One of the trickiest aspects of digital marketing is measuring campaign success. You want to understand your return on investment (ROI), and you don’t want to just track vanity metrics. With all that in mind, tracking the right key performance indicators (KPIs) allows you to accurately measure success
Does your boss want you to “raise brand awareness” with your upcoming digital campaign? That’s not a very specific goal. Instead, you could choose to measure how long visitors spend on your website after clicking on your ad. Are you supposed to “sell more product”? Instead, you could choose that you want to get 500 clicks on your call-to-action button and convert 2% of those clicks into purchases.
As you plan your digital campaigns, ask yourself: Am I measuring outcomes in a way that’s meaningful to my company’s bottom line? Are my measurements accurate? For example, you might know that your banner ad got 75 clicks. But if you don’t know how many clicks converted or how much you spent on each click, “75” doesn’t mean much. So, consider using the following key performance indicators (KPIs) to measure your success.
Conversions
The most obvious KPI is conversions. How many units did you sell? How many people signed up for your course? You can measure conversions a couple different ways. One is tracking when visitors become leads. An example would be when someone visits your website from an ad and then gives you their email address in exchange for a coupon code. You can also measure conversions from lead to customer. This, for example, is when someone from your email list purchases one of your products.
These measurements can be tracked based on digital consumer behavior (like signing up for an email list). There are also opportunities to measure conversions from digital marketing campaigns in retail stores. For example, some grocery and drugstores use a product called Cooler Screens, which are smart screens built into the doors of the cooler sections. The screens have identity-blind sensors that track customer presence and interaction with the coolers. The ads on the screens change depending on the context (a hot day? A sale on name-brand sodas?). Using this kind of technology, digital marketers can match location, inventory, sales, and customer interaction to discover how ads impact buyer behavior. Similar technology will likely be used for many different industries in the near future, giving digital marketers even richer data. As you plan your digital campaigns, explore whether your industry offers unique placement opportunities that provide more point-of-sale conversion data.
Conversion Rate
It’s not enough to know how many conversions you have — you also need to know your conversion rate. This allows you to plan your digital marketing spend.
Here’s an example: You have $3,000 to spend on a Facebook ad, which you guesstimate will get your ad in front of about 2,100 people. Your ads typically have an 8% click rate. This particular ad leads to a landing page with a 6% conversion rate, based on your last campaign. Based on your revenue goals, you want to land 20 new customers and 10 returning customers from the ad. You do the math: 2100 ad views x .08 click rate x .06 conversion rate = 10 total customers.
Because this is far short of the 30 customers you need, you have a few options. You could try new creative on your landing page. You could tweak the target audiences for your ad. You could look at other past campaigns and see if you have better luck with YouTube pre-roll ads or Instagram story ads. Or, you could adjust your budget.
Because you understand conversion rate, you’re able to design a successful campaign based on what’s important to your bottom line.
Cost Per Customer
Cost per customer is a vital measurement of digital marketing success. In the previous example, you adjusted your campaign based on conversion rates. Now, you want to look at how much each customer cost you. If you went with your original plan of spending $3000 and getting 10 customers, that means you’re spending $100 per customer. That might make sense if you’re selling a car or a college education, but not if you’re selling a $40 pair of sunglasses.
It’s important to have solid benchmarks to go with your cost per customer data. This allows you to discern whether you’re targeting people who would have bought your product anyway. Going back to the retail digital screens example, you can run A/B tests between stores. This can tell you if your ad makes a difference in sales. Or, if you’re running a seven-day banner ad, you can compare sales with the same seven days the previous year. That way, you have more context about the specific impact of your digital marketing.
Other KPIs Can Also Help Reach Your Goals
The KPIs listed above are generally considered lagging indicators, meaning they show how your campaign did. You can use them to guide your next campaign or make adjustments mid-campaign. Leading indicators (such as followers on social media) are used more for predicting the trajectory of a campaign or business goal.
There are many more KPIs and marketing performance metrics you could be tracking, but these three are a good starting point. Once you’ve run a campaign tracking these KPIs, you can make adjustments to design even better digital campaigns, each time around.