Tracking how digital marketing channels are performing and converting is crucial for any eCommerce business. Using our free eCommerce Digital Marketing tool, you can collate and measure all your digital marketing efforts to ensure you are setting an appropriate baseline spend for each channel and maximizing ROI.
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Define, measure and forecast your digital marketing efforts over 5+ years
Taylor Davidson, founder of Foresight, has designed an eCommerce Digital Marketing Model exclusively for TradeGecko. Here’s our step-by-step guide on how to use this free tool to define your digital marketing objectives and channels, and evaluate performance.
1. Define your marketing objectives
Start by identifying measurable objectives that support the short and long-term goals of your business. The targets you set should be based on the past performance of your business, as well as your overall strategy moving forward. Your goals might include the following:
Sales/conversions: Driving targeted traffic to your website that results in customers buying your product. For example, you might set a goal of a 20% increase in website sales year on year over a six-month period.
Lead generation: Procuring targeted visitors to your website who are interested in your products. This will be measured differently depending on your business model, but could include the number of inquiries made or “favorited” products.
Brand awareness: Making your business easily identifiable by your target market. This can be measured by factors such as an increase in direct website traffic and search volume for your brand name, or a rise in referrals from social media platforms.
Customer retention: The number of customers you’ve kept compared to the number you had at the start of a period. Customer retention can be measured by factors such as the number of repeat purchases made, or the number of customers logging into their accounts over a defined period.
2. Identify your key marketing channels
Once you have defined your core marketing objectives for a period of time, you will need to decide on the channels that will best help you achieve those goals. Common marketing channels that work well with this tool include the following:
CPC-based paid advertising: Cost-per-click advertising means you only pay when an ad is clicked on. This includes some forms of banner advertising, Google AdWords campaigns, and Facebook ads. If your sales funnel is effective but you aren’t sure if your ad will attract many clicks, CPC is a good starting point.
CPM-based advertising: Cost per thousand impressions advertising means you pay per thousand potential customers who view your ad. (The "M" in CPM represents the Roman numeral for 1,000.) Again, this is a strategy seen among channels such as banner advertising, Google AdWords campaigns, and Facebook ads. CPM advertising is most effective when you know an ad will garner a high click-through rate.
SEO: Optimizing your website’s content and structure to improve your search engine ranking. This is useful for increasing organic (i.e. non-paid) traffic to your website.
Content/direct/social/referral: Traffic and conversions that have come from content marketing efforts, direct website searches, social media, or other websites.
Viral: Acquiring customers or sales without spending any marketing budget, such as through word-of-mouth recommendations or reviews.
3. Identify your current baselines and budget
To determine how much you want to invest in each marketing channel in the future, you should look at how much you’re currently spending in each area and how each channel is performing against your goals.
If you are already running CPC or CPM AdWords campaigns, you should also look at your current average cost per campaign. You can find this under Campaign Management in your Google AdWords account:
Once you have analyzed your current baseline spend and performance, set a new budget per channel over a period of time (a year, for example), keeping in mind how each channel will support your marketing objectives.
4. Enter your data into the digital marketing for eCommerce tool
Under the “Get Started” tab, enter the basic details about your business. This includes information like the currency and start month, along with how you want to track performance and conversions. This can be via sessions, page views, or any other specific metric.
Under the same tab, scroll down and enter your baseline data and forecasts in the grey boxes:
You will need to enter the following information:
- Unique channel names (“Google AdWords”, “Google Display Network Ads” etc. as above)
- The month you will start using each channel – month 1 will be the first forecast month you specified above
- The month you will stop using each channel, if applicable – this is automatically set to 5 years but can be updated based on your own marketing plan
- Your budgeted monthly advertising spend for each channel
- The percentage by which you will increase your advertising spend each month, if applicable
- Your predicted conversion rate – the percentage of conversions (orders, in this example) in relation to the specified metric (sessions, in this example)
- Your budgeted cost per click or cost per thousand impressions, depending on the channel
- The click-through rate of advertisements to sessions for CPM campaigns
- Forecasted conversion rates for organic channels such as SEO, content, direct, social, referral and viral
- The average order value for each of your channels
Remember that you can add or remove channels depending on your marketing objectives.
Once you have filled out the essential data, you will see that a summary of forecasted acquisitions per channel has been prepopulated under the “Acquisitions” tab:
There are a number of useful insights you can glean from the data, including:
Where the majority of your orders are coming from
The impact of increased budget by channel
How additional spend on agencies, staff etc. impacts your bottom line and Customer Acquisition Cost
5. Use Key Reports for more customer acquisition data
To make interpreting your results easier, you can find your customer acquisition and revenue data represented graphically under the “Key Reports” tab.
Some of the key information you will find under this tab includes:
The number of orders by channel over a quarter
Year on year growth rate
Yearly Customer Acquisition Cost
About the eCommerce Digital Marketing Model creator:
Taylor Davidson is the founder of Foresight, which helps entrepreneurs use financial models for business decisions.
Through his template financial models and strategic advisory services, he has helped over 18,200 entrepreneurs on financial planning, projections, fundraising, and business strategy.
Download your FREE eCommerce Digital Marketing Model
Define, measure and forecast your digital marketing efforts over 5+ years in one easy template!