Like all the new years that have gone by, now is the time to revisit certain fundamentals that beckon more attention when it comes to tracking, measuring, and analysing the efficiency of your digital programmes. Here is a quick overview of the various ‘mile stone’ metrics that constitute the much spoken about ‘conversion funnel’ – a mission-critical dashboard which marketers need to keep on their radars on a continual basis.
What Is a Conversion Funnel?
It is the ‘in-site’ journey of users who land on a marketer’s website, driven there via various channels – both online (display, search marketing, etc.), as well as offline (print, TV, etc.). It’s of extreme importance to keep track of the percentage of visitors that are contributed by each channel and the quality of the visitors as judged by various activities they perform within a site. This is because such analysis empowers the marketer with valuable business intelligence data that can then be applied to derive maximum mileage out of the multiple media initiatives. Therefore, one should have a clear view of the various metrics to zero-in on, while looking at the reams of data that are churned out by various Web analytics tools and other external measurement and tracking systems. Measuring what can be tracked is passé; measuring relevant parameters for actionable outputs is today’s mantra.
Visitor Journey and Measurement Metrics
We can classify the relevant measurable parameters corresponding to the visitor journey in to a few broad layers that we shall refer to by the following names – top-line, just-below-the-line, below-the-line, and bottom-line.
Top-line metrics are the simplest of all and are in vogue amongst a large faction of the marketers for judging channel/media performance simply because this is the first ‘feedback mechanism’ that is easily available (read: without incurring extra tracking dollars) from the channels/media. The following illustration provides the ‘good ole’ metrics that proliferated as key metrics during a good part of the decade.
Marketers who focus on such metrics are largely looking at the efficiency of the channel initiative at the surface level without being exposed to how each of these relate back to the quality of the visitors delivered by each channel. These metrics may be used as primary efficacy gauges only if the website is not being considered as an active engagement platform that contributes towards acquiring, nurturing, and retaining consumers in the long term. This forms the ‘awareness/recall’ phase of the consumer journey as well.
Just-below-the-line metrics are comprised of a family of parameters that primarily contribute more stature to the top-line metrics and form the next stop for the visitor journey within the site (see figure below). They resort to tracking and measuring click-stream from various sources, categorising and attributing the visitor stream to various channels, and attempting to attach an initial quality score to the classifications based on the ‘instances’ or ‘activities’ that visitors engage in as soon as they enter the site. This layer also projects a macro-view of the visitor stream pie that helps one understand the ‘play’ of each channel as visitor contributors and also identifies the potential of each channel towards increasing quality traffic based on a period-based trending analysis. More importantly, this forms the ‘interest/research’ part of the consumer journey where they form early perceptions, opinions, and initial consideration.
A few pertinent ‘derived metrics’ that marketers can analyse against each contributing channel based on the above two layers are as below. Readers need to bear in mind that many derivations can be made from the various parameters appearing across the two layers depending on the need.
- Lookers to visitors ratio = unique visitors/unique clicks per channel (for every click, how many visitors were derived?)
- Product views to visitor ratio = product views/unique visitors (visitor quality and relative product attraction)
- Visitors to engagement ratio = number of sessions X page views per session/unique visitors (stickiness of the site in relation with quality of visitors sent by different channels or media)
- Product exposure duration = number of sessions X number of product views X session time/unique visitors (a composite score of the visitor quality and product attraction quotient per channel)
Below-the-line metricsmay be, many a time, subject to referrals as shop front metrics – given that the name belongs to a family of measurement parameters that have a high proximity to the last mile goals and last mile conversion metrics. These are forerunners that constitute the’active consideration and evaluation phase’ of the visitor journey within a marketer’s website and this is the time period where users tend to have multiple sessions/windows open while comparing various choices. And needless to say, this family constitutes the additional reinforcements to the two layers we covered above (i.e., assessing the additional level of credibility to the visitors from each channel).
Pertinent efficacy assessment metrics that one may derive from this additional layer of information include:
- Lookers to instances ratio = success event/unique visitor per channel (allows further visitor quality assessment and interest levels based on the success event. Success events at this layer are defined as cart builds in case of a shopping site or priced itinerary builds, in case of an airline site or an RFQ generation, in case of a solution provider site or a trial download in case of a music site, etc. A good example of a probable weakness in ‘relative competitive price points’ for an airline may be a very high inflow of visitors and priced itinerary building but very low number of conversions)
Bottom-line metrics (or the Holy Grail metrics, as I like to call it) are the last mile conversion or success events that ultimately become the axe-wielders for the candidate channels in an online initiative. These bottom line metrics effectively measure the ultimate ROI to the marketer relative to the investment in a channel/media or the yield derived from each channel. Hence, these straightforward metrics arm the marketer with the most important data on channel performance based on which critical business decisions may be arrived at.
Derivable relevant metrics from the above in relation with all the other layers include (but are not restricted to) the following:
- ROAS = total revenue generated/total investment in the channel
- ROI = (total revenue – total spends)/total spends in the channel
- CPA = Total investment/total conversions in the channel (cost per ticket, etc.)
- ARPU= revenue generated/total users from the channel
- Lookers to bookers ratio = total visitors/total conversions (all the above metrics may over time be applied to generate a ‘lifetime customer value’ against each channel, campaign, etc., which in turn gives the overall efficiency of a channel over a long duration)
Ultimately, it depends on individual marketers to leverage upon the outstanding measurability provided by the repertoire of tools available in the areas of bid management, ad serving, and site analytics. The costs and efforts involved in enabling such tools is negligible in comparison to the long-term returns that one can derive from them.