The holiday season is right around the corner – and for many marketers, this presents an opportunity to close out 2020 on a high note. However, this year has been quite unusual, and marketers need to adjust how they measure marketing performance to keep pace with all of the disruption.
The popularity of online holiday shopping has been growing every year, and 2020 is only going to exacerbate this trend. People aren’t only being encouraged to shop online for reasons like convenience and discounts – they are actively being discouraged from shopping in person due to the threat of COVID-19. In fact, research has shown 75 percent of customers plan to conduct at least half their holiday shopping online in 2020, while only 56 percent of customers planned to holiday shop online in 2019.
This means that marketers will need to spend more time measuring the effectiveness of online shopping channels through digital marketing KPIs. Thankfully, this switch isn’t as arduous as it seems – you just need to reframe your usual goals. Let’s see which KPIs marketers should use to measure their marketing performance this hectic holiday season.
Measuring traffic to your website accomplishes a similar goal as measuring traffic to your store, except it is far more granular. There are many sources of site traffic, and with basic marketing attribution capabilities, you can look closely at each source and determine how much traffic they bring, and how valuable that traffic is. Here are a few sources to consider:
- Direct traffic – When a customer types your site’s URL directly into the address bar, they are counted as direct traffic.
- Search traffic – Search traffic describes when a visitor finds your website organically on a search engine, such as Google or Bing.
- Paid traffic – Paid traffic, also known as pay-per-click traffic, describes customers who clicked on a paid advertisement on a search engine or publisher network.
- Display ad traffic – Display ad traffic describes visitors that clicked paid ads on a webpage, video, or other online asset.
- Email traffic - If a customer follows a link from your email campaign to reach your site, they will be attributed as email traffic.
- Social media traffic – This describes customers who found you through a social media platform either through organic posts or paid ads.
- Referral traffic – If a visitor followed a link to your store from another website (such as through an affiliate link), they should be counted as referral traffic.
By watching traffic from all of these channels, you’ll get some reliable leading indicators regarding how well your holiday campaigns are performing on different channels. These granular measurements are one major upside to this year’s unique holiday shopping environment – when everything can be traced and attributed, it’s much easier to measure marketing success.
Conversion rate describes how many sales you made relative to the number of visitors to your site within a set time period. The formula for conversion rate is:
Conversion rate = (conversions / total visitors) * .1
Generally speaking, a high conversion rate means you’re attracting high-quality traffic and engaging in all the activities necessary to make a sale. Offline, those activities may look like an in-store salesperson finding the perfect product for a frazzled shopper. Online, this often looks like great site content, user-friendly web design, and personalized messages to guide shoppers to the perfect item.
This can be used as a quick way to rate the effectiveness of not only your marketing campaigns, but your website. If conversion rates are low for a certain campaign or product, consider reworking it. If conversion rates are high, however, try increasing your marketing budget to maximize sales.
Average Order Value
While it’s good news to have a high conversion rate, you should always layer those insights with an average order value. Transaction size is the KPI most closely tied to profit, so by encouraging patients to purchase more items, you’ll directly increase your bottom line.
Since encouraging large orders is so valuable, it’s important that retailers pull out all the stops to maximize a shopper’s order size. An offer like “Free 2-Day Shipping on Orders Over $75” can help you get a start, although personalized ads and product recommendations have the potential to put relevant items in front of customers with a high propensity for large purchases.
Cost Per Acquisition
Cost per acquisition, often shortened to CPA, is designed to answer one primary question: When someone does convert, what was the associated marketing cost? This information can be extrapolated to help your team find the most valuable channels and messaging, ultimately allowing you to invest in activities that will maximize ROI.
However, don’t look at CPA all by itself – instead, layer it with other KPIs. For example, if Customer A costs $2.50 to acquire, but Customer B costs $4.00, Customer A would seem like the clear winner. However, when you layer in order value, Customer A may spend $20 while Customer B spends $75. This would make Customer B’s segment significantly more profitable by comparison.
This upcoming holiday season will be unlike any other, and marketers need to start preparing for a torrent of online shoppers today. Digital KPIs provide a great way to track the success of your marketing campaigns while they are in-flight, allowing you to optimize each touchpoint before the holiday season is over.
However, collecting data that supports these KPIs is only part of the story. To maximize the value of your holiday marketing campaigns, invest in a flexible marketing analytics solution that can track and analyze both online and offline KPIs. With Marketing Evolution, you can use these KPIs to predict the impact of prospective media buys and marketing activities. This forward-looking approach will help you make slight modifications to your campaigns as-needed, helping your brand win the lion’s share of revenue this holiday season.