I lecture regularly on digital measurement and strategy — specifically, where to begin and how to do it — at Columbia University. The field of analytics and measurement is complex, insightful and ever-changing. Adept marketers are analytical, inquisitive and technologically comfortable.
But, what I’ve found, is that there are 8 basic knowledge-points to get marketers and CMOs up to speed in terms of guiding their internal conversations with leadership, vendors and employees.
The Art of Measurement.
Marketing has always been a blend of art and science. Digital hasn’t changed that. It’s simply made the art more accountable to the science.
Here are 8 steps to ensure holistic digital measurement, plus some helpful tools:
Step 1: Do an Internal Discovery.
You must begin with defining success. Do you need to sell more product? Drive more leads? Increase donations? Create more brand awareness? After you’ve identified your bottom-line success metric, ask yourself some basic discovery questions. What is the reason for this initiative? How will you judge its success? What are the three most important actions a customer should take when interacting with your marketing campaign? What is your fundamental point of differentiation? What is the maximum amount of money you can spend to acquire a customer?
Step 2: Define Measurable KPIs.
Todays analytics and data allow marketers to measure awareness, engagement, conversion and loyalty. Key Performance Indicators (KPIs) do seven things. They must echo organizational goals, be decided by management, provide context to greater trends, create meaning for an entire organization to act upon, be based upon legitimate data, be easy to understand and most importantly, lead to action. In other words, KPIs are the simple, yet critical actionable benchmarks of key organizational success.
To measure awareness, you might measure referrals to your site from social media. To measure engagement, you might measure content downloads from your site. To measure conversions, you might measure lead submissions via phone or email. To measure loyalty, you might measure repeat site visitors.
Step 3: Define Your Metrics.
From business objectives, KPIs are developed. And from KPIs, metrics are born. Metrics are the foundation to the actualization of measurement. An example of a business objective might be to increase online revenue. The KPI is online revenue. The metrics? They are the telltale signs of progress toward the KPI: measuring conversion rate, average order value, site traffic reorder rates, per-visitor-value and sharing. Metrics can be counter metrics (# of visits, # of page view) or ratio metrics (average time on site, % of conversions). Your metric combinations will ultimately define your site, social or email strategy. For example, if you want to increase online revenue, you’ll want to increase conversion rates to X, increase depth of visit to Y and increase onsite sharing by Z.
Step 4: Measuring Your Funnel.
The next step is critical to having context behind user behavior and propensity to convert based on their position in the funnel. A funnel is how website visitors engage with the site to the point of conversion.
Funnels also extend beyond onsite interaction. They apply to the behavior of how a person might interact with the brand online during their decision-making process.
Step 5: Assign Values to Your KPIs.
This step is often overlooked because, quite frankly, many marketers don’t know the answer: How much is one newsletter subscriber worth? How much is one Facebook like worth? I’ve asked this question in every single lecture and am met every single time with a quiet audience. CMOs just don’t know. This is the most critical step to actually being able to attribute success and define budgets.
You have to know the values of your KPIs and how they affect your bottom line. At its core, it’s a simple equation: channel revenue divided by quantity segment visitors. But, not all KPIs have inherent revenue numbers attached to them.
For our agency, recruitment is something that we’ve been able to assign a value to that isn’t necessarily revenue. For example, we are willing to spend $100 to acquire a single candidate to visit our site and click the “join our team” CTA.
How do we decide that? If an average NYC salary for a position is $100k, and if we used a traditional recruiter, who has an average 20% fee, we know our average recruitment cost is $20k. Assuming a typical interview rate is 5%, a cost for an interview via a traditional recruiter is $1k just to get someone in for an interview. And, assuming the average hire rate is 1 out of every 10 candidates is hired, we’re looking at an average cost of $100 every time someone wants to hit our “join our team” CTA. Because we apply value to KPIs, we end up with spending a fraction of what a recruiter might cost and spend a smarter dollar. Assigning value to KPIs will allow you to properly compare success attribution when you measure channels.
Step 6: Measure Your Channels.
As a marketer, you need to know which channels perform, how they contribute to success, and which are closest to the decision-making funnel and have the highest propensity to convert.
Your channels might be specific blogs, specific social properties, specific ad buys. If you divide the site revenue or KPI goal value by number of visitors from each channel, you can determine the value of each visitor from that source.
That total number provides you the insight as a marketer to understand how much you can afford from a last click total value to acquire that customer. It is critical as a marketer not to provide 100% credit to last source. That last click to conversion is part of a larger marketing mix just as offline marketing functions are. Analytics are sophisticated enough now to know how a visitor interacts with your brand in a larger framework: search, branding, social interactions, passive social content, display ads, email remarking and more contribute to the user’s conversion funnel.
Step 7: Identify Your Segments.
Segments are, in a nutshell, distinct portions of your users who share distinct identifying criteria. Segments might be as broad as US traffic vs. International traffic or as complex as users who are from a specific City, State using a specific Browser and interacting with a specific Goal. Segments will provide valuable insights to specific user behaviors and propensity to convert, allowing maximum optimization of creative, search and experience.
Step 8: Measure Your Campaigns.
Adobe’s Quarterly Digital Intelligence Briefing (2011) states that only 21% of companies say they are adequately measuring social initiatives. And, there’s a distinct discrepancy between the perceived importance of measuring the value of social media traffic and brand sentiment compared to the actual ability to measure those.
The key to any measurement, even social or sentiment, is setting up proper tracking campaigns. Regardless of your tracking platform, measurement is only as good as how the tracking mechanisms are set up to work. CMOs are faced with the challenge of being knowledgeable of analytics, being able to QA proper set up and tracking, and ultimately hire the right resources who are not simply analytic-proficient but analytic-experts. CMOs need to know how to check and call out expertise.
Access to a previous Columbia University lecture is accessible here.