Digital marketing is a powerful way to get the word out about your products and services — that is if you know what you’re doing. For many businesses that embark on a digital marketing journey, things may seem confusing, especially when they are just starting out. As a result, they base their actions on blind guesswork. Which is not only wrong, but also risky.
The thing is, digital marketing does not have to feel like rocket science. Because in real terms it’s a simple science that your business, or any business can master. When compared to traditional marketing tactics, digital marketing is actually traceable and inexpensive, which makes it so much more feasible.
Now, the question is, can you actually make your return on investment more predictable with digital marketing? Of course you can. But for that you’ll have to understand the importance of measuring and understanding the right digital marketing metrics.
When you know your metrics well, it can make a world of a difference to your campaign. The positive return on investment that you seek from your digital marketing efforts depends on what metrics you track and improve in the long run.
However, there’s a catch: studying the wrong type of digital marketing metrics can actually cripple your campaign instead of helping it. And with so much data easily available to analyze, the whole process of choosing the most appropriate digital marketing metrics can be difficult and overwhelming.
At the end of the day, you are running a business. And what matters the most to your growth is revenue. Monitoring metrics that actually help you increase your revenues overtime should be your topmost priority. Rather than focusing too much on vanity metrics (such as the number of social media followers or likes) that don’t really have a significant effect on your bottom line, you need to work on what is real.
In the following article we look into 15 important digital marketing metrics that you need to keep an eye on in order to revamp your existing strategy or ensure you’re starting on the right note.
#1: Total Number of Website Visits
Traffic is the lifeblood of any website, which it needs to survive at every cost. Of all the digital marketing metrics, the total number of visitors that your website receives from all sources is an important metric to keep an eye on.
No matter what type of marketing campaign you are running, you will have to ultimately measure how it is contributing to your website’s traffic growth. Total number of visits gives you a bird’s eye view of it.
Although the total traffic numbers keep fluctuating from month to month, any sharp decline in traffic indicates something isn’t right and needs to be improved. If your campaign is healthy and is heading in the right direction, you’ll see the total number of visits metric automatically increase with time.
#2: Interactions per Website Visit
If you want to know your traffic inside out, working with the right digital marketing metrics is needed at all times. The “Interactions Per Visit” is obviously a useful metric that needs to be tracked along with others. However, in order to derive some actionable insights from it, it’s important that you interpret and understand it well. Which means you’ll have to focus on the following variables:
- The number of pages visited by a user.
- The time they spend on individual pages.
- The action they take on each page.
Keep in mind that although interdependent on each other, interactions and conversions are very different. Analyzing the interactions per visit metric gives you a better idea of your visitors’ behavior/activities. You can then use this knowledge to improve your site so that more people spend more quality time on your site. Which in turn makes your website sticky.#3: New & Returning Website Visitors
When it comes to digital marketing metrics, the “new and returning visitors” metric is fairly straightforward and simple to understand. It basically tells you what percentage of people visiting your site have already visited before and how many of them are new.Like any business website, you want people to visit your website again and again because recurring traffic is always valuable. The new versus returning traffic metric helps you understand how well your web content is performing in terms giving value to your existing visitors. It gives you the opportunity to improve your website’s offering along with your marketing.
If you see more of your existing visitors coming back to your site and less of new traffic, you may need to do one of these two things:
- Ramp up your marketing efforts to boost the number of new visitors.
- Keep doing what you’re doing (while gradually improving) because your existing visitors are clearly liking your content.
However, if you see most of your visitors are new and the majority of them aren’t returning, you will have to work on your content and try to make your website more sticky by offering a better user experience.
#4: Average Time Spent On Website
If people like your site and the kind of content you’re publishing, they’ll give it a “thumbs up” by simply investing more of their valuable time on your site. The average time spent on your website tells you how and if visitors find your website useful, and if they liked their experience on it.
Now, you obviously cannot and do not need to beat the “time spent on website” of a popular site like, say, Wikipedia. But that doesn’t mean you shouldn’t care about it. When more and more people are spending lesser time on your site, it is a matter of concern. It’d be a great for your business if you can have them spend a few valuable minutes browsing your site and connecting with your content.
Remember, a website with poor content or one of that is low on value will have a hard time keeping visitors from exiting it within a few seconds.
#5: Traffic by Individual Channels
The traffic your website receives obviously has a source of origin. Your channel-specific metrics tell you where exactly you got your visitors from — the actual source. Which can in turn help you focus your marketing efforts in the right direction.
“Traffic by Channels” is one of the most crucial digital marketing metrics to keep an eye on because it gives you a more complete or detailed picture of your traffic. When you know which channel or source is helping you get the most visitors, you’ll be able to work on it better, especially when you’re running a full-blown online marketing campaign.
If you look into the “Acquisition” section of your Google Analytics, you’ll find that your traffic is segmented based on the following four sources:
- Direct Traffic: Anybody who visits your site by directly typing your URL into their web browser is considered a direct visitor. These visitors usually happen to be the most loyal.
- Organic Traffic: People that land on your website through a search engine like Google or Bing make up your organic search traffic. Generally speaking, the more the organic traffic you get, the better it is.
- Referral Traffic: The traffic that hits your website via an external link from another site is known as referral traffic, which can be highly valuable as long as it is relevant.
- Social Traffic: Visitors that arrive on your website through the popular social media platforms such as Facebook, Twitter, Instagram, etc. fall under the social traffic metric. Getting a good amount of social media traffic is an indication that your content is being liked by people and they are actually engaging with it.
#6: Conversion Rate by Source
There’s no doubt that knowing your traffic sources well can make a huge difference to your overall marketing efforts. You get a better sense of direction and ultimately a higher return on your investment in the long run.
However, you cannot simply depend on traffic-related data when it comes to gauging the success of your marketing campaign. You also need to know how and if your traffic is converting, and which channel is driving the most number of conversions.
For example, let’s say that you are using Facebook to drive traffic to your ecommerce site, and you’re also getting regular organic search traffic to it. Now, the traffic you’re getting from your Facebook page may be more when compared to organic search traffic, but it may not be converting better. Or it could be vice-versa.
When you know exactly which of your channels are helping you convert better, you’ll be able to improve your ROI by simply focusing on it more in terms of efforts and investment.
Here’s an example of an average conversion rate by source from an ecommerce site.#7: Bounce Rate
There are two types of website visitors: one that visit your site and explore it further by navigating from one page to another. And second are those who leave your website only after visiting one page.
Your website’s bounce rate is determined by the percentage of visitors that do not go beyond the entrance or the landing page. In other words these are visitors who simply enter your site, don’t like it for some reason and “bounce back” to the site they came from or another site that is not your domain.
Since every page on your site is different, the bounce rate is bound to differ from page to page. Your homepage may have a lower bounce rate than, say, your “about” page or “contact” page.
Although the “bounce rate” metric is relative, it does give you a fair idea of how well your site is performing in terms of providing relevant content, or if it’s giving an experience your visitors want.
When a page has a higher bounce rate, it necessarily isn’t bad because sometimes the visitor gets what he/she wants right away (such as filling out a contact form) and isn’t required to browse any further.
However, at other times, people simply hit the back button or close the window because they had some issue with the site’s design or usability. An issue that could have been fixed.
Bounce rate is one of those critical digital marketing metrics that you should not ignore because it helps you identify the core issues with pages on your site that are pushing your visitors away.
#8: Website Traffic to Lead Ratio
Quality traffic has a higher chance of converting into quality leads. So the more such traffic you get, the more leads you generate. The traffic to lead ratio metric tells you how many visitors to your website converted into leads.
When you analyze this metric, you get a clearer understanding of how targeted and relevant your traffic is. And how well your website is converting website visitors into real leads.
If you’re just starting out with your digital marketing campaign, your traffic to lead ratio may be low or average, depending on your current marketing activities and goals. However, with time as you work on boosting your site’s conversion aspect, you’ll see this ratio improving along the way.
#9: Cost Per Visitor (CPV) and Revenue Per Visitor (RPV)
The reason why you need to keep track of digital marketing metrics is because you ultimately want your marketing to yield positive results. Each marketing channel you use to promote your business should help you get a better ROI. If it isn’t working, it either should be improved or chucked altogether.
One way to find out whether a marketing channel is working for you is by measuring your cost per visitor (CPV) against your revenue per visitor (RPV). In general, your RPV should be more than your CPV to make your campaign profitable. In case your campaign is paid, then knowing your CPV and RPV will help you allocate your budget better.
You can easily arrive at your CPV by dividing your total ad investment by the total number of visitors you were able to generate through that particular marketing channel.
For example, if your Facebook ad campaign ran for a week and generated 100 sales worth $5,000 USD and a total of 2,000 website visitors in the same period, then your RPV would come down to $2.50 USD.
Whether your preferred marketing channel is social, email or search, you can and should always run your numbers to know it’s worth investing in the channel.
#10: Lead to Close Ratio
A lot of businesses do not take this metric as seriously as the other digital marketing metrics, only because it is more about sales and doesn’t directly relate to marketing. However, you will be able to understand your digital marketing results with more clarity when you are also measuring your sales growth.
Why? Because after all, your return on investment depends on the amount of sales you are able to generate as a result of your marketing efforts. What’s the use of getting leads if you are not converting more of them into sales?
Having a higher lead to close ratio indicates that your marketing efforts and sales efforts are working in conjunction with each other, and are operating within budget.
You can easily calculate this ratio by dividing your total number of closed sales with the total number of leads generated, multiplied by one hundred. This should give you a clear idea on how well your sales are doing.
#11: Cost per Lead
When you’re planning your digital marketing budget, it’s important to know how much you should spend to reach your business goals. Out of all the digital marketing metrics, cost per lead plays a crucial role in helping you structure your budget. Because it tells you what you should be investing in order to get a qualified lead.
A lead could be your existing customer, but it could also be someone who has only expressed interest in your product/service or your niche area at some point of time. It’s worth noting that your lead may or may not buy something from you in the future. But still, a qualified lead is valuable for your business just because they have a higher chance of turning into a paying customer.
You can find out the cost per lead by dividing the total ad spend by the total number of leads you were able to generate due to it.
The idea is to lower your average cost of gaining a lead as much as possible, so that the average amount your customer spends is higher.
In simple terms, the lesser you spend for acquiring a lead, the higher is your chance of earning a bigger revenue. Which means, you have to aim at getting more leads in a cost-effective manner.
#12: Customer Retention Rate
For complex B2B businesses that have a long and detailed buying cycle and for businesses that deal with single-time sales, customer retention is a metric that is not easy to measure. But that doesn’t necessarily make it any less important amongst the list of digital marketing metrics.
Just the way it is important to get new customers, it’s equally important to retain the existing ones — regardless of the size of your business. Because it’s a known fact that acquiring a new customer is much more expensive than retaining a current one.
However, thankfully, for the majority of businesses operating online (such as ecommerce and SaaS), measuring customer retention is as easy as calculating the percentage of returning customers throughout a particular period.When and if your business experiences a low customer retention rate, it means one of the two things:
- Your product/service isn’t giving consistent value and hence is having a difficult time keeping customers paying for longer periods.
- Your overall outreach process/program isn’t doing enough in terms of strengthening the relationship with existing customers and giving them a reason to stay.
When you know your customer retention rate, you’ll also be able to calculate the average value of your customer. Which makes it a critical metric to keep track of amongst all the other digital marketing metrics.
#13: Customer Lifetime Value (CLV)
When you’re running a business, you want long-term profits, not just short-term gains. Customer lifetime value (CLV) plays an integral role in helping you achieve this goal.
CLV represents the business you gain from a single customer throughout your relationship with them over a period of time. In order to grow your business consistently, it’s not only important to track your “repeat customers” but also maintain them.Knowing your customer lifetime value allows you to gain an understanding and achieve clarity on two important, interconnected factors:
- The amount you can expect to invest in your business in order to achieve a positive outcome.
- The return that you can potentially generate from your investment in the lifespan of a customer.
Also, when you are aware of your customer lifetime value, you’ll know where exactly to focus on:
Acquiring new customers OR retaining the existing ones.
Remember, your marketing dollars are valuable and need to be spent in the right direction. Here’s how you can calculate CLV for your business:
Generally speaking, when you see your CLV is small, you’ll need work on customer acquisition in order to maintain business growth. However, if you figure that your CLV lies on the higher side, then you may want to put more effort into customer retention.
When talking about digital marketing metrics, only the CLV metric will help you look deeper and get a stronger understanding of your marketing efforts. Mainly because it gives you a clear picture of what your average customer spends over time. It lets you rightfully predict the profit you can expect to create from your loyal customers.
#14: Cost Per Acquisition
Cost per acquisition or CPA is what your business revolves around because it tells you how your business is performing in terms of revenue. Every time you have a real paying customer/client, this metric changes and shows you how much you should be realistically investing in order to convert a prospect into a paying customer.
No matter what type of paid campaign you are running, you need to keep an eye on your CPA. Because even if you are buying traffic at a cheaper cost (by paying less per click), you will not be growing your business until and unless you have actual paying customers. Every paid marketing channel you use is only worth it when it helps you bring down your CPA. In short, when you focus on cost per acquisition, you’ll be getting a more complete picture of your campaign’s success or failure.
#15: Estimated Return on Investment
The only reason you’re marketing your business online is to boost your profits in one way or the other. Which makes your return on investment or ROI one of the most critical digital marketing metrics to keep track of. Because it shows how far your campaign is profitable or if it is losing steam.
When you have a positive ROI, it means that your marketing is working and there are no major changes needed to be made. However, when you see a negative ROI, it means you’re losing money and you have to adjust your marketing strategy.
Calculating your ROI is pretty straightforward:
It doesn’t matter what type of business you are running and if it’s big/small. If you want it to grow, you cannot ignore your ROI for long. It’s one of those digital marketing metrics that will decide whether your campaign is a raging success or a downright failure.
Now that you know the most important digital marketing metrics to track within your campaigns, you should optimize your campaigns to improve these metrics. The actions of your campaigns should be a direct reflection of the goals you are trying to achieve through digital marketing.
If you know these goals, but still need help achieving them, reach out to us. A member of our team would be happy to discuss some options that will improve your digital marketing metrics and overall campaign performance.