Remember the days when we judged marketing campaigns based on impressions, circulation and audience viewership numbers? Yes, I’m that old, and wow, we really have come a long way. Now because of Google Analytics and other performance tracking dashboards, we have real numbers to judge the success of our advertising, public relations, email and social media programs. But are you using the correct analytics data points to judge the health of your program?
Too often we find brands and other marketers are only concerned about new website visitors, bounce rates, time-on-site and page views. While these are important metrics to gauge the success of offsite awareness, they really don’t tell you if you were successful.
From our experience, the performance metrics that really matter are acquisition rate and cost per acquisition. Some very simple math will give you real numbers to see how your work is producing revenue or not. Here’s how it works:
A media website includes your product in a story with a link back to your website. Your analytics software shows that 100 visitors came from the story to your website. Ten of those website visitors purchased your product. The product sells for $100 so you made $1,000.
Your acquisition rate is the number of customers who purchased a product divided by the number of visitors who came from the channel. In this example, the answer is 10/100 or 10 percent. So for every 100 people who saw the story and came to your company’s website, 10 people or 10 percent purchased your product. This is an acquisition rate of 10 percent.
The cost per acquisition is a little different. We know we had 10 customers. Let’s say your company spent $500 in time to discuss the product with the media and/or to send a product for testing. Other factors may include shipping, literature, etc. The cost per acquisition is determined by taking the money spent (ad spend, email distribution charges, time for PR, media relations) and dividing it by the number of customers. In this example, 500/10 for a cost per acquisition of $50 per customer.
By determining the production cost of the goods sold, the number of customers and the number of website visitors, you will begin to understand exactly how much a lead is really worth and how to gauge marketing investments. You can also gauge the success of individual marketing campaigns like advertising, PR, social media, etc.