Table of Contents
- You Can Measure All of Your Digital Marketing
- Measuring Online Marketing Value Like the Pros
- GOOD - Measure Rankings
- BETTER - Measure Traffic
- BEST - Measure Behavior and Value
- Creating An Economic Value Measurement Model
- 5 Steps to Create an Economic Value Measurement Model for Your Website
- Step 1: Define Business Objectives
- Step 2: Create Goals for Each Objective
- Step 3: Decide How You’ll Measure Each Goal
- Step 4: Assign Value for Each KPI
- Step 5: Create Market Segments
Times are a changin’.
Well, actually, they’ve already changed … at least for what business owners can expect from marketing ROI.
There was a time not too long ago when ad agencies would sell business owners ad campaigns on the merit of the campaign’s reach and frequency alone.
The agency would sell the creativity of the photography and the cleverness of the headline and ad copy.
As a business owner, who was paying the bill, you’d be left to hope the ad idea was right and that it translated into more business for you.
That was the old way. Now, we can measure everything thanks to the internet and some pretty slick free tools. Digital marketing metrics are the answer.
All it takes is some hard work at the beginning … and we’ll show you exactly how to do that hard work in this post.
You Can Measure All of Your Digital Marketing
Instead of running a radio commercial and hoping it turns into sales, you can now run a Facebook ad and know exactly how many sales it produced.
Instead of putting up a billboard and hoping people call your number, you can run an ad on Google and know exactly how many times it was clicked and what those people did on your website after they clicked.
You can target your promotions, events, blog posts, and videos directly to the people who are most interested in them.
You can know exactly how much revenue your online marketing returns.
You can finally measure ROI for marketing.
Measuring Online Marketing Value Like the Pros
One of the biggest benefits of online marketing is that you can measure everything.
One of the biggest challenges of online marketing is that you can measure everything.
Because we can now measure everything, it’s easy to get lost in all the data. Just look at all of the categories of data that Google Analytics will measure for free.
Here’s how we break it down:
GOOD – Measure Rankings
Google rankings are a good place to start. Using a rank tracker tool like SEMrush, you can see which keywords your site ranks for and what position in the search results you hold over time on Google.
Google Organic traffic is often a website’s top source of traffic, so measuring rankings will give you a general idea of overall site performance.
BETTER – Measure Traffic
Measure the actual traffic (visits) to your website for a better picture of your online marketing. Using free Google Analytics, you can see the number of visits to your site from all search engines, social media, advertising, other websites, and from people directly typing in your URL.
BEST – Measure Behavior and Value
The professionals (like Google) use and encourage an even better way to understand online marketing ROI than visits: track what people do on your site and assign a value to those actions.
For example, one of our clients knows that each time someone submits a contact form on their website, it’s worth $250. We can now measure how many forms are submitted, their value (in dollars!), and know exactly where those form submissions came from (search, social, ads, etc.).
When you understand how much value your site is generating and where those valuable visits are coming from, you can:
- Spend your marketing budget more wisely
- Validate a larger marketing budget
- Dominate your competition
Now that we understand the best online marketing metrics to measure, let’s look at creating a model to structure and capture the value of our online marketing.
Creating An Economic Value Measurement Model
While there are many ways to create a measurement model for your website, we love Avinash Kaushik’s Economic Value Measurement Model. Kaushik is a Google Evangelist, bestselling author, and digital analytics guru.
We think he’s a good guy to model.
Here’s an example of his model:
As you can see, it is a strategic overview of the business objectives and how they tie to specific, measurable metrics on your website.
Let’s look at the steps to build your model.
5 Steps to Create an Economic Value Measurement Model for Your Website
Remember, you are building a tool that works for you and your team. Use these steps and examples as a guideline. The result should be something that makes sense to you and helps guide your strategic marketing discussions and evaluation.
Step 1: Define Business Objectives
Think about what you want your website to accomplish. You may have already completed this exercise when you built your website.
Think about your type of business and how your website helps your business.
- A medical practice’s website may help educate patients, book appointments, and facilitate the new patient paperwork process.
- A retailer’s website may sell products through an e-commerce store, teach customers about how to use the products, and attract new customers.
- A law office’s website may generate new client leads and qualify those leads.
- An auto service website may promote sales, generate leads, and educate car owners about required maintenance.
Even the most basic website serves as an electronic brochure to promote a business and generate leads via phone calls and contact forms.
TO-DO: Write down the 3–5 objectives for your website now.
Step 2: Create Goals for Each Objective
Now it’s time to define each objective by creating one or more goals for each objective. In this context, goals are the strategies you’ll use to accomplish the objective.
Let’s use our medical office example.
One of their objectives is to educate patients. How are they going to accomplish this? Let’s say they start a blog and dedicate it to educating their patients about common conditions. They also start an email list to deliver the blog’s educational content.
Objective: Patient Education
Goals: blog content, email list
TO-DO: Write down at least one goal for each of your objectives.
Step 3: Decide How You’ll Measure Each Goal
You now have objectives and goals for each objective. The next step is to decide how to measure each goal by assigning a metric or Key Performance Indicator (KPI). A KPI is simply a unit of measurement for a goal.
Back to our example, the medical office.
One of their goals is to educate their patients about common conditions. They decide to count the number of blog posts read as their KPI for this goal.
They have another goal to create an email list. They choose the number of email subscribers as the KPI for the email list goal.
Objective: Patient Education
Goal: Blog Content (KPI: articles read), Email List (KPI: subscribers)
TO-DO: Write down a KPI for each goal.
Step 4: Assign Value for Each KPI
When you assign a value to each goal conversion, you start to see the magic of online marketing. Many get stuck at this step, though.
It can be hard to quantify the value of your goal completions that don’t directly generate revenue, like sales transactions.
Don’t let this step derail your Economic Value Measurement Model, though.
Admit that your values won’t be perfect to start and commit to adjusting them as you start to track behavior on your website.
Our inspiration for the value model, Avinash Kaushik, has some excellent thoughts on defining the value of your KPI’s. Here’s the cheat sheet version:
- Avg Deal Value – Use your average deal/sale value (or lifetime customer value) to determine the value of a lead. For example, our medical office knows that each new patient has a lifetime value of $7,000. They also know that about 1/10 of people who submit a contact form on their website become a patient. They can then calculate that each contact form submission is worth $700.
- Ask Accounting – Sometimes a KPI doesn’t directly turn into a new customer or client. In those cases, you can work with accounting to understand the value of a particular action. For example, our medical office wants to know the value of a patient education blog post being read. They used to print out patient education materials, so accounting knows the cost per patient to print the paper and buy the folders to give to patients. It used to cost $.50/patient. Now they know when someone reads a blog post, it’s worth at least $.50 of value.
- Relative Goal Values – When all else fails, take an educated guess. Think about what you’d be willing to pay for a customer or lead to take that specific action. Or think about how that action may contribute to revenue. Pick a starting point and adjust as needed.
- “$1, Bob” – If you can’t think of an educated guess, use $1 as a placeholder. This is a short-term solution to get you started. You must have values for your KPIs.
TO-DO: Assign values for each of your KPIs.
Step 5: Create Market Segments
As a final step of the pro-level analysis, look at your KPIs in market segments. Segments are any group of people based on a definable characteristic. Think of how you evaluate your business outside of your website and match it up with your website traffic.
Here are some of the most common segments we analyze:
- New visitors
- Returning visitors
- Converted visits
- Traffic channels (search, social, email, referral, etc.)
TO-DO: Write down a few market segments to use in your economic value analysis.
The elusive marketing ROI calculation is now attainable for all online marketing. You have all the tools you need freely available to understand exactly what your marketing budget is returning.
We’ve outlined the steps above.
Now it’s your turn to gather your team and do the hard work of creating your Economic Value Measurement Model.
Want some help creating your model and tracking behavior on your company website? Contact Strategy today.