Track your ROI this Holiday Season
The Holiday Season is the most important time for retailers hands down. I know, as I used to own an online toy boutique and you can imagine that as a toy store Christmas was the make or break time.
If you’re an online retailer and running marketing campaigns to drive traffic and sales to your store, your number one goal is understanding what the return on your investment (ROI) is.
Preparing for the busy holiday season usually starts in late Q3 or early Q4. It’s around this time that retailers look at what marketing initiatives they will be running, plan out when things will launch and make sure that they’re tracking what they’ll be using to measure the performance of their campaigns.
Like all good things, the key is to plan out and outline what campaigns you are running, the messaging, the locations, the ad copy, your target audience, etc. You want to be as detailed as possible as this will ensure you are able to optimize as you go along and will also be able to compare the performance of this campaign with previous and future ones.
What if you have not planned anything just yet?
Fear not, all is not completely lost. It just means that you may not be able to make adjustments as quickly as you would have had you set things up earlier. Nevertheless, you will be able to use the learnings from these campaigns to inform future ones.
Still very valuable information!
Where to start?
First things first, you need to create a measurement or marketing plan. The plan will outline in detail all the marketing initiatives you will be undertaking this holiday season. Things like your Paid Search ads, your Facebook Ads, any email campaigns to your list, will you be running ads in magazines, social media, etc.
Secondly, you need to make sure you have tracking set up to capture completions of your important actions on your site. For retailers, you need to make sure you have tracking in place for your purchase completions (this is the bare minimum), you probably want to have tracking in place for when consumers add items to their cart, sign-up to get your coupon code, and any other actions on your site that you feel are important and show intent or interest from your visitors.
My recommendation is to have tracking on both Google Analytics and your shopping cart platform (ie Shopify, Squarespace, etc). Google Analytics will enable you to easily and clearly track your traffic sources, cost, and purchases. You’ll also be able to do additional analysis that your website platform provider can’t give you, like do additional segmentation which is very valuable to get a deeper understanding of your customers and their engagement with your content.
Take a look at your tracking and make sure that at the basic level you have Google Analytics enabled on your site and are capturing page views.
If you’re not sure how things are being tracked and/or are not sure how you can get the information you need to evaluate the performance of your marketing campaigns. Please reach out to me and book a 30 minute FREE consult and I’ll be more than happy to take a look and let you give you the information you need.
Alright, now on to the fun stuff...the metrics!
But first...let’s talk about Goals.
I highly, and I mean highly recommend that you create Google Analytics Goals to track your high valued actions.
My recommendation is to create a goal to track your ‘add to cart’, and ‘purchase complete’ at a minimum. If you have other high valued activities that show interest and intent from your visitors, perhaps, registering for your coupon, or signing up to your newsletter, create those as well.
Having goals created in Google Analytics will make it extremely easy for you to get the numbers you need to understand how your site and marketing is performing. You can read more about the importance of Google Analytics Goals here.
Now, on to the metrics!
This is pretty straightforward and really the starting point. Understanding how many visits your various marketing campaigns generated is very important.
One thing to note is that for all the metrics I’m outlining, you will be segmenting them by the various marketing initiatives. I would also recommend you break things down further where applicable. For example, if you are running paid search ads, I would break your segment down to the various campaigns and/or ad content. This way you will know which ad content is driving more profits (more on this later) and can shift funds around to your benefit.
Understanding the number of visits to your site is the starting point, but we can’t stop here.
The bounce rate is the percentage of visits that came to your site and only viewed the page they landed on. A bounce rate of over 75% requires investigation, as it can be due to tracking issues or bad user experience and if you are spending money to get people to your site and a high percentage of them are leaving after only viewing one page, this is not a good use of your money.
Various traffic sources will have different bounce rates, but a range to keep in mind is between 25% to 65%. If you see a campaign that has a high bounce rate, I recommend that you investigate the following:
The keywords you’re using
Your ad copy/messaging
Your landing page
Any technical issues navigating to other parts of your site from the landing page
Once you understand what is causing the high bounce rate you can then make adjustments, minimize the loss of engaged visitors to your site and increase your sales.
Here is where things get interesting, it’s also where the goals you set up will come in handy.
Your conversion rate will be the total number of conversions or high valued actions (i.e. purchases, adds to cart, etc) divided by your total visits.
I recommend that you break out your various conversions to make it easier to evaluate them individually. This way you’ll also have a clear view into the conversion rate of your most valuable activities such as purchases vs. lower value ones, like add to wishlist.
Cost per Conversion
We can’t stop at just looking at how many conversions each campaign drove, it’s also very important to understand how much that cost you. Understanding each campaign’s cost per conversion will help you know where to invest your money.
You’ll quickly know if you should put more money in Facebook vs. Instagram. You’ll also know if you should increase spend on one campaign vs another within paid search. It’s all about being efficient and effective with your marketing budget.
This is where the money is at!
At the end of the day, you want to know what your return on investment (ROI) is from all your campaigns. This is where Profit comes in.
Profit = Revenue - Expenses
Calculating your profit by the various traffic sources will probably take more effort. If you have enhanced ecommerce enabled and correctly tracking in Google Analytics, the effort is lower. If you don’t, it just means that you’ll have to get your data from various sources.
It’s important though that you calculate this metric. At the end of the day, you want to know how much money you will have in your pocket and the only way to know this is to look at your profit number.
When it comes to expenses, it’s not only about the marketing expenses that you incurred (i.e. the Facebook ad spend, the paid search ad spend, etc). You also need to determine how much it cost you to obtain the products that you are selling on your site. I recommend coming up with a general number that you can apply to your inventory, instead of going item by item as this can be quite cumbersome if you have many different items in your shop.
Let’s say that it costs you 30% of your revenue to obtain the products you sell. This means that your Expenses = marketing cost + 30% of revenue. From here you can do a quick calculation for each marketing initiative and clearly see how things performed and what worked and what needs improvements.
With all these metrics clearly laid out, you’ll be able to easily identify how each campaign performed and can use the information to make changes for your next campaign, changes like:
Your ad copy
The keywords you bid on
Your landing page(s)
The products you promoted
Your shopping cart steps
Your shipping amount or discounts
The types of marketing campaigns (ie Facebook vs Paid Search)
Continuously, optimizing your campaigns is what will give you the ROI you are looking for.
There you have it, the metrics you need to be evaluating to have a successful marketing campaign this Holiday Season and beyond.
To help you get started tracking your metrics, I have created a google sheet that you can easily customize and fill in with your own information and data.
My wish for you is that you take action, start tracking your performance and experience increased sales.
To access the Google Sheet, just click here. I have provided an example for you, but you will need to modify it based on your own campaigns, goals and costs. There are instructions within the sheet on how to proceed.
Let me know in the comments if you will be running some Holiday Marketing campaigns and whether you’re all set to track your ROI.
As always, happy analyzing!
Hi, I’m Karla
I’m here to help small business understand and use their website data to take the guess work out of growing their business.
I’ll love to help you start using your valuable website data to help you grow your business, book a FREE 30 minute discovery call with me and let’s get started.