Kyle’s note: Chris Kilbourn has helped countless startups with their marketing campaigns. We asked him to share some of his wisdom and a few case studies on using data in your marketing campaigns. This is a great read for anyone who is using or considering paid advertising. Over to Chris.
“How to use data to pinpoint your most effective marketing campaigns” goo.gl/nCUkxd @WPCurve – CLICK TO TWEET
You’ve heard that saying, “you’ve gotta spend money to make money” right?
It’s true!
If you are running marketing campaigns, you really need to spend money to make money.
In fact, the more money you can spend on marketing, the more people you will reach with your campaigns.
That being said, widespread reach doesn’t necessarily mean you’re making your money back on those campaigns. Reach simply means that your messages are being seen by people, who may or may not become a customer.
Today’s post is all about showing you how to track the effectiveness of your campaigns to make sure you are making money back!
Here’s what you need to do…
1. Tag All of the Links You Want to Track
Before you launch your first ad campaign, send an email or post an important link onto your social media channels, you’ll want to tag the links so you can track each individual post, email or ad in Google Analytics.
Tagging links is really simple and completely free.
Simply go to Google’s URL Builder tool here:
https://support.google.com/analytics/answer/1033867?hl=en
Using the URL Builder you’ll want to insert the URL of the landing page you want to link to first.
Then you’ll need to add a campaign source, medium and name.
You could use whatever you want for these three items, but I recommend using the platform on which you’re posting the link to as your source. For example: Facebook, Twitter, Email, Google, etc.
For the medium I like to use something similarly direct such as post, email, CPC (for an ad), tweet or something like that.
Finally, the campaign name should be something memorable and descriptive. When you see it in Google Analytics you should know which ad, post or email correlates to that campaign keyword. For example: NewProductLaunch, MarchNewsletter, etc.
Let’s look at a real world example.
Here’s a Facebook post that was boosted with ad money on Facebook:
When a Facebook user clicks on this post they are taken to this URL:
https://www.WEBSITE.com/5-healthy-alternatives-fridge?utm_source=facebook&utm_medium=post&utm_campaign=ditchfromfridge
You can see the source = Facebook, medium = post and campaign = DitchFromFridge.
The marketer who set up this campaign can now look in Google Analytics and see exactly how this specific post performed.
You would find the results in Google Analytics under Acquisition > Campaigns > All Campaigns.
Once you locate the Campaigns section you’ll see your tagged keyword along with all of its individual metrics including visits, time on site, bounce rate and goal completions.
Tagging every URL you use in a marketing campaign so you can see how it performs is one of the easiest and most effective ways to use data to find marketing gold!
If you’re not tracking individual URLs you will only be able to see traffic stats in Google Analytics by general source. For example, you could see results from “Facebook” but you wouldn’t know which specific post on Facebook brought you the highest number of clicks or leads/sales.
It’s impossible to optimize if you don’t know all the details!
2. Set Up Goals in Google Analytics to Track Conversions
In the previous section I mentioned something called “Goal Completions.” If you’re not already familiar with how or why to use Goals in Google Analytics it’s important that you keep reading this section!
A Goal measures how many times a desired action was taken on your website.
Goals are usually set up as: form submissions, product sales or phone calls.
Here’s a quick video overview of Goals:
Here are the most common goal types:
If your goal(s) fall into one of these categories, you can just click next step and Google will guide you through the setup.
If your goal falls outside of these templates, you can set up a Custom goal. This is the option you want to use if you want to track how many people submit a form and end up on your Thank You page.
You should give the goal a descriptive name like “Contact Us Form” or “Application Form.”
The Goal Slot ID isn’t important, you can ignore that for now.
The type would be “Destination” and in the next step you would input the Thank You url.
Once you create the Goal you are then all set to start tracking how many of your website visitors complete the goal.
You’ll be able to see the overall number of goal completions and you can then break that out into goal completions by traffic source or even by the campaign URLs you learned how to setup earlier in this post.
Using the example from before, you can see there were 72 overall goal completions and 2 of those came from the DitchYourFridge campaign.
As you can see, learning to tag your marketing campaign URLs was really important!
3. Closely Monitor Your Cost Per Acquisition
I’m going to say something now that may sound a little crazy.
Your best performing campaigns aren’t necessarily the ones that drive the most conversions.
Let me explain!
Say you own an online store and you’re selling a product that costs $25.00, but the cost to obtain a visitor that makes a $25.00 purchase sets you back $30.00, you’re now in the red even though you got a conversion.
Here’s a real world example:
In the chart above you can see $4,215.35 was spent on one ad campaign to obtain 17 conversions which resulted in $1,207.19 in revenue.
If this was your company, would you be happy that you got 17 conversions, or would you be mad that you didn’t come out ROI positive? I’m guessing you would be pretty upset that you spent way more than you made on this campaign, or at least that is how you should feel.
The average cost per acquisition (CPA) for this campaign was $247.96 per order but the average order value was only $71.10. Yikes!
(In some cases this could be okay, and we’ll talk more about that in the next section, but for most companies this is not good.)
So, how do YOU calculate your CPA?
If you run an ecommerce store, it’s pretty simple. To come up with your CPA you would just look at how much you spent on each campaign and divide by the number of sales it bought in.
Using the example from above, I took the $4,215.35 in ad spend and divided by 17 sales to come up with a CPA of $247.96.
To calculate the average order value I took $1207.19 in revenue and divided by 17 sales to get an order value of $71.10.
You and try these calculations yourself, or use some of your own numbers in this CPA calculator.
If you run an e-commerce store you can use this simple formula to come up with your CPA. One you have that you can look at which of your marketing campaigns are actually generating an ROI for you. Those are your best, most effective campaigns!
If your website is focused on lead generation rather than online sales, you’ll do almost the same thing.
First you’ll need to determine how much each lead is worth to you. Once you have that number in mind, you’ll do exactly the same thing as e-commerce shop owners do.
Here’s another real world example:
This is for a site that considers a lead someone who fills out an online application.
Here you can Campaign A which has spent $2,127.01 so far and has generated 103 leads which the company values at $32,548.00. That’s great ROI!
Campaign B is doing even better. You can see $3,026.47 was spent and that generated 204 leads which the company values at $64,464.00. Even better ROI!
The CPA for each lead in Campaign A is $20.65 ($2127.01 divided by 103) and the CPA for Campaign B is $14.83 ($3026.47 divided by 204).
While both marketing campaigns are effective, the data shows that Campaign B is even more effective since it can bring in leads at a lower cost!
Hopefully these examples have shown you the power of knowing your CPA numbers, and that it’s not enough to simply look at your total number of conversions!
4. Collect Data to Track Customer Lifetime Value
Okay, so earlier I mentioned that in some cases it’s okay to spend more to acquire a customer than they will pay you initially.
What did I mean by that?
Well, let’s consider that you sell software that requires a monthly licensing fee of $10 per month. If you’re running an ad campaign that costs you $12 per new customer, but customers usually stay signed up for at least one year, you still come out ROI positive because that customer will spend $120 with you!
$10 x 12 months = $120.
Or let’s say that you have an online shop that sells gym clothes.
Perhaps your average cost per acquisition is $50.00 and an initial average order value for a new customer is only $30.00. That may seem ROI negative, but if you have good customer loyalty and retention programs in place, you can easily generate more money over the lifetime of the customer.
For example, let’s say a customer first buys some workout pants from you for $30.00 and then 15 days later you send them an email showcasing your latest running tops that would pair well with those pants. The customer may go on to buy another $30.00 worth of tops, so now you’ve spent $50.00 to acquire this customer but you have made $60.00.
That’s nice, but even better is when you continue to send marketing emails throughout the course of a year or two years or five years and continue to generate sales from this customer.
You know what’s even better than that?
When you get that customer to connect with you on social media and she shares your Facebook post with her friends and then her friends make a purchase with you too!
Now you’re really ROI positive!
If you’re not already collecting data on your customers to know what your average lifetime value is, you would never know that your marketing campaigns that brought in your first $30 sale would end up being ROI positive.
Here’s a simple way to calculate average lifetime value:
(Avg. value of a sale) X (number of repeat transactions) X (average retention time in months of years of a typical customer).
You’ll need to be in business for a few months to a year before you can really know what numbers to plug into the equation, but once you’ve been in business a while knowing this information will be vital to understanding which of your marketing campaigns are effective in the long run.
Getting Started
Now that you’re armed with all of the information you need to pinpoint your most effective marketing campaigns, it’s time to get started.
If you don’t already have the proper tagging and tracking in place, don’t worry, you can start today!
The only thing that should worry you is clicking away from this article without using the information to make your marketing campaigns more effective.
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