According to the Digital Analytics Association, 44% of analytics teams spend over half their time accessing and preparing data rather than analysing it. This makes it incredibly hard when building a business case to increase budgets in certain areas as they rarely get to the bottom is what works and what doesn’t. Senior executives need to be provided with a clear view of where the business value lies.
Acquiring more customers
One of the clearest ways to us digital analytics is in working out how to acquire more customers. Through the multi-channel metrics that are collected, digital marketing teams can see the full journey each individual customer takes before making a purchase.
For example, we can see the precise point within a video that the customer completed an action or at what time they responded to your social media banner. Using these metrics, a business can spend more targeting the content that gets the best response to help achieve a better ROI.
These tactics have been used for a long time in web analytics. With a platform like Google Analytics, a business can measure the devices used, keywords searched for, time spent on pages, exit pages and much more to ascertain potential issues that need optimisation. It might show that customers visiting the website via mobile drop-off at a certain page and direct the digital team towards a fix that improves conversion rates.
Each channel has metrics that can act as a guide to acquiring more customers, but it isn’t always as simple as yet. The key to success isn’t just in getting more people, it is about getting the right people for your business.
Acquiring more of the RIGHT customers
Bringing in more of the right customers is a fundamental way for improving return on investment. The key word to note here is ‘right.’ You will often hear digital marketing teams talking about how they have reduced their cost per acquisition (CPA). In simple terms, they have reduced the amount they spend to bring a customer on-board. This is measured strictly in digital advertising terms and usually includes the cost per pay-per-click campaigns, social media adverting or banner ads for example.
Whilst having a low cost per acquisition is a useful metric, it doesn’t really tell the whole truth. Digital analytics can tell you a lot more and potentially pinpoint channels where a higher cost per acquisition is not necessarily bad. The low acquisition cost may just be a sign that we are not attracting the right target audience.
Let’s take a practical example. A retail business has identified females aged between 24 and 30 are the ideal market for their line of fashion. When doing a channel analysis, they notice that social media marketing has the lowest cost per acquisition of all channels so decide to do more of that. It brings in volume whilst being within budget.
However, digital analytics need to go to the next level and answer the question as to whether these are the right type of customers. Having a low CPA doesn’t always mean they are the best customer anymore. Upon deeper analysis, it is 45-50-year-old females that are purchasing. They tend to only purchase one and don’t stay loyal to the brand. When we look at the 24-30-year-old females, the target audience, although CPA is higher, they spend more, always stay loyal and promote the brand through social shares.
Digital analytics is more than just CPA. Whilst cost is obviously important, it needs to look at the mix of all channels to present the real business value.
Analysing the marketing mix
Playing with and optimising digital channels is a little bit like playing Russian Roulette. As so many channels are available, businesses will want to try to be everywhere without putting enough focus into one specific area. Sometimes, it is a case of trying to solve a problem by throwing money at it, leading to ineffective ads and campaigns. It is important to think strategically and have the right mix to achieve the best possible ROI.
The first thing that digital analytics might tell you, as per our retail example above, is where your customers are. Just because you’ve got a Facebook group or send them emails all the time, it doesn’t mean that they will jump in and use either of those channels. Your digital data should first and foremost help you pinpoint the most lucrative channels and not rely on assumptions.
Some digital professionals have also noted it is worth considering your digital assets. For example, if you invest heavily in Facebook advertising through business pages, ads, Messenger and Groups, what would you do if Mark Zuckerberg decided to shut all of that down? All the data stored in there is owned by Facebook and not by your business. Even if the best results come from Facebook advertising, it would be a bad move to put all your eggs in one basket. Having a mix that includes assets your business owns like a website, blog or email is important to cover the worst-case scenario.
Success in digital marketing shouldn’t just be achieving an ROI in one channel. It should be achieving an increase in ROI across the entire marketing mix. Broadly speaking, a good mix should fit into three categories.
- EARNED – someone else says something about you for free. This might be mentions, social shares or reviews
- PAID – Pay-per-click, display ads, retargeting and paid social
- OWNED – your own website, blog or email marketing
The concept of not throwing money at everything whilst also having a strong marketing mix might sound a bit like a contradiction in terms. However, it is about picking the right channels within each of the broad categories above that contributes to a healthy marketing mix.
Picking the right digital channels
A strength-based selection will focus on the things you are good at and the channels that will be the best at supporting any activity. For example, if it takes you 3 weeks to create quality video marketing content with the expense of equipment and people, don’t do it. The chances are you will spend a lot of time creating content that doesn’t offer any value to the business.
There are forms of media that will naturally feel more comfortable to the business than others. It would be quite unlikely to find a team of lawyers trying to create viral YouTube hits, nor would customers look for them there.
So, we know where the customers are and what we are good at but where does digital analytics come in the help increase ROI? One of the key functions of digital marketing analytics is to attribute specific activities to sales revenue. For example, we can see that all our owned channels are brilliant at generating leads but have a very low conversion rate (getting the customers to purchase). The paid channels could be fantastic at getting new customers but costing too much to do so.
What we know from this is that owned content should be used for engagement, but paid channels are how we are getting to bring in customers. Both can be optimised accordingly for a better ROI.
Link back round to those initial business goals to figure out where the focus should be. If the business aim is to improve brand awareness, then the blog is prioritised. Measuring the ROI from brand awareness is not an exact science but it should link to:
- More organic/direct website traffic over time
- Social shares and likes as customers search via other channels as well
- More earned media such as reviews and recommendations
- External link building
- Community growth
Whilst focusing the marketing mix on owned channels for brand awareness might not feel as if it creates ROI, tracking metrics like the above showcases the “halo effect” of any activity. This is a term used for an impression created in one area to influence opinion in another area.
Revenue from existing customers
We’ve probably all heard somebody tell us that it costs five times more to acquire a new customer than it does to retain an existing one. Brand loyalty is hard to achieve at a time where customers have so much choice.
There are a number of methods to ensure existing customers stay loyal to your brand and continue to purchase. This will include activities like upselling and cross-selling through the various digital marketing channels that the business decides to use. Much of the strategy we’ve spoken about so far in this article is designed for generating leads and creating engagement but digital analytics platform can do a great job at helping you optimise the experience for an existing customer.
Your digital analytics tools should allow you to analyse the full customer journey. This can be a winding path as customers in some sectors access an average of four digital sources before purchasing. They also do this using a variety of devices. In monitoring the choices your existing customers make, it will be possible to optimise the journey for potential new customers
The key to existing customer retention is communication. If you consider that a new customer who buys for the first time doesn’t always know your business, there is a lot of scope for you to ensure that happens. You might send a personalised email as a welcome with some rich content. You could send them a SMS or ask them to follow you on Facebook. As long as the communications are relevant, customers won’t might you speaking to them digitally.
Digital analytics platform can also measure:
- Email open and click through rates for existing customers. This could look at what prompts different groups to action and lead to a more optimised customer journey
- Chatbot data. Some existing customers will need to ask questions. Analysing the text via natural language processing is a great way to solve problems and keep the customer satisfied.
- Social media group analysis. If you have had customer join your groups or follow you on social media, track how they interact with your posts and tailor them to what the customer wants to see. Focus on those that generate a return.
There is a lot of competition
As the number of internet users grows, more IoT devices come into the market and Artificial Intelligence (AI), Augmented Reality (AR) and Virtual Reality (VR) continue to blossom, the competition for digital success is immense. Digital analytics platforms can help you measure your brand, product lines or performance against that of the competition.
Some examples might be comparing traffic, referrals, visitor behaviour and keywords statistics. If you can see where you rank on Google against your competitors, it will help when trying to optimise keywords in SEO and PPC campaigns so as to best align spend to potential income.
Other tools can help you monitor the audiences of your competitors to see how you compare and make decisions about the target market you need to be looking for. For example, if you want to sell to young females, you can analyse where that market is right now and plan accordingly.
Other tools available help you search for specific content, articles and social shares.
Grow from testing
Testing digital marketing campaigns is as important as it has ever been and perhaps even more critical if you are managing multiple channels. Digital analytics can isolate variable and test assumptions throughout your marketing journeys or funnels.
Analytics are fundamental to pinpointing the metrics that will help you run A/B testing scenarios. If you have a series of ads on social media, you need to understand what has worked best otherwise it is impossible to move forwards. This form of testing is one of the key ways to generate ROI from your digital analytics. You can analyse the traffic generated, conversions, revenue and engagement from each and every campaign, review the content and optimise it to reach its full potential. For example, a successful ad on Facebook may not necessarily work on Instagram as the two have different audiences. Incremental testing to get the best ROI from advertising is critical to success.
Please read onto the last article of the series of articles on Digital Analytics. The last article on this series is; How do you analyse digital data?