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The Key Performance Indicators that are your best friends.

June 19, 2012

Your key performance indicators will help you gauge which of your activities are stars that help you reach your goals and which are duds. Understanding your top performing activities will help you make adjustments to your marketing strategy throughout the year and life of your campaign. The most important key performance indicators that lay out the foundation of success for any online business are conversion rate, cost per action and value of your customer. Under these three categories falls your entire marketing strategy.

You cannot improve your conversion rate if you don’t have measures in place. Set benchmarks and understand what’s working and why then change or eliminate low performing activities. Activities refer to any action you have taken to create a conversion. A conversion being the rate a customer signs up for whatever you’re offering to the total number of customers visiting your site.

You can’t drive your business if you can’t measure the success of your marketing activities. It reminds me of what my grandfather used to say, “You will lose what you cannot monitor.” Set benchmarks for your metrics and follow them closely. Look at the cost of getting your message to your target market.  Is your advertising content speaking to the needs of your target market? Are your efforts capturing the quality of visitors you are targeting? What is the cost to convert your customer? And what is your customer worth in terms of monetary value? Have you calculated out the average profit of your conversions versus your cost to get them there? Have you calculated the gross profit margin of your converted customers?

By understanding what it’s costing you to drive business to your site and what the ultimate value of that cost translates to in dollars, you will be able to make alterations to improve your desired outcome as well as improve your customers’ experience.  The more you improve your customers’ experience the more business you will generate and with metrics in place you can improve your gross profit margins and total sales. Your Key Performance Indicators can provide you the information you need to gauge value and direct you to re-strategize for better performance.

update: 2011/07/21 tags:

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