Why conversion rate is the most important metric
The use of digital media to reach new customers continues to rise. Overall, spending on digital advertisement, in some markets, has surpassed traditional media such as radio and newspaper. Yet, some businesses are not convinced of the effectiveness of digital marketing in driving results, especially revenue growth and higher profit. There is wide acceptance on the need for spending on digital to increase but the answer to how these impacts the bottom line remains elusive to some business owners. Proving the ROI on digital marketing activities is a significant road block to greater adoption.
Engagement and other fluffy metrics or vanity metrics have blinded too many marketers for too long. Number of “likes” or “mentions” or “story shared” on social media do not move the needle on profit. Business owners are asking “show me the money” or tell me the ROI for spending on Facebook page”
The answer is solid marketing analytics process. Analytics is the foundation of any successful digital marketing or media.
You need to show businesses the full impact of the sales funnel For example let's say a business spends $3,000 on digital advertising to promote a specific product or service on their website: - Digital ad delivered 2 million impressions with a click-through rate of 0.2% - This brings 4,000 new visitors to website - 1,500 of those visitors read about the product or service on the site - Of the total visitors, 100 (2.5%) purchased the product or requested a demonstration for the service. Based on this, the business owner can estimate that they have to spend $3,000 to acquire 100 new customers. This means cost per acquisition is $30. With this, impact of digital efforts is easier to understand and can be quantified. The end focus must ALWAYS be on conversion metrics not vanity metrics like impressions delivered. At the minimum marketing analytics should be able to tell business owners: • Amount of people that have taken action as a result of seeing the online/mobile advertising, redesign of the site or Social media spend • Amount of people that expressed further interest by contacting the business through email or telephone • The changes in level of usage or new customers that bought products or signed up for a service. Broadly, a percentage of responders who convert. Digital marketing is not JUST about engagement and brand awareness. Yes, they are important but only a means to an end. For instance, deeper customer engagement underscores a successful digital effort but it’s not a true measure of effectiveness of spend. The end goal should be: more sales, new customer signings, increased usage amongst current customers and profit. Using “marketing speak” to communicate the value of digital to business owners is undermining marketing efforts. Impressions delivered, click through rate and engagement score have to tie in to an economic or business value. In the end it boils down to CONVERSION RATE. The most important metric from a business perspective.