I’d like to discuss an important principle that is surprisingly often misunderstood, and that is evaluating success based on correct performance indicators.
What not to do
We recently met with a prospect company that kindly shared a report on the success of their recent advertising campaign’s pay-per-click activity. The ad agency that handled the PPC (along with the rest of the ad campaign) reported that the campaign was a raging success.
Unfortunately, the only measure of success the agency was using was the proportion of the given PPC budget spent. They had managed to spend 100% of the PPC budget for the campaign and therefore concluded that they had been incredibly successful.
It turns out that they were using PPC as a branding activity which, as Stefan Tournquist of Marketing Sherpa confirms, is a bad idea.
What to measure
When deciding with our clients how to measure success, we always look first at how to get as close as possible to revenue. Otherwise we would be in danger of optimizing marketing efforts for low value clicks. A common example are companies that run ad banners promoting free prize contests that are unrelated to their product. They’ll get a ton of contest entry visitors and a terribly low sales conversion rate.
In our Kaizen planning process for conversion optimization projects, the discussion of objectives and measurement process is a critical component. The measurement of success must be irrefutably (or at least as closely as possible) tied to revenue, and decided upon at the outset.
If you plan this right, you’ve already made progress toward a successful Conversion Optimization experiment.
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