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Analytics - Murder by Numbers - Part 1
Want to know
a methodology to learn the exact effectiveness of every e-marketing
initiative you conduct? It’s a method that every company online
should implement. It’s a must-have if you’re actively
trying to leverage your web presence to increase your bottom line.
One of the great
aspects of the Internet and e-marketing is its ability to give immediate
results and feedback regarding all kinds of online activities. This
of course requires tracking.
Let us delve
into the world of tracking. Part 1 of this two-part series will
explain the basics of e-marketing tracking. Part
2 will provide a fool-proof method for website statistical
acquisition.
If you rent
some banner ad space at a website whose audience is your target
market, you can learn exactly how many people saw your banner ad
and how many clicked through to your site. You can also determine
how many people actually became a lead from the banner ad and even
see how many were converted into a sale.
If the numbers
were low the first time around, you can create a new banner ad and
submit it again, then track those results. You can keep tweaking
ad infinitum until you discover the perfect combination of design,
copy and presentation that yields the best results. This is one
of the wonders of the Net. But you’ll need a way to make sense
of all the numbers. And there will be a lot of numbers. Enter Web
Analytics.
Here are the
most important data points for an e-marketer:
1. Cost for
campaign
2. Reach or total visits (in Netspeak, ‘eyeballs’)
3. Unique visits
4. Click-thru number
5. Click-thru percentage
6. Number of leads generated
7. Cost per lead
8. Lead conversion rate
9. Lead to sales ratio
10. Number of sales generated
In the banner
ad example above, let’s say the statistics for a day are:
1. The banner
ad’s cost for the day = $500
2. Total visits = 1000
3. Unique visits = 800
4. Click-thru number = 50
5. Click-thru percentage = 5%
6. Leads generated = 20
7. Cost per lead = $25
8. Lead conversion rate = 40%
9. Lead to sales ratio = 10%
10. Sales generated = 2
The daily, weekly or monthly visits to the site that houses your
banner ad will be the reach or visits to the site. This number can
be broken down to both total and unique visits.
If there were a 1000 visits to that web page in a day but 200 of
those visits were from the same people visiting twice in that day
(and all the rest came only once), then total visits is 1000 and
unique visits is 800. This is because if 200 people came to the
site twice that day, then 200 of the total visits for the day were
repeats which leaves 800 unique visitors (1000 – 200 = 800).
Continuing with
the example, the number of people who view the banner ad and actually
click on it over to your site is the click-thru number.
The click-thru percentage is ascertained by dividing
the number of click-thrus by the number of page visits. For example,
if 50 people clicked-thru to your site from the banner, and there
were a total of 1000 banner views (because there were 1000 views
to that page that had the banner ad on it), then the equation would
be 50 divided by 1000, or 5%. (You could also use the unique visits
to calculate this percentage: 50/800 = 6.25%.)
Leads
acquired is how many people actually filled out a form
on your site or called as a result of the banner ad. In other words,
the user saw the banner ad on another site, clicked the banner thru
to your site, and then actually gave you their information via a
web form or phone call.
Cost
per lead is very important. The lower this is the better.
You calculate this by dividing the total cost by the number of leads,
in this case $500 divided by 20 leads, or $25 per lead.
The lead
conversion rate is the percentage of new leads you obtained
from the visitors driven to your web page as a direct result of
the banner ad. Of course this page needs a call to action in order
to convert a visitor to a lead. A call to action is a statement
on the page that says “Call today” and gives a phone
number or is a link that points someone to a web form.
If your banner
ad cost $500 and you got 20 leads (leads acquired), then your cost
per lead for this banner ad campaign was $25.
If 2 people
out of the 20 new leads actually bought your product or service,
then your lead to sales ratio is 1/10 or 10%.
Obviously, the
whole point of all this is to increase the last number, our final
sales. By monitoring all these numbers continuously and systematically,
we can gain an almost omnipotent view of our various e-marketing
campaigns. We can then leverage that knowledge to improve each initiative
to yield the best results.
Look for Part
2 of this two-part series. It will explain how to get all the initial
web statistics to plug into these formulas. It will also describe
a great method for obtaining accurate click-thru numbers.
Good luck number
crunching! The better you get at it, the more sales you’ll
create.
read
Part 2 --->
Article
by Jason O'Connor
© 2004
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