One of the most exciting aspects of digital marketing is its measurability. From the number of visitors, to add impressions, to geo-location of discounts,etc, every digital marketing initiative can produce quantitative data that is in sharp contrast to the traditional media. However, quantity does not always convert into conversions in the digital world. Yes, you could have a 1,000 Facebook fans.
But how many of them actually matter to your business?
How much value addition is your blog giving to your business?
What about your online community for sourcing innovative ideas from the customers?
Much as we might wish, there is no single ‘silver bullet’ metric to measure the impact of digital marketing. Instead, it would help the businesses if they develop a variety of metrics to measure the returns on their digital marketing strategies.
Figure out your goal
First, the key to developing good business metrics is to know your objectives.
Q. Are you trying to facilitate market entry and drive awareness for a new product line?
Q. Are you trying to build a relationship and maintain loyalty among your existing customers?
Q. Are you trying to reduce the cost of customer service by helping customers help each other as a part of your online community?
Then, understand how close your business metrics are to measure a financial value delivered to your business. Some digital metrics measure firm value quite precisely, whereas many others are not very helpful.
Digital marketing metrics fall into the following three broad stages:
Stage 1: Activity Metrics
This is the lowest level of digital metrics. By definition, an activity metric is one that actually tells you that “something is happening”. Classic examples of this metric are: number of page views, site visitors, Facebook fans, or members joining your online brand community. You cannot ignore these numbers or stop gathering this information as they are helpful in tracking trends and benchmarking. But you should never be satisfied with activity metrics alone. In short, do not get stuck at stage 1.
Stage 2: Engagement Metrics
“Engagement” is one of the most over-used, and under-defined terms in marketing. An engagement metric is anything that measures the level of your customer’s involvement, attention, and commitment. Examples include the average time spent by members on social media, percent of Facebook fans who ‘like’ or comment on your wall posts, or the number of ideas actually submitted to your innovation sourcing site. Engagement metrics are much more meaningful than activity metrics. And in some cases, they may be the best measure that you can get. It’s hard to ever know how many cars were sold because 20,000 people ‘liked’ your pre-launch product photos on Facebook. It is hard to justify a major marketing investment on engagement metrics alone. So whenever necessary, you want to go to the next stage.
Stage 3: Business Metrics
Business metrics measure the impact of digital marketing on critical business outcomes – your KPIs (key performance indicators), or ROI (return on investment). Business metrics could include direct sales through a digital channel, lead generation, or cost savings to existing business processes.
If you are running an online forum to generate innovative business ideas from customers, then you would like to know:
Q. How many of their ideas did you bring to the market?
Q. What was the business value achieved, perhaps in terms of new sales, better customer retention, or increased market share?
These may be financial measures, or established KPIs used across your business. Business metrics allow you to optimize your digital marketing strategy, compare their results with traditional marketing activities, and decide how to best allocate budgets.
Books might offer a plethora of metrics. But as you look at what’s being measured in your own company, it’s critical to make sure you know which stage of metrics you are operating at.
Because only when you get to stage 3 can you answer important questions such as:
Q. Are my digital marketing initiatives paying off?
Q. What are we trying to measure?
Q. What stage do our measurements fall into?
It is a good idea to use the social media marketing your company and products. But it is also important that you track the performance of your strategy. You need to know if it really improved the performance of your sales. So you have to measure the performance, do not be satisfied by starting a page and looking at the like number and comments increasing on it. You definitely need more than that, you need ROI ie Return on Investment. So devise the best strategy possible to increase sales, research well about your target market in order to plan better.