Getting Smart With Metrics And Tracking Business Performance

In business, it’s often the minor details that define success over failure. Different kind of metrics and statistics are not the most exciting subject, but you should not underestimate their importance and the impact they can have in tracking and scaling your business. If you track only the basic metrics and numbers relating to your website, you’ll have a great advantage over someone else that doesn’t bother with it. Metrics give you real-world data to work with so you can see what’s working and what doesn’t, determine room for improvements, and pinpoint any abnormal results (like when your servers go down and cause an outage). All major websites have resources that track key metrics, and this is something that you should be doing, too.

 Trying to make a marketing or business strategy work without using any kind of metrics to track the results is like going on a long trip but without a map or clue if you are on the right track. You should have some metrics in your mind that you should be trying to improve in your campaigns and we’ll help you to determine the most important metrics to track. There are so many marketing metrics tracking tools that are available today that you can track just about anything. Because of this, it’s easy to end up spending your time tracking the metrics that don’t give you the best insight and actionable information that you can implement to improve your campaigns.

It doesn’t matter if you are running a website, e-commerce business or email marketing campaigns, metrics are something that you should be obsessed with and your business and marketing decisions should be guided by data. If you can’t measure something, then you have very little chance of improving it. We know that it’s often hard to decide what metrics to monitor and that’s why we wrote this guide to help you start with implementing and tracking the most important metrics so you can grow your business to a new level. While collecting as much data as possible will give you valuable insights, don’t jump so deep before you have the essentials down.

Traffic Metrics

Traffic statistics are the most popular metrics that businesses track. The number of visits to the website is something that people obsess over. This makes sense because website traffic is something that can easily translate into more money going to your business. More traffic means that more people are viewing the website and the higher chance that someone will buy a product or service.

Because of this, people tend to focus just on the big-picture, i.e. the number of visitors, but this is not all there is to it. The problem with this is that these stats do not show us how well the traffic is translating into more money. Also, this metric doesn’t take into account how much you are spending to get that traffic to your website. Traffic stats also doesn’t tell you how the traffic performs depending on where it comes from. The broad metrics like traffic won’t give you any actionable information that you can use to improve.

Traffic Acquisition

The channels through which the traffic comes is an important metric when analysing traffic properly. For example, one of the things you’d want to track is the volume of traffic that you receive from each traffic source. This way, you can track the volume that comes through guest posting, social media or organic search rankings. When you analyse these numbers, you can then focus on the channel that is getting you the most visitors.

Google Analytics breaks down the traffic sources into 4 broad categories so you can have a quick overview.

Another metric to track with traffic acquisition is the customer acquisition cost or CAC. This represents the cost you pay to get a new customer to purchase your product or service. The CAC is not just a cost of one thing, but rather a mix of costs for advertising, software, analytics, team salaries, etc. Knowing how much it costs you to acquire a new customer is crucial if you want to effectively grow your company.

Calculating the CAC is simple and all you have to do is calculate your monthly marketing budget and divide that number by the number of new customers for that month. If your monthly spend is $10,000 and you got 100 new customers, then that means that your customer acquisition cost if $100. If you want to understand your CAC even better, then break down the costs for each specific channel that you are using to get new customers. This could be through search, social media, email marketing, etc. Is important to keep CAC below the customer lifetime value in order to be profitable.

Conversion Rate

Conversion metrics is another category of the most important analytics that you should pay close attention to. A simple definition of a conversion is when a website visitor completes a goal action. Conversion can be when a subscriber opts-in or when a customer buys something. The conversion rate will show you how productive your traffic is.

What qualifies as a conversion will vary depending on your website. Some of the conversion goals might be a sale, a new subscriber to your email list or a social share.

A/B testing is one of the most important things you should be doing if you want to optimize your conversion rate. Without it, your conversion rate will always be the same and you won’t make any progress. You need to know which landing pages are the most productive so you can cut the ones that are not giving you the most ROI. When doing A/B tests, you should be tracking these four major metrics on your landing pages:

  • Click-through rate (CTR)
  • Conversion rate
  • Bounce rate
  • Exit rate

Conversion rates vary a lot based on the industry and the channel. Take a look at a breakdown by channel:

New vs. Return Visitors

There are a few groups of visitors that are bringing you conversions, primarily new and return visitors. Generally, the visitors that return to your website are more likely to convert simply because they are familiar with your website and they probably find it appealing. Getting return visitors to spend money on your website is much easier than getting someone new to purchase.

Cost Per Conversion

You should be tracking how much you are spending to get each conversion. Conversion acquisition channels is a good place to start to get a good indication of the costs. You should work on getting the cost as low as possible.

Conversion Value

This is another important metric to keep in mind. The easiest way to track the value would be a sale, so if someone purchased something for $100, then the conversion value would be $100. Is more difficult to assign conversion value to other types of conversions like email subscribers. For example, if 20% of your email list ends up being your customer on average (and spend $100 on your service or a product), then each new subscriber is worth $20.

Bounce Rate

Bounce rate numbers are displayed as a percentage and will tell you how many visitors leave your website when they arrive. The lower the bounce rate the better, since that means that more visitors are browsing around and enjoying your website.

Bounce rate will vary between different type of websites. You should be making continuous changes and improving your bounce rate, especially if is too high which means that visitors are leaving quickly. Bounce rate doesn’t tell you why they are leaving, you’ll have to check other metrics for that. Some of the most common reasons for high bounce rate are broken websites, slow load times and poor first impression. If you are having bad bounce rate, you should be working on those few things first and try to improve them as much as possible. Page views per visit measure the number of pages that visitors browse through each time they are on your websites. Higher numbers mean that visitors are interested in the content on your website.

If you want to measure engagement on your website, then take a look at the average time on site metric. If you see that visitors are spending 30 seconds or less on your website before leaving, then there’s probably something that is repelling them.

Customer Lifetime Value

Customer lifetime value (CLV) measures how much a customer spends with your business through their customer lifecycle. You can calculate it by subtracting the acquisition cost from the revenue earned from that customer. If your acquisition cost is too high, then you’ll need a lot more customer to break even.

People usually have an idea of the value of an average transaction but ignore the fact that when a customer gets into your sales funnel that they are more likely to become a repeated customer and buy again. An example would be a membership website (but LTV can be applied to any other type of business) – if monthly membership costs $50 and the average customer remains a member for 10 months, then each customer is worth, on average, $500 to that business.

LTV is worth knowing because you can make a more calculated decision when allocating your resources such as the budget for paid advertising. The higher the LTV, the more you can spend on paid advertising since you know that each new customer will earn you much more over time.

Email Metrics

Email marketing is still one of the most effective ways to grow your business but also to acquire and keep customers. Is a crucial element of any business that is successful. A study done by Direct Marketing Association from 2013 has shown that email marketing has the highest ROI when compared with any other marketing strategy. Email gives you the option to get very personal and targeted with your advertising while generating more revenue than other marketing channels.

If you want to get these ROI figures, then you need to constantly improve the effectiveness of your email campaigns by tracking the metrics of your campaigns and using that information to move forward. Some of the most important metrics to track while doing email marketing are:

  • Delivery rate
  • Open rate
  • Click rate
  • Conversion rate

Some of the other metrics that might interest you would be unsubscribed rate, bounce rate, earnings per email, and complaint rate.

Open Rate

Open rate is the most basic metric that you should be tracking. This is a number of people on your list who open your email. For example, if you have 1000 subscribers and you got an open rate of 20%, that means that 200 people opened that email. According to Mailchimp benchmarks, the average open rate across industries is around 20-25%. If you notice that your open rates are below that, then take some steps to fix that. Things that you can improve are email subject lines, preheaders, and of course, make sure that emails are reaching people’s inbox folder instead of landing in the spam folder.

Click-through Rate

CTR represents the percentage of people who click on the link in your email. Mailchimp’s data report that CTRs are usually below 5% (ranging from 2% to 3% on average). So, if your CTR is below 5%, that means that for every 100 people who open your emails less than 5 clicks the link in the email. If you are getting low CTR, then you can try to repeat a link several times in the email but change the anchor text it a bit.

CONCLUSION

If you are just starting to learn about metrics and how to implement them, then all those charts, numbers, and percentages can look intimidating. There’s no reason to panic because most top tracking software’s show the data in a straightforward way so you can digest it easily. Remember that all of these metrics that we explained here are critical for your business. They give you a bigger picture and detailed overview instead of relying on just assumptions. Consistently making improvements based on these metrics will put you in the best position going forward.