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Google Website Analytics has finally done the right thing

analytics-goalsI have just noticed that my google analytics account now allows me 4 sets of 5 goals, rather than the previous ration of only 4 goals in total.

That means I can now track a lot more goal conversion funnels on my sites.

If your website uses Google Analytics, let your marketing and web team know that they should set up more goals to track your key website conversion funnels, for things like:

  • Opt ins (newsletter subscribers, white paper downloads)
  • Central resource pages
  • Sales
[widget id=”ad-continue-marketing”]Ad: continue-marketing[/widget] Happy tracking.

Business Marketing Performance Objectives and Indicators

Marketing-Cycle-RFX-FKG-w450

(download a pdf version)

This diagram needs an orientation…

First, the diagram shows different types of coloured box that have different labels:

  • Objectives
  • Goals
  • Indicators
  • Propositions
  • Knowledge
  • Preconditions

Business Marketing Objectives

Your objectives can be represented by the 3 areas of:

  1. Find new customers
  2. Keep existing customers
  3. Grow your ‘share of customer wallet’ through cross-sell or up-sell to existing customers

Marketing-Cycle-RFX-FKG-Goals

The goals of your promotions relate to total revenue per customer, average order value, profit per customer, frequency of sales per customer, and recency of the last sale per customer. (You may have spotted the traditional model of RFM.)

Each objective has a different focus for creating your offer, based on your value proposition and the market intelligence you must have for success.

This makes up the lower half of the diagram:

  • Proposition – The proposition (or value proposition) is a statement of what your product will do, who it will do it for, and why it is relevant and valuable to them.
  • Precondition – required to deliver each proposition.
  • Knowledge – the insights you need to form an effective proposition.

Marketing-Cycle-KPP

Let’s whizz through them one at a time:

  • Lead Generation – Preconditions to a successful lead generation campaign include identifying the right target segments, and having the right marketing channels to contact them by. This will depend on your knowledge of current alternative suppliers (your competition), and knowledge of the needs of your market. From there, you can create a plan for how to attract leads, and where to find them.
  • Front-end sale – After generating a new lead, the key precondition to your front-end sale is having a highly relevant product offer. This depends on your knowledge of your prospects motivations.
  • Re-sell – A loyalty program will depend on your knowledge of how customers use the product
  • Reactivation-sell – When you combine all of the points represented in this framework, your churn rate should be low enough, and opportunities easy enough, that you wont really have to worry about customers you have lost, as many will return as a matter of course whilst your marketing program improves.
  • Cross-sell and Up-sell – This depends on your product portfolio which should evolve from the behavioural insight you gain through customer research.

Marketing Metrics and Performance Indicators

The Indicators (or Key Performance Indicators) will give you the reporting fire power to demonstrate your results, and to help guide your next campaign and tweak your entire marketing engine.

Marketing-Cycle-RFX-FKG-Indicators

  • Cost Per Lead – CPL is the average cost of a lead after dividing your marketing cost by how many leads were generated  (Cost Per Opportunity – CPO can be calculated if your sales process involves a few steps, where after you have got a lead, you then qualify that lead, and thus classify the lead as an opportunity – popular with CRM / sales teams)
  • Cost Per Acquisition – CPA then is the average cost of a new customer after deducting marketing expenses
  • Churn Rate – The amount of customers that do not turn into repeat buyers
  • Average Deal Time – ADT is the average time it takes from generating a lead to making the initial sale
  • The M in RFM can split into 3 different views:
    • Average Order Value – AOV is the average revenue per sale.
    • Total Purchases – This shows the average running total spent by your customers.
    • Profit Per Customer – Customer profit refers to total income minus campaign expenses divided by the amount of new customers generated. (This helps understand different levels of profitability per channel and per product type due to differences in profit margins).
  • Average Customer Life Time Value – ALTV Is the average sum total (at present value) of your customers total purchase value minus all marketing costs.

To achieve those goals and excellent performance metrics, we need strong propositions for each of our products that are as relevant as feasible for the audience we can promote to.

Return On Marketing Investment | ROI and ROMI

At this 3rd stage of business tracking, we account for Customer Performance Management. What is the return on marketing investment, at various levels of customer lifestime. From customer acquisition, through to retention.

Soft measurements

  • Feedback from customers, partners, and resellers
  • Questionnaires/Polls
    • What did you like about our product that influences your decision to buy?
    • Rate your experience with us on a scale of 1 to 5?
  • Intuitive insight into campaign response
  • Buzz monitoring services such as http://sysomos.com

Hard measurements

Front-End Acquisitions

Tracking acquisitions includes numbers such as:

  • Number of visitors to your web site
  • Number of visitors choosing to register at your web site
  • Number of leads generated
  • New customers acquired

Return On Acquisition = Front-end revenue – acquisition costs / acquisition costs

Back-End Retention

Between marketing for acquisition or marketing for retention, the marketing budget priority should be on retention. – Retention is King.

This gives your marketing strategy a holistic approach, focusing on the most profitable areas of the market, through demonstrable ROI, which can then guide the acquisition.

  • Current list size?
  • Leads
  • Response rate
  • Cost per lead
  • How many orders
  • Conversion rate
  • Current CPA
  • Average order size

From the relevant metrics of your specific campaigns you can determine both Total revenue and Current marketing costs to then calculate your current Return On Investment.

Marketing Costs

  • Cost per dollar earned
  • Cost per acquisition sale
  • Cost per retention sale

Real-Life Return On Marketing Investment Example

My Financial Services client had a customer list of 30,000 names for a back-end (selling to existing customers) promotion.

This particular promotion was loans for homeowners. The average size loan was ?10,000.

Up to that point they had been sending a similar email with no personalisation or compelling appeal that a good direct response copywriter revels in. So I saw an opportunity for a big increase in ROI on this campaign.

Here’s how it turned out…

ROMI Calculations Input

  • list 30k
  • average order 10k
  • expected response 0.05% = 15
  • expected conversion of that 3% = 0 new customers
  • Marketing costs = ?2,000

They got a customer once every several months from that particular promotion. Remember, these are people that had taken a substantial loan in the past few years already.

For our test with my long copy against the agencies creative we split the list.

15k names at 0.05% is 8 projected leads from their creative.

How much better could I do?

ROMI Calculations Results

Here we want to keep track of things like:

  • Number responders
  • Number buyers
  • Total revenue
  • Cost per response
  • Cost per buyer
  • Cost per piece
  • ROMI

15k names on my long copy produced a response of 61 leads, which was a 0.4% response off the list. The existing creative had a response of 10 leads (near enough their projected 8.

This meant a 510% increase in response (My 61 against there 10).

(61-10) / 10 = 5.1 = 510%

That was huge for the client, who then wanted me to train their copywriters in some direct response copywriting principles (opens new window).

And because of the personal nature, and genuine human appeal of my copy the client had 2 buyers, at approximately 10k each (a ?20,000 return).

Marketing costs = ?1,000 (half of the full cost of ?2,000 given that we did a split test)

Return = ?20,000

A huge ROMI of 1900%.

But this was still only the beginning as I saw it…

  • I began work with the client on their loan information pack to increase actual conversion rates after the new lead generation.
  • I also began to plan a follow-up series to the list of 15k that had received my email
  • Plus another campaign to the 59 leads who responded to the first email but hadn’t yet converted.
  • And the email would also (ofcourse!) be sent to the other half of the list that hadn’t yet received it.

Through integrated marketing, opportunities to increase ROI are endless.

You can read the copy I wrote on the Email Marketing page (link opens new window).

Retention Metrics

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  • Current purchase cycle – purchase frequency
  • Current life cycle
  • Retention rate – number of customers continuing to make purchases on a periodic basis (e.g. yearly)
  • Cost of acquisition
  • Cost of retention

Current LTV. For lifetime value calculations see the Retention Marketing page.

From there, money can be allocated for new customer acquisitions, based on the cost : profit relationship.

The focus of direct marketing is to improve RFM: Recency, Frequency, and Monetary value of sales, which reveals 4 revenue streams:

  1. More Customers
  2. More money per order – which can be
    2a. Higher cost per unit or
    2b. More of the same unit (increased consumption) or
    2c. Different units (cross-sell / upsell)
  3. More purchases – achieved through
    3a. Increase in purchase frequency and
    3b. Extension of purchase lifecycle)

Lifetime Value (LTV) of a customer is simply the not profit over a customers lifetime. I.e. Total revenue earned through customers purchase frequency and amounts, minus cost of acquisition and cost of retention.[/private_free] [widget id=”text-402250962″]Text: Register Free[/widget] [widget id=”ad-continue-marketing”]Ad: continue-marketing[/widget]How close are you to knowing, controlling, and increasing your average customer LTV? Contact me for partnership or consultancy opportunities.