How do you know that your online marketing efforts are going well? What areas of weakness and strength do your endeavors have? The answer lies in metrics, but some help you more than others. It’s essential to identify the right key performance indicators or KPIs.
Think in Terms of Macro Conversions
Your primary goal is to make a profit. Thus, only those metrics that directly assess revenue are key KPIs, and they’re called macro conversions. There are four: customer acquisition cost, conversion rate, revenue per visitor and lifetime value.
That’s it. All other metrics are micro conversions because their tie to revenue is indirect. For example, a business may have been putting a lot of weight on how long visitors browse its website. However, browsing alone doesn’t make the business money. In fact, it’s possible that visitors who spend more than a certain amount of minutes on the website are less likely to become customers. Similarly, a business could have been assessing click-through rates as a KPI, but where’s the money?
A Look at Each KPI
The lower your customer acquisition cost, the better. You want to keep time and expenditures low while maximizing profits. To measure this, take the money you spend on marketing for a certain period and divide it by how many customers you attracted in that time frame.
The conversion rate in many situations is the rate at which customers make purchases and for what amounts of money. It’s a critical KPI, because it shows the marketing efforts that are working best and those that may need changing.
Given marijuana laws, though, your website might not sell products. You can still measure conversion rate in other ways. For example, say you wrote two blog posts. Each offers the same coupon. At what rates did each post get customers in the store?
Revenue per visitor is how much money your business makes per website visitor. It gives a much fuller picture than other metrics such as average order value or transaction rate.
Finally, lifetime value is the estimated net profit each customer brings to your business. After all, some customers spend a lot more than others and frequent your business for longer periods of time, and it makes sense to focus on them. LTV also helps you determine how long it will take for a customer to become profitable.
Stay tuned to Marijuana Marketing Gurus for more insider tips and tricks.
