Marketing Metrics that matter

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Map and Compass

The beauty of online marketing is that you can track everything.  The problem with the ability to track everything is knowing what to track.

  CFO’s value certain metrics, while marketing executives value a different set of metrics.  There are substantive metrics and then there are those “sexy” measurements that are flashy and look good on paper, but don’t really tell a story.

To satisfy the demands of several departments, the right measurements need to account for all of the costs associated with a campaign.  CFO’s will want to track as much of the costs associated with a campaign as possible.  Things like overhead, salaries and campaign specific expenses help CFO’s determine a projects viability.  For the marketing department, analytics like cost-per-click, cost-per-customer and cost-per-follower provide insight into a campaigns performance.

Choosing between all of the available marketing metrics can be a daunting task, but armed with a better understanding of some of the common measurements will allow you to tell a better story.  Recognizing that different people need different information, here is an in-depth look at a measurement that is easy to understand yet tells a powerful story.

Customer Acquisition Cost

The Customer Acquisition Costs (CAC) is a number that satisfies the CFO’s needs while providing an effective measurement for the sales and marketing department.  In its simplest form you take all the costs associated with acquiring customers during a certain time period, then divide that by the number of new customers acquired during that period.  For example if you spent $1,000 on your sales and marketing department (including promotions, programs and salaries) during the month of June and you acquired ten new customers, the CAC cost would be $100.   You can include as many costs in this measurement as you want, but the main thing is to be consistent and track it over time.

If this cost goes up, you know right where to look to see what is driving it.  If the costs associated with your sales and marketing department are constant, then look at the campaigns you are running to determine the effectiveness of each.  On a smaller scale, you can apply the formula to each of the campaigns that you run—using pro-rated shares of expenses and specific campaign expenses—to determine which campaigns provide the biggest bang for the buck. 

Campaign Analysis

Some useful campaign analysis measurements to help you understand what is happening are:

  1. Cost-Per-Click. According to Google, Cost-Per-Click (CPC) is the amount you earn each time a user clicks on your ad. The CPC for any ad is determined by the advertiser; some advertisers may be willing to pay more per click than others, depending on what they're advertising.  Each click is considered an interaction with a customer—like a customer walking in the front door—and is the beginning of the lead nurturing phase of the customer cycle. Your cost per click is determined a series of variables—competitiveness, quality score and ad rank—and averaged over the life of a campaign.
  2. Cost-Per-Mille.  Cost-Per-Mille (CPM) is also referred to as the Cost-Per-Impression (CPI).  This metric measures the cost associated with a thousand advertising impressions.  This is useful because it allows you to compare costs across mediums.  For example a direct mail piece may cost $500 for 2,000 pieces, resulting in a CPM of $250, whereas a banner ad on a webpage may cost $500 for 200,000 impressions, resulting in a CPM of $2.50 (500/200,000)*1,000.
  3. Cost-Per-Action.  Cost-Per-Action or Cost-Per-Acquisition (CPA) is how much you pay to convert a lead into a sale.  Similar to CPC, CPA requires the lead to take a specific action—fill out a form, buy a product—before a cost is incurred.  Like the CPM metric, you calculate the CPA by dividing the total cost of the campaign and divide it by the number of acquisitions.  For example a campaign that costs $200 and generated 50 acquisitions, results in a CPA of $4.

Marketing metrics are useful tools that allow you to understand what is going on in your marketing department.  Gone are the days when companies blindly spend dollars on expensive television ads and not expect to track and measure the results.  The internet has given us the ability to measure almost every aspect of our marketing efforts, the trick is to be consistent and respond to what the metrics are telling you.  Using the marketing metrics mentioned above will give you the insights you need to make the most of every marketing dollar.

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It’s Your Business – Business Terms That You Need to Understand

When you work for yourself, you’ll find that the business world is filled with terms and jargon that you may not fully appreciate. Knowing these terms is essential to understanding business metrics so you can constantly improve upon what you offer, retain your customers and bring in new business.

Must-Know Business Terms for Your Professional VocabularyBusiness man looking at charts 300 wide

  • Business metrics: Business metrics are quantifiable measurements that you compare to established goals or benchmarks and use to track and analyze the performance of an organization or a specific process. Unlike key performance indicators, or KPIs, business metrics track all the areas of an organization instead of critical target areas. An example of business metric includes comparing the number of sales to past performance.

  • Key performance indicators (KPI): KPIs are quantifiable measurements that show the effectiveness of a process as you try to achieve a business goal. Common KPIs include analyzing the growth of the business’ sales revenue or determining the effectiveness of a marketing campaign.
     
  • Cost to acquire customers (CAC): Also called a customer acquisition cost, CAC determines the cost of gaining a new customer. To determine your CAC, add the cost of marketing, sales and related salary and overhead expenses, and divide the total by the number of new customers in a specific period. In addition to learning how much it costs to gain a new customer, you’ll have a better understanding of how CAC fits into your operating budget and how much you can afford to spend.
     
  • Long-term customer value (LTV): Also called the lifetime value of a customer, the LTV is the amount of repeat business you can expect from a customer. Business owners use this metric to determine how much to spend to on CAC. To gain a better understanding of LTV, you must determine how often the customer shops and how much she spends. When you know this, you can decide how to formulate customer retention programs and services.  
     
  • Allowable acquisition cost: Relating to CAC and based on LTV, this is the amount of money you’re willing to spend on every new prospect per campaign. Business owners generally approve allowable acquisition costs as a short-term strategy or if there are cash flow concerns.
     
  • Investment acquisition cost: Relating to CAC and based on LTV, this is the amount of money that you’re willing to spend per prospect even though it will lead to an initial loss. Business owners generally approve investment acquisition costs when they’re part of a long-term strategy and when other resources will absorb the losses.
     
  • Churn rate: The rate in which a business loses customers. A higher church rate signals higher customer losses and lower retention rates, as well as a rising CAC and decline in LTV.
     
  • Unique selling proposition (USP): The USP is what makes your product or service better and different from what the competition offers. You communicate the USP to prospects to encourage them to buy. For example, if you offer HVAC services, you may sell comfort, not necessarily air conditioners. Base your USP on customer behaviors, motivations and buying decisions.
     
  • Buyer persona: A representation of your target consumer or the type of consumer you believe is most interested in your products or services. Create a buyer persona based on factors like the target's gender, age and socioeconomic status.
     
  • Branding: The act of creating a symbol, name, design or slogan that identifies and differentiates your business and products from other businesses their products.
     
  • Brand recognition: The extent to which your target market or the public identifies your brand by its attributes. Brand recognition is successful when target consumers identify a brand with visual cues like slogans, logos or colors.
     
  • Competitive analysis: The process of identifying the competition and evaluating their strategies to learn their strengths and weaknesses as they relate to your own service or product. This analysis is vital to a successful marketing plan and USP. As you evaluate your competitors, learn about their past and current strategies, the platforms they use to market their goods or services, the potential threats they pose to your business and the opportunities they may create.
     
  • Sustainable competitive advantage: A competitive advantage that’s long-term and difficult for competitors to surpass or duplicate.
     
  • Platform: The manner in which your business delivers media content. Examples of platforms include radio and television advertisements, social media posts, websites, blog posts and press releases.
     
  • Revenue percentages: Most businesses have different sources of revenue, unless they only sell one product. Revenue percentages refer to the revenue that each product or service generates for the business. Keeping track of this metric can help you see changes in consumer spending habits and/or market or industry trends.
     
  • Stakeholders: Any group inside or outside of the business that has a stake in its performance. Such groups include employees, customers or clients, the surrounding community and shareholders.
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Have You Hired One of These Web Designers?

This is actually an article I wrote 3 or 4 years ago, but I came across it when I was looking for content for a clients newsletter and though I would share it with you.. It's a fun run through of some of the unique "characters" we run into in the web designer/developer world. If I missed a type l let me know in the comments.

1. The Human Flash –

This individual believes that every website should be flash. They will tell you that NOBODY uses html anymore. They will justify the website costing 5-10 times as much to do everything in flash by saying that it will look a LOT cooler.

2. The Dark Horse -

Will only do black backgrounds and white text. Doesn't really care that your target audience isn't 18-25 year old Goths or gamers. Designs the site the way they like it.

3. The Microsoft Manipulator -

Yep I'm picking on everybody – The Microsoft Manipulator will always go for Microsoft based tools without reviewing the actual customer requirements. He'll also refuse to make sure that his web site works on Firefox or a Mac stating they SHOULD be using Internet Explorer.

 4. Egomaniacial Coder –

This individual feels that they need to write everything from scratch and charge you for it. – warning sign – he tells you that the e-mail programs out there are all designed wrong and that he is going to write a new one for you

 5. The Widget Warrior -

this individual will fill your page up with so many widgets and spinning objects that it will take a week to download on the average home PC – Famous phrase – it works fine on my machine

 6. The Mac Maniac -

This individual believe that Microsoft is the enemy and will tell you that at every turn. They are welcome to their opinion. But since most of the world uses Internet Explorer it REALLY IS important that it displays correctly on IE. Phrase to watch out for, Well everyone should be using a Mac…it's better

 7. The Linux Lackey –

This individual is the geekier, less hip version of the Mac Monster. He also believes that Microsoft is the enemy, everything should be open source and everyone should be using Opera or Firefox for their browser.

 8. The Bored B.A. –

they've found that the only way that they can make a living with their Art degree is to do websites. Warning signs – they tell you that they have a wonderful inspiration for your web design as they pull out the watercolors or pencils….

 9. Jeremy – 

The neighbor kid, friends' kid etc – He's usually named Jeremy. He had a class in html in high school and has built a one page website. The biggest issue with these kids is that they are usually a combination of several of the above without and real knowledge or direction.

10. The Cranky Copywriter -

"Images are a waste of space — copy is what sells"

11. The Lazy Layout artist –

Every one of their websites looks exactly alike

12. Last but not least … The Perky Perfectionist –

They are ALWAYS "almost" done…kind of like this list of the top 7, I mean 10, I mean 12 Scariest Web Designers!

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PayPal What are you thinking???

Dear PayPal

I'm thinking about breaking up with you.

We've been together for almost a decade. A decade where I've bought and sold 10s of thousands of dollars of items using your service. I've loved the simplicity and the security that you provide me when I make purchases from people I don't know all over the world. I love how you make it easy for me to sell things online without having to go through setting up bank processing.

I evangelize you to friends, family, students and clients.Recommending that the simplicity that you provide far outweighs the higher transaction fees when selling and that the security you provide when ordering is unparalleled.

I look for the PayPal button when I'm making purchases and always use PayPal when it's available.

I even remember stubbornly ignoring Ebay's attempts to get me to use BillPay. I ranted to my friends about Ebay's attempts to replace you when you were so vital to Ebay's growth. Even when Ebay made us go through extra steps to use you I persevered. I thought you were in the right and I like to think that people like me are the reason that Ebay relented and bought you for $1.5 billion.

But I don't know what you're thinking right now.

I'm not sure if you've just gotten too big and forgotten your roots. Your service is still awesome, I've even had great customer service experiences the couple of times that I've had issues.

You have to remember that it's not the big things that kill relationships.

It's the little things. Like forgetting to put the toothpaste cap back on or leaving the toilet seat up.

Those things that just annoy you,

The first couple of times, you don't even notice

But after a while you mention it and explain why it bothers you

Then when it happens again…

You're mad

This is one of those things…

Why in the hell do I have to click "NO" I do not want to use your "Bill me later" service EVERY time I pay for something????

Once was fine…"Oh they have a new service…"

Even the second time, I thought "Oh there it is again…"

But then you started freezing the page to make me select yes or no on it.

That was annoying

But I dealt with it, thinking to  myself, "This is a little aggressive for a $5 purchase"

and it happened again

and again

and again

WTF are you doing??? Who programmed that thing. There are two issues here:

1. Why would someone want to use Bill me later on a $5 purchase?? Maybe a $500 purchase, BUT a $5 purchase???

2. Why should I have to say "NO" more than once. Hell even a 30 day cookie would be fine. A one day cookie would make it a little easier to bear…

Really…I don't get it. how much will you really earn on my $5 purchase if I use Bill Me Later…

Sincerely,

Former raving fan

 

Fir those that don't use PayPal here's the offending picture:

 

 

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Want to Build Your Business – Get Involved

I believe in giving back to my local community. I'm on the board of Junior Achievement, I co-founded the Save Our Parade committee and saved the Billings St Patrick's Day Parade five years ago, I helped with our Billings Swords For Kids run at the  Pepsi Refresh grant #17 out of over 300, I help with the Yellowstone Highland Games and I give free presentations on online marketing and social media for a variety of organizations.

How do I give back?

I prefer to give back using my skills: public relations, marketing strategy and social media /online marketing and tend to do that for the different groups I get involved with. Most of the time that's simply because i have the most experience other times it's because I request to fill that roll.

I believe that anytime you can fill a roll that fits your work skills it's best. It's not that I'm allergic to setting up tents or manning a ticket booth, but I know that my skills are best suited lining up and doing TV and radio interviews. So try to fill in where your skills are best suited. If you're a carpenter, build things, if you're a graphic designer design things, if you are extremely organized, manage the projects there is no end to the number of roles that are available to you.

How do I benefit?

There are a lot of great benefits from giving back. I truly enjoy teaching kids in the Junior Achievement program. It's so much fun seeing the look in a kids eyes when a concept hits home. I also get a chance to hang out with some amazing people that I may not have met without getting involved.

My business has benefited because I've been able to get to know a number of the local reporters and have been interviewed on camera as the local social media and online marketing expert and provided commentary on Facebook changes and Cyber Monday. This has helped me get speaking opportunities and new clients without doing anything but giving free information.

So get out and get involved in your local community, you'll feel great, you'll meet some great people and you can build your business. Now I need to run the St Patrick's Parade lineup starts in 1/2 an hour.

 

 

 

 

 

 

 

 

 

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