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Clicks Aren’t Customers

Gauging effectiveness doesn’t need to be complicated and overly engineered

Gauging effectiveness doesn’t need to be complicated and overly engineered

Without clear objectives, how do you know if you were successful? If you didn’t define what success looked like up front—how do you know if your plan worked? It’s good to be flexible, to try new things and see what happens—some of the most creative inventions of our time happened that way.

But for most of us, most of the time, it’s a good idea to know what you’re aiming for. In order to evaluate the effectiveness of any type of campaign (online or offline) you have to be able to measure the impact it had on a defined criteria. The measurement could be click through on your website, calls to a 1-800 number, or actual sales volume and revenue targets. Gauging effectiveness doesn’t need to be complicated and overly engineered. Some of the most sophisticated analytical models work because they are very simple. Let’s take a basic online campaign and do the math.

Assume conversion rates on websites today are about 1–3 percent (meaning about 1–3 percent of clicks turn into customers). Let’s say you did an online ad campaign for $5000. The campaign generated an incremental 2500 visits to your site (we know that because you can track against average daily traffic for similar days prior to the campaign). The results of the campaign (affectionately known as return on investment or ROI) would look like this:

Clicks Aren't CustomersThis means that in order for the campaign to break even each customer must purchase at least $66.67 worth of stuff as a result of your campaign. Looking at it a different way, it cost you $66.67 to get each new customer. Depending on your business, this may be good—it may even be great. You’ll never know unless you do the math and have a target to measure your results against.

Cost per acquisition, or CPA, is a common metric used to track return on investment for this type of online campaign. For the data to make sense, you need to track enough campaign data to give you some directional guidance. In this example, a campaign is defined as an email with a unique subject, offer and call-to-action.

If you executed 30 individual email campaigns you would end up with enough data to develop a benchmark for measuring the success of future campaigns. Once you know your target CPA you have a very clear objective. This type of model helps you evaluate and prioritize your investments. You’ll definitely know when it works and when it doesn’t.

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