Two key online marketing metrics

Tracking in online marketing is a key focus. With tracking in your business you get to understand what kind of leads are converting for you or which leads proving to be profitable. However, many business owners and entrepreneurs focusing on an online business complicate the whole tracking process, looking at unnecessary metrics that have no relevance.

The only thing that really matters online is ROI = Return on Investment

So in this article I briefly cover two main metrics that should be analyzed and measured for online businesses.

 

Cost Per Lead

This is perhaps the old school way of looking at what your marketing is costing you. Cost per lead essentially tells you how much it costs you to get ONE lead.

So let’s say as business owner you spend $100 for your marketing to generate leads and you get 10 leads, your cost per lead is $10 per lead.

While you want to drive down your costs per lead, what is also essential to understand is to get quality leads and not just a large volume of leads. My next metric will give more insight into why this is so.

 

Cost Per Sale

Many online entrepreneurs and business owners overlook the key metric called Cost Per Sale or also Cost Per Acquistion. Now there are different variants of looking at this metric, but the easiest way is to look at it using an example below:

Let’s say you get a sale for every 50 leads (various factors and types of online businesses will mean this figure could vary vastly).

Now what would your 50 leads have cost you in your marketing spend? Let’s say that it cost $500 ($10 cost per lead on average). So essentially your sale cost $500.

Now of course the type of product you sell and it’s sale price play a crucial role in determining your return on investment. Let’s say the sale only gave you $100 in revenue. So you actually made a loss of
$400 ($100 – $500). This is why it’s important to try to ensure your cost per sale is driven down at every opportunity.

However let’s say you got a sale for every 50 leads that cost you $50. So your cost per lead is $1 per lead (NB. this is an extreme example used and is very rare to find in online marketing). So now you have a profit of $50 ($100 -$50), with a return on investment of 50%.

So as you can see from above the cost per sale is linked to the cost per lead, but you need to analyze both in conjunction to ensure you are getting a reliable ROI.

How do you drive down cost per sale or cost per lead?

 

The simple answer is TESTING. You need to keep testing your marketing and online advertising with different variables and demographics. Testing is really important because it will give you DATA which will give you further insight into the market you are advertising to and the quality of leads you are receiving. So it is essential you develop a mindset which is strong enough and prepared to lose money in marketing online; what you will gain in data will be a longer term benefit compared to the short term monetary loss you experience.

 

P.S. If you are looking to receive an education into online and digital marketing, sign up for this complimentary 7 day video training series which will reveal the exact same system I use to learn and build my online marketing education. 

 

To Your Success & Beyond,

Siddharth