There is a common phrase you'll hear in marketing circles: vanity metrics. This term refers to numbers you collect about your business that make you look and feel good about your efforts but, in reality, are meaningless.
A KPI (Key Performance Indicator), on the other hand, is the opposite.
Instead of looking at impressive but hollow numbers, you'll have a set of digital marketing metrics that tell a comprehensive story about your marketing performance.
Read on to learn what KPIs you should track to skyrocket your digital marketing efforts for your contractor business.
Is a marketing campaign worth the money?
That's a question you can answer when calculating the return on investment. It's one of the most critical digital marketing KPIs and is typically the first metric a marketing manager will examine.
ROI assesses the overall financial return on any marketing spend. It's calculated by taking the profit from a campaign minus the marketing cost and dividing that by the cost.
What you are left with is a multiple. A 3X ROI means you got $3 back for every $1 spent. You can also express this as a percentage - 300% in the example.
It helps ensure your campaigns are profitable. If something gives you a negative ROI, you can ditch it instead of pumping more money into that strategy.
Cost per acquisition is your measure of how expensive it is to acquire a new customer.
You'll need to spend money on digital marketing to attract each new customer. That might be via ads, or it could be through content marketing. However, there will always be a cost involved.
Your cost per acquisition breaks this down into a figure per customer.
If you want to measure performance, this metric is crucial. It can tell you whether any marketing campaign is cost-effective and allows you to measure different marketing promotions side by side.
Suppose you have two ad campaigns, one with a CPA of $4 and the other with $7. In that case, you can immediately see which campaign is cheaper.
You need to know whether someone takes action when they see your marketing campaign. Action might mean signing up to your email list, grabbing an offer, or inquiring.
It's a vital step in any sales funnel. Monitoring the conversion rate will help you measure this. The conversion rate tells you the percentage of people who converted on any page.
If you have a free eBook offer on a landing page, and three out of ten people enter their email address to receive that eBook, you have a conversion rate of 30%.
A conversion rate will tell you which pages are performing and which aren't. A low conversion rate somewhere in your funnel is a bottleneck that you can work to improve.
You must know your click-through rate or CTR when you run any digital advertising campaign. When people see your ad online, they click on it or scroll past it.
A click-through rate is simply the proportion of people who clicked on your ad as a percentage of the total number of people who saw your ad.
The CTR reflects how effective your ad was at attracting your target audience. A high CTR means you had an interesting, relevant ad that people clicked on.
A low CTR is the opposite, and when you have this situation, you can begin dissecting the reasons why.
It might be that your ad was in front of the wrong people. Or you may have a poor ad design and copy that didn't capture people's imaginations.
When you run a marketing campaign, you want to know that it will bring you long-term returns. If you spend $1000 securing a new customer who only orders $500 of contractor services, that's not a great business model.
You need to understand the long-term value of a customer - in other words, the money they'll spend with you over the long term.
That way, if that customer only spends $500 on that first service but spends $5000 with you over the next few years, you can now see that $1000 marketing campaign in a different light.
A high customer lifetime value means you are excelling at retaining your customers. It's a vital metric to gather because you want a business with loyal customers who return repeatedly to buy from you.
Monitoring your traffic is an essential step in digital marketing. Without regular traffic to your site, it's hard to move people further into your sales funnel.
However, traffic numbers can sometimes be a bit deceptive. You could find yourself in a situation where you are getting lots of traffic, but it's not impacting your sales.
One metric that's a meaningful way to unravel this puzzle is your bounce rate. Your bounce rate is the number of people, expressed as a percentage, who abandoned your site after viewing a single web page.
It means you need to work on your website to make it more enticing to your visitors. If people don't stick around, you limit your opportunity to turn those website visitors into new paying customers.
Digital marketing goals are often geared toward getting people to your contractor services website. So, when you look at your Google Analytics, you'll want to know which campaigns impacted your traffic numbers best.
That's where traffic sources become an essential metric. It will tell you the percentage of visitors via different sources and how this changes over time. It's a vital way of shaping future marketing promotions.
For example, suppose your primary traffic source is organic search, and that figure is rising.
In that case, you know you have an excellent SEO approach for your contractor website. If it's low or dropping, then it's an area where you need to make changes.
Digital marketing metrics are a bit like a navigation system in a car.
It will point you in the right direction and let you know when you go off course. Use these KPIs and digital marketing tips to make a difference in future marketing campaigns.
Our digital marketing services at AltaVista can help you reach your contractor business goals. Find out more here about what we offer.