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
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
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 elses 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.
About the Author
Catherine Franz, marketing coach and entrepreneur over 20
years, has been selling on the Internet since its birth.
She mentors other coaches and business owners from Hawaii to
New Zealand on how to marketing on the Internet. Additional
articles and ezines are available at the Abundance Center
and her blog http://abundance.blogs.com