And Why Nearly Every Metric Is Worthless On Its Own
One of the biggest issues many site owners have when hiring an outside agency to run their paid ad and SEO campaigns is understanding the reports that are presented and why the choice metric of the agency may not be the most important metric to be following, and why it has the potential to disguise a real issue somewhere in the sales process.
Let’s take a look at the sales process one step at a time and discuss why each metric needs more context.
Discovery is the very first time your business or product is seen by a potential customer or client. The most common metric for discovery is the number of impressions that your site sees either in search or in AdWords (or Facebook Ads, etc.). As the first step in the customer journey, the number of impressions your site receives can be the make-or-break point of a website.
It’s also the easiest number to ‘fake’ by an agency you have hired or an in-house marketing expert to ‘drive traffic’ to your website.
In natural search (SEO), huge increases in impressions can be achieved by targeting high volume phrases and keywords that have little competition, but also have little value to you. Since Google stopped showing us the search terms used to find your website this has gotten far easier to fake.
In AdWords, you can increase the impressions simply by adding more targeted phrases, changing exact match keywords to broad match, or even changing your ad target locations from local to national. Again, if these keywords and phrases don’t fit your potential customer persona, they may have little value to you.
Often referred to as Click Thru Rate or CTR, this is the next step in the customer journey. They have seen your product and now they have taken the next step to learn more about your offering. CTR is great, it is an early indication that potential customers like what they see in the ad copy they just read and want to learn more. If you are selling on Amazon CTR has even more meaning since it is also considered a ranking factor on their site.
A high Click thru Rate is great unless you are paying for clicks and those clicks aren’t turning into sales. A high CTR also doesn’t mean much if you only have a few impressions. A 10% CTR on 100 impressions might be great, but an 8% CTR on 1,000 impressions might be better.
The next step in the custom journey is engagement. On Facebook, this might be sharing a post or even better, an ad, or a like. On Youtube, this could be a video view or a new subscriber. On your website, this could be a new newsletter subscriber, time spent on page, or number of pages viewed. This is the trust building phase of the customer journey.
When it comes to engagement on your website, Bounce Rate tends to be the king of the metrics. A 90% bounce rate on the traffic you get isn’t a great thing. This means that if you get 100 visits from your AdWords campaign, only 10 of them stick around long enough to even start reading the page that they landed on, but you paid for all 100.
This is generally an indication that there is either something very wrong with your website content, or that your ads are driving the wrong type of customer to your website. All the impressions in the world, paired with an outstanding CTR, mean nothing if the people coming to your website don’t stick around long enough to do anything.
The Holy Grail metric, for most people. You’ve managed to guide a customer through the previous stages of the journey and they bought something! This is great – this is what we want, paying customers!
But what if you are paying too much for those customers? Sure, you just made a $75 sales on a $2 click, but what if it took 100 clicks to make that sale? What if the time to conversion is 2 days or 2 weeks? How does that affect your conversion rate?
Where in the customer journey can we improve our conversion rate? More targeted discovery? A more refined Click Thru Rate? Or could it be an improved engagement opportunity with more focused content? Any of these stages can affect your conversion rate.
To me, the metric for the customer journey that means the most is the one that combines all of these metrics into an easy to understand number, Return on Investment – ROI.
This is the number that tells you if you actually made any money and is arguably the most important, and least understood, metric of all.
In many cases ROI is presented to you in a simple formula, Net Profit / Total Investment *100. For example, if you spent $750 on ads and make $2000 in sales, you might see your ROI as (($2000 – $750) / $750) * 100 = 166% ROI. This is great!
The issue here is your actual NET profit. What does it cost you to create or purchase your product? If you have a digital product this may be $2000. But if your product has a 60% profit margin that $2000 suddenly becomes $1200. Now your ROI is (($1200 – $750) / $750) * 100 = 60%.
Unfortunately, we still aren’t done. How much does your agency charge you each month to run your AdWords or SEO campaigns for you? Now your Total Investment is $1750. The ROI equation changes again (($1200 – $1750) / $1750) * 100 = -31% and now where you thought you were making money you are actually losing money.
And you only found out by looking deeply at all of the numbers and how they interact with each other rather than looking at each metric on its own.
The customer journey really is a journey. Each step along the way can contribute to the journey, or take from it. It is important that not only you understand the process, but that you have an agency or employee who understands that journey – who can present you with a comprehensive look at your marketing efforts in relation to your business and not in an isolated bubble, where the numbers they give you may look good, but in the end, are simply covering up a very real problem that needs to be addressed.