number of blog posts produced by their team each month as a measure of success.
Search engine optimizers might say the most import thing to measure these days is traffic to the website. A couple of years ago, a lot of search engine optimizers were totally focused on the number of backlinks and pages indexed. Generally this equated to higher search engine rankings for keywords, and that was all that mattered. Not anymore.
Company presidents might say sales are the only thing that matter. And as a business owner I can’t blame them. I often say the top line (revenue) can fix a lot of issues. But I would be disappointed if any executive said the number one metric was traffic to the website.
All of them should have said the only thing that matters is the cost per lead or cost per sale.
I’m here to tell you that the only thing that matters at the end of the day is conversions. If you don’t have conversions, you don’t have a business.
Focusing on conversions means you need to track two things:
- How much you are spending to convert customers.
- How you can optimize the process of converting customers.
Determine the cost of customer conversion
An entire article can be written on determining these costs of converting customers, but let me boil it down to four steps.
1. Revenue goals:
Define your business objective for the year. To keep this very simple, let’s say your team’s goal is to generate $1 million in new sales.
Identify the number of new customers you need to meet your goal. To accomplish this, you need to determine the average revenue generated by your typical customer. In this example, let’s say that is $5,000. Divide revenue ($1M) by your average customer ($5K) and you get two hundred. This means you need to close 200 new customers to make your revenue goal.
3. Conversion ratios:
How many leads does it take you to close one customer? If you close one new customer out of every 10 leads, your conversion ratio is 10 percent. This means you will need 2,000 new leads (calls, walk-ins, online registrations or completed lead form) to get 200 new customers.
4. Cost per lead:
Your business plan tells you marketing cannot exceed 10 percent of revenue. Following through on our math, you now know you need to keep your marketing costs below $500 per new client. It takes 10 leads to get a new customer so our cost per lead needs to be $50 or less.
This might seem too simple and too obvious, but how many of you know whether your content marketing is paying off? Are your white papers, your YouTube channel or even your blog cost effective? Are they generating leads at or below your business goal of $50 per lead? A typical response from those who don’t know is “but we do that for branding.” Really? Even though you have the tools to measure all of those channels right to the cost per lead or sale? It is so tempting to brag about likes, views and subscribers, but if you cannot quantify whether they helped achieve your business goal, why measure them?
Optimize the conversion process
There are a number of metrics you can track to help improve your cost per conversion. By tracking these metrics you can make incremental improvements to many aspects of your content marketing program, which will result in improved conversions. Here are several examples of metrics to follow that will help you optimize your process:
- Source and quantity of traffic to your site. Often called “web referrals,” this metric is probably the most basic measuring stick and indicates where your website traffic is coming from and at what rate. If you have conversion tracking set up in your analytics, you can determine which referral sources have the highest conversion rates. This should be measured over an extended period of time.
- Visits to purchase rate is defined as the number of sessions your visitors require to move from first interaction to a completed purchase. This metric is loosely related to days to purchase, another measurement worth noting. As you might expect, more complex sales generally require a few visits before buying, whereas sites focused on lead generation might be able to see conversions on first visits.
- Popular landing pages are those pages of your site that have the highest entrance rates. This is the first page visitors see when they arrive at your website. Many people assume this is your home page, but in many cases this is not the case. You must consider every piece of content and every page of your site a landing page. Take a close look at the top 10 or 20 landing pages. What would a new visitor think of it each without other context? Does it have a clear call to action?
- Page load speed is the time from which the page starts to load to the time when all the objects on the page are loaded. Fast-loading content improves the user experience and reduces bounce rates. Google’s algorithm is now taking page-load speeds into account for search rankings.
- Bounce rate represents the percentage of initial visitors to a site who bounce away to a different site, rather than continue to other pages within the same site. Even visitors who stay on a page for 10 minutes to read an article or watch a video will be considered a bounce if they do not move deeper into your website. Any page with a high bounce rate will be unlikely to convert customers effectively, and may even hurt you in search rankings.
- Time-on-site or engagement measures how long a visitor remains on your website during one session. Time on your website can be an indication of the level of interest or involvement that a visitor has with your content. If you have solid engagement on specific pages, but no conversions, you should check to see if you have a clear call to action.
- Number of re-tweets and Facebook shares (not “likes”) are two metrics that speak to the Holy Grail of social media marketers: “shareability.” Re-tweets and shares not only indicate whether your content has found an audience, but evidence also shows the major search engines are tracking this type of sharing to determine how this content should rank within search results. Again, if the content is being shared, but not converting, you may need to improve your call to action.
These metrics are all useful to track, but remember: conversions are the lifeblood of virtually every business. Thousands of “likes” may win you a popularity contest, but also may be completely unrelated to revenue growth. The happy glow of your newfound social media status will not impress your CFO if it doesn’t also lead to business growth. Period.