7 Must Knows for Measuring Web Site Activities
By Catherine Franz
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 web sites 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 try, 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 other services or brick and mortar operations.
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 web
site? How many click-throughs does it take for visitors to
make a purchase? Another way to apply this to ezines
subscribers -- how many clicks were made before the subscriber
registered for your eNewsletter? You take the total expenses
for running your web site 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 web
site, 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. Refunds or credits are also
taken into account. 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 your ROI calculations. If you
provide this service in person you need to also 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, this is why I recommend only performing complimentary
session over the phone or in your office unless you're fee is
built in and high enough.
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 eNewsletter 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. Not to mention a means for reporting to you what was
sold, when and where too.
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 and 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 $46,200/22 = $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 web site.
Example: You purchase a banner space on someone else’s web
site 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 = $1.77.
You paid $1.77 for each 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 to a similar
request, and they are the target market you are looking for.
The leads can be limited to just providing the e-mail address
or in great details.
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