If you’re an eCommerce business owner who has recently introduced a digital marketing plan, you’re probably asking yourself: “How do I know if it’s really working?” After all, when you decide to leverage digital marketing to grow your business, you want to make sure your time and money is being invested appropriately.
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Here are the key factors you should consider when measuring the performance of your digital marketing initiatives.
eCommerce metric definitions
To find out how your digital marketing efforts are performing, you first need to identify the metrics by which your success will be measured. Some of the most common metrics include:
Traffic: Changes in the volume or type of traffic to your website are a good indicator of whether your digital marketing techniques are effective. This includes factors such as overall site traffic, traffic sources (where your customers are coming from), time on site and bounce rate, and can be measured using Google Analytics.
CTR (Click Through Rate): If you’re running paid ads or email marketing as part of your marketing campaign, your click through rate can tell you which content is garnering the most clicks from visitors. Your CTR should be measured against the average for your industry.
CPC (Cost Per Click)/CPM (cost per thousand impressions): Similarly, if you are running ad campaigns, you should look at how much you are paying per click on your ad or per thousand impressions, depending on the type of campaign.
Conversions: As an eCommerce business, conversions will most likely be defined as product sales on your website. Measure your sales against previous periods to see how your digital marketing efforts are improving business. If you’re using Google AdWords, you can also set up conversion tracking to see where your sales are coming from.
Related Article: 5 ways to increase sales via social media
CAC (Customer Acquisition Cost): This is the cost you have paid to acquire new customers over a certain period. You can calculate it by tallying your total marketing and advertising costs and dividing it by how many paying customers you had during that time. This should also be measured against previous periods and your industry average.How to find industry benchmarks
Having performance data available to you is only really useful if you can understand how it stacks up against other eCommerce businesses in your industry. There is a wealth of information online about industry standards in digital marketing – such as this Google AdWords benchmarks by industry data – that can give you an insight into where you stand in your sector.
How to create KPIs for your business
Once you have identified the key metrics by which you will be measuring performance and understand your industry standards, you should set targets, or key performance indicators, so you know if you are meeting your goals. You should define the following:
- Your baseline – where you currently stand against all your chosen metrics
- Your main objectives – this could be more sales, brand awareness, customer loyalty, or a combination of objectives
- Your strategy – what digital marketing activities you are putting into place to achieve your objectives
- Channels – the places you will implement your strategy e.g. Google ads, social media, website content, email marketing etc.
- Time period – How long it should take you to achieve your goals
- Growth forecast – the percentage or amount by which you want to see each of your key metrics improve
How to measure your digital marketing success
When you’ve locked down your KPIs, it’s important to continually check in on how you’re performing against those objectives. Record your monthly results by metric and channel, so you can identify areas where you’re achieving your KPIs, as well as areas where you need to revisit your tactics.
Our free digital marketing tool for eCommerce businesses allows you to record your key metrics, marketing channels and performance data in one place – and it pre-populates key reports so you can easily see how you’re tracking.
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.