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The meteoric rise of digital marketing only proves the importance for businesses to understand how to effectively measure their success. We've discussed what the best marketing tactics for lead generation and marketing strategies for small companies are, but how can we actually know whether these strategies have worked or not?

This is where Digital Marketing Metrics come in. Metrics are the tools we use to measure the effectiveness of marketing campaigns.  You can capture these metrics through analytic tools such as Google Analytics, HubSpot Analytics, and SEMrush. This is not to be confused with your business Key Performance Indicators.  Key Performance Indicators track the performance of your business, whilst metrics are an indication of how effective your processes are. All KPIs are metrics but not all metrics are KPIs.

An advantage of understanding how to read metrics is that you are often able to see the impacts of your marketing campaigns in real-time, as opposed to traditional marketing campaigns, where the results were often not seen until months to potentially years later.

6 Digital Marketing Metrics Your Business Needs to Understand

However, a word of warning, not all metrics are as effective as others. These metrics are called Vanity Metrics as described by Tableau. Vanity metrics may sound good on a report but will not provide you with any true insight on how to generate greater sales.  For example, the number of Instagram followers. Having many followers may look appealing, however, is this large number reflected in revenue?  These are considerations one must take when allocating resources to boosting.

To assist you in determining which metrics you should prioritize, here are the essential 6 digital marketing metrics your business should understand!

6 Digital Marketing Metrics Your Business Needs to Understand


1.     Website Traffic

Website Traffic is the overall number of people (both new and returning) visiting your website.

Driving a greater volume of traffic to your website is essential to digital marketing success. However, merely measuring traffic alone will not provide you with key information required to convert sales.   To gain greater insight into the success of digital marketing campaigns, you should consider which channels are driving what percentage of customers to your website.

Analytic tools will generally divide sources automatically into five different channels. These include:

  • Organic - Visitors who visited your page from a search engine
  • Direct - Visitors who came to your website by directly typing the URL
  • Referral - Those who came to your website through a link from another website
  • Social - Visitors who came from social media
  • Paid - Visitors who came to the website from a paid ad or promotional content

Users who reach your site through different sources may have different motivations and interests to those to reach your website through other means. Therefore, it is also essential to consider other metrics in conjunction with Website Traffic. For example, conversion rates of sources (which is a metric we will discuss further on)

If website traffic is low or not receiving enough new visitors, it could indicate a need to work on exposure and reach. This could include employing a stronger social media marketing strategy or improving SEO ranking.

2.     Bounce Rate

Bounce rate is the average number of visitors that arrive at your site and leave without navigating to any other pages on your site.

The Bounce Rate can be indicative of many factors, but predominately it shows whether or not your page content is relevant for the attracted/desired users. Bounce rate is vital as it not only serves as a metric but is also a key indicator for search engines such as Google to determine a site's overall ranking.  Similar to conversion rate, a good bounce rate is dependent on the website and industry. Therefore, you should compare your sites with sites from similar industries and sites. Here are some tips to better market your business in 2021.

3.     Conversion Rate

Word Stream defines Conversion rate as the percentage of visitors to your website that complete a desired goal (purchase a product, contact you or sign up for an email newsletter) out of a total number of visitors.

The higher your conversion rate, the greater chance you are conducting a successful marketing campaign.  A good conversion rate is generally between 2% to 5%. It can also be dependent on the industry.  For example, e-commerce stores may have greater traffic, but a lower conversion rate to a financial service website, as they have less traffic, but more niche products, so as a result, they will have higher conversion rates.  Although this number may be low, if your conversion rate was 3% and you had 10,000 visitors, this still means that 300 users are completing a transaction.

4.     Cost per click (CPC)

(Ad Rank of the Ad Below Yours/Your Quality Score) $0.01 = CPC

Cost-per-click directly relates to paid ad campaigns.  Cost-per-click (CPC) is the dollar value you pay for each click on your digital ad campaigns.  This is critical in measuring the effectiveness of your spending on online ads.  It is important to monitor this metric so you can reach a larger number of customers at a minimal cost.  One small click represents attention from someone who is interested in the product you have to offer.  Therefore, the aim for CPC is to minimize it, whilst maintaining the value and quality of the traffic directed from the click.

 Watch this video from Google AdSense for more in-depth information about CPC:

5.     Return on Marketing Investment

(Revenue return – Marketing spend) / Marketing spend] * 100 = ROI (over X time period)

This is arguably one of the most important metrics to understand.  Marketing ROI allows you to measure whether the amount of money you are spending on your marketing campaign is being recouped.  This metric puts into monetary terms the success of each campaign and provides you with direction for future marketing campaigns. Analyzing ROI will point out which strategies should be allocated more investment and which weaker strategies should be given less or no funding.

6.     Customer Lifetime Value (CLV)

Customer Lifetime Value (CLTV) measures the total revenue a business can reasonably expect from a single customer account throughout the business relationship. This metric is used to identify customers who contribute the most revenue to the business.  This can help show retention rates and offer a glimpse of how customers feel about the product. 

Once the most profitable customers are identified, you can use this information to allocate greater resources to such customers or focus on building greater retention rates with other customer segments.  This is essential in increasing customer loyalty and retention. A study conducted by Bain & Company found that a 5% increase in retention rate can lead to a rise in profit between 25% to 95%.

The opportunities small businesses hold with digital marketing data are endless! Digital marketing is a necessity for businesses nowadays. Stay ahead of the curb by making sure you have a comprehensive understanding of these metrics.

If you want to better understand how digital marketing can benefit you and your business, get in contact with the Marketing Eye team here.

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