Your marketing team possibly generates tens of data points and KPIs to measure what’s driving engagement on your website. Out of all those, the following are the uber data points that directionally tell you where to start optimizing to improve your company’s bottom line in any significant manner.
How many people are coming to my website?
Visits: The sum of sessions on your website
Visitors: The sum of sessions on your website
Where are these people coming from?
Visits: The sum of sessions on your website
Visitors: The sum of sessions on your website
What do I want these people to do on my website?
Visits: The sum of sessions on your website
Visitors: The sum of sessions on your website
What are these people actually doing on my website?
Visits: The sum of sessions on your website
Visitors: The sum of sessions on your website
A metric is a quantitative measurement of statistics describing events or trends on a website. A key performance indicator (KPI) is a metric that helps you understand how you are doing against your objectives. Web Analytics 2.0 by Avinash Kaushik
Based on the above definition, the KPI is tied to objectives. But how are objectives for SEM defined? They are done based on the SEM funnel. Each stage of the funnel could have objectives tied to it.
Objectives
Let’s say our Search Marketing objectives for this quarter are as follows:
- Awareness Stage Objective: 5% increase in traffic from audiences who are exploring resorts (they use searches such as “Bahamas resorts”, “Key West resorts”)
- Research Stage Objective: 2% Increase in conversions (bookings) from users researching resort options (they use searches such as “A1 resort locations”, “top A1 resort deals”)
- Purchase Stage Objective: 1% Increase in efficiency of closing consumers who are ready for purchase (they use searches such as “Book A1 resort in key west”, “A1 resort Bahamas availability”)
For each of these objectives we can define the following KPIs to be measured within our quarterly time period.
Awareness Stage KPI
These KPIs are towards optimizing our search traffic. Here, we are looking at trying to get consumers aware of A1 Resorts, so the KPIs should be about bringing traffic into our Website.
- CTR (Click through rate): This is the ratio of the number of people clicked on the Ad (Clicks) to the number of people who saw the Ad (Impressions). This gives a measure of the effectiveness of the Ad.
- CPC (Cost per click) : This is how much the Search Engine (e.g. Google AdWords) charged per click.
Research Stage KPI
These KPIs are towards optimizing our conversion volume. Here, we are looking at consumers who are already interested in A1 Resorts and we are trying to get them to make bookings, so the KPIs should be about how we are converting their interest into bookings.
- Bookings: Number of bookings attributed to Search Marketing
- Revenue: Total revenue attributed to Search Marketing
Purchase Stage KPI
These KPIs are towards optimizing our conversion cost-efficiency. Here, we are looking at consumers who are ready for purchase, and trying to lead them to a purchase as efficiently as possible, so KPIs should be about cost-effectiveness and revenue per dollar spent.
- CPB (Cost per Booking) : Total spend on Search Marketing / Total number of bookings attributed to Search Marketing
- CPA (Cost per Action) : Total spend on Search Marketing / Total number of actions attributed to Search Marketing
- ROAS (Return on advertising spend): Total revenue attributed to Search Marketing / Total spend on Search marketing
Benchmarks
Finally, the we need to setup our KPIs against benchmarks. These could be benchmarks that we have previously achieved (a baseline) or could be industry averages. As an example the hospitality industry benchmark for CTR could be 20%. So our KPIs could be at that or a higher level of we are establishing them for the first time.
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