I 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:
(download a pdf version)
First, the diagram shows different types of coloured box that have different labels:
Your objectives can be represented by the 3 areas of:
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:
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.
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.
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.
Tracking acquisitions includes numbers such as:
Return On Acquisition = Front-end revenue – acquisition costs / acquisition costs
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.
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.
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…
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?
Here we want to keep track of things like:
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…
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).
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:
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.