Marketing Analysis: Digital Audit and KPIs
Have you invested significant amounts in marketing and advertising, yet still don't know your return on investment? Are you unsure of which digital strategies to invest more in and which ones to invest less? Just like your personal investments in financial markets, your company's advertising program must generate a worthwhile Return on Investment (ROI).
How to Measure the ROI of Your Digital Marketing Strategy?
Fortunately, today many technological tools allow us to calculate the ROI of your marketing program with great accuracy. The days of focusing on impressions, clicks, and click-through rates (CTR) are over... If your current agency only talks about impressions and clicks, it should raise a red flag in your mind, as they are only measuring the tip of the iceberg, which has limited value. In the web era, when we talk about ROI for a digital marketing program, it's essential to evaluate and compare different KPIs (Key Performance Indicators).
What are the Important KPIs in Digital Marketing?
Conversion elements/goals can be various actions a user takes on the website or with advertising campaigns, such as:
- A call;
- A form;
- An email;
- A purchase;
- A newsletter signup;
- A software subscription;
- A survey response;
- An app installation;
- An account creation;
- An appointment booking;
The number of conversions is a performance indicator. To measure the number of conversions accurately, Google Analytics can be configured, and conversion elements can be created on the Google Tag Manager platform.
How to Increase Your Number of Conversions?
The first step to increasing the number of conversions is to increase the number of visitors (traffic) to the site. Several digital strategies can help achieve this. Another equally important element is your conversion rate. By improving your conversion rate, you’ll also increase the number of conversions.
THE CONVERSION RATE
The conversion rate is the percentage (%) of visitors who achieved a goal (a conversion) on a website compared to the total number of visitors, over a chosen period. A simple calculation can give you your conversion rate: divide the number of visitors by the number of conversions, then multiply that figure by 100. Measuring the conversion rate as a performance indicator allows you to verify if your website or pages include elements that encourage visitors to take action and meet your goals.
What Are the Average Conversion Rates in B2C, B2B, and by Industry?
The conversion rate in B2C ranges from 1.4% to 6.25%, while in B2B, it ranges from 2.23% to 11.70%, according to WordStream statistics on Google Ads. It’s important to note that the digital source bringing in visitors can influence the conversion rate.
Industry Average
Category | Conversion Rate |
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cell1_1 | cell2_1 |
cell1_2 | cell2_2 |
cell1_3 | cell2_3 |
cell1_4 | cell2_4 |
cell1_5 | cell2_5 |
cell1_6 | cell2_6 |
cell1_7 | cell2_7 |
cell1_8 | cell2_8 |
cell1_9 | cell2_9 |
cell1_10 | cell2_10 |
cell1_11 | cell2_11 |
cell1_12 | cell2_12 |
Industry Efficiency
Average by Traffic Source
Is It More Important to Increase Traffic or Improve Conversion Rate?
You want to increase your conversions, and your first thought is to get more visitors to your website. In theory, if you increase traffic, your conversions will increase as well. However, this assumes that this new traffic will convert at the same rate as previous visitors. It's essential not only to consider the quantity of visitors but also the quality, as it impacts the conversion rate. The equation (3 times more visitors = 3 times more conversions) is therefore incorrect.
To maintain a high conversion rate when increasing traffic, it’s crucial to enhance user experience on your site, optimize content quality and quantity, and improve the user journey. This is where User Experience (UX) optimization comes in. By keeping the same advertising budget, optimizing and improving your conversion rate can also increase your total conversions. For example, by raising your overall conversion rate from 3.0% to 3.2%, you could see a 10% increase in conversions with the same budget.
Cost Per Lead (CPL):
Marketing cost to generate a lead (potential client). The Cost Per Lead (CPL) is a KPI that measures digital campaign performance by determining the actual monetary investment required to acquire a prospect. In calculating CPL, it’s essential to consider both direct and indirect campaign costs. The formula to calculate CPL is: Total marketing investment / Number of leads. This KPI allows you to assign a monetary value to leads and make decisions about how to allocate your digital marketing investments across channels.
Customer Acquisition Cost (CAC):
Marketing cost to acquire a new customer. The calculation of CAC is done by: total marketing investments over a period / total customers acquired over that period. This performance metric allows for highly targeted campaigns and tracking of results. CAC also enables you to compare different strategies and identify the most profitable ones. This metric also helps to evaluate your value proposition, as an inadequate value proposition can lead to a high CAC.
Customer Lifetime Value (CLV):
The monetary value of a customer over their lifetime with a company, i.e., the average time a company retains a customer. The formula to calculate CLV may vary, but a simple one is: CLV = (average sale value) x (average number of sales) x (average customer lifespan).
How Can You Use CLV in Your Marketing Strategies?
A useful application is comparing CLV to CAC—specifically, the total financial return from a customer versus the total investment to acquire them. CLV calculation can even help determine the maximum CAC, the limit of monetary investment you’re willing to make to acquire new clients. It’s also crucial to monitor your customer retention rate and factors affecting it, as these influence average customer lifespan and, thus, CLV.
Return on Investment (ROI)
For every dollar invested in marketing, how much revenue does it generate? ROI measures the profitability of your digital marketing efforts, allowing you to evaluate and compare the effectiveness of various marketing strategies and tools. It’s a critical calculation for assessing overall performance, reducing the risk of investing in poor strategies, and maximizing profits. The calculation is: ROI = (Revenue - Investment) / Investment.
Choosing the Right KPIs for Your Business
Selecting the right digital marketing performance indicators is not a one-size-fits-all decision. The best KPIs to track vary between businesses. To choose the best KPIs for your business, start by evaluating your objectives and working backward to define them. Regardless of which KPIs are most useful, they should meet SMART criteria: Specific, Measurable, Achievable, Relevant, and Time-bound.
Our Marketing Analysis and Digital Audit
We analyze each investment product, strategy, platform, and advertising channel you've used so far to provide detailed insights and recommendations. This allows you to make informed marketing investment decisions. We define the best KPIs for your business and compare them with industry-specific data and benchmarks.
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