Seven Terms for Measuring Website Activities
Record keeping measurements for Internet marketing
Record keeping tracks money — where it goes, when it comes in. Internet record keeping is also required for success.
Yet the statistics show that only one out of a hundred people who own websites do any type of record keeping on how much it cost them to be there A system that works hard for you when you don’t still requires monitoring and periodic reviews. If you can’t measure it, you can’t manage it, then it manages you.
The top keys to making money on the Internet are working smart, planning, testing, immediately stopping when something isn’t working, reinvest in new techniques and approaches that improve and then keep testing. For every success there are usually 10 to 15 tries, sometimes more, that weren’t successful. Even prolific writers create a number of drafts to get to the end result that works.
Here are nine terms you want to become very familiar with and that you want to use to measure your success. As a past CPA, these terms aren’t just for an Internet site, they too are usable in brick and mortar operations as well.
1. Cost Per Action, sometimes also called, cost per acquisition. How much does it cost you to get a visitor to take a specific action beyond just clicking around in your website? How many click-throughs does it take for visitors to make a purchase? You can also apply this calculation to ezines subscribers. (How many clicks were made before the subscriber registered for your eNewsletter?) You take the total expenses for running your website and divide by the number of clicks measured.
Example: If the cost per click is $0.50 and it takes 30 click-throughs to get one person to register for your eNewsletter, the cost per action is $15. If you write articles, how many registrations do you get for each article? If your measurement is 10 for each article and it takes you about two hours to produce and deliver the article over the Internet. If your estimated hour rate is $100 per hour, then each registration is costing you $10 plus your web expenses.
2. Cost Per Sale. To measure, divide the marketing expenses by the total number of transactions to come up with the cost per sale in a dollar amount.
3. Return on Investment, also known as your ROI. Divide your gross sales, this is all your sales coming from your website, whether it is from affiliate, commission, advertising, or items sold, by all your marketing costs — all that you have invested in its production. You come up with a percentage amount which is the bottom line on how successful your marketing was in terms of sales. You must also calculate in refunds or credits in this formula. If you gave away a number of products you need to count these as part of the items sold even though they didn’t land any money in the bank account. Giveaways are a frequent overview in this calculation and can be a huge eye opener.
Example for service professionals. If you provide a service where you give away the first session as complimentary, give a presentation for a sale, or prepare a proposal, these costs also need to be included in the ROI calculation. If you provide this service in person you need to add in your travel time and an average cost for car expenses (not just gas). This is why it is so important to prequalify. For coaches, consultants, and other freelancers, this is why I recommend only performing complimentary session over the phone or in your office. If you already calculate this into your fee then this could be an exception.
4. Pay Per Sale, also called a referral fee for closed transaction. This is typically a percentage of the sales generated by the advertisement. A commission is paid when a sales is made by the advertiser and not by the number of click-throughs. Advantageous to the advertiser not to the publisher.
Example: Someone places an ad in your newsletter with an agreement to pay a higher percentage fee for each sale but zero for any nonsales. The responsibility of success for the sale falls mainly on the advertiser. If you enter into this type of agreement, make sure the advertiser delivers on their promises, and has a structurally sound sales processing system in place. Including a method for reporting what sold, when it sold, and where it sold.
5. Customer lifetime value. Stated in dollars, this is the average length your customer remains with you divided by net profit of that value. If you are new in business or don’t have the actual figures you will need to estimate.
Example: If you are a coach or consultant and you have an average of 22 steady clients per month for an average agreement of six months. Your net profit for six months would be $46,200. You then divide the $46,200 by 22, this equals $2,100. What this means is that every client that you acquire for six months is worth $2,100 to your business.
6. Cost Per click, also known as cost per click-through (CPC). How much you have to pay for every time someone clicks on your ad — clicks from that point to the next point, usually your website.
Example: You purchase a banner space on someone’s website for your product or service. That space costs you $400 for the month. There were 225 click-throughs from that banner to your site during that month. $400 divided by 225 equals $1.77. This equates to $1.77 per click-through.
7. Cost Per Lead, also known as pay per lead. This usually occurs when you purchase prospect lists. These are specific lists from people who have already given permission to someone else that they are interested in this type of product or service. In other words, they have opt-in (chosen to join) to a similar request, and they are the target market you are looking for. These leads can be limited to just providing the email address or include other contact details.
Catherine is a veteran entrepreneur and communications
master coach. Additional articles, newsletters, workshops,
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