Online marketing for B2B companies


What is a website and online ROI Online report?
July 5, 2009, 6:05 am
Filed under: Uncategorized

Before we get into the nuts and bolts of online ROI reporting let’s ask the following questions:

1. What is the goal of a website?
2. What is the goal of online marketing?
3. What do we mean by online goal conversion?
4. How do you measure the achievement or conversion rate of a set goal on a website?
5. Lastly, how do we measure a ROI report

Let’s examine these questions now.

1. What is the goal of a website?
Most websites these days are moving away from being “dumb” or mere product catalogues to being “intelligent” in offering unique functionality, interactive software, e-commerce platforms and marketing tools. In fact most websites have a combination of the above, as selling and marketing online is becoming an integrated part of modern businesses.

The goal of most websites then is to drive traffic (ie. get more people to visit the website) to the website, entice the visitor to take an action (ie call us, fill in a form or buy online)

There are 4 types of goal conversions:

  1. Lead Generation – your goal is to gather potential customers’ contact information through using your website. Gathering items such as names, email addresses and other pertinent information from people who are interested in your products or services in order for you to cultivate a relationship with them.
  2. Sales – your goal is to generate sales via your website (i.e. e-commerce). So here you are looking for online paying customers.
  3. Cost Savings – your goal here is to reduce costs, usually business processes you can automate online; such as providing online invoicing and statements or e-learning
  4. Customer Service – your goal here is to reduce costs and make it easier to service customers – this could entail items such as online forms, self-service options or even online polls.

2. What is the goal of online marketing?
Online marketing is simply setting up a strategic goal and planning ways to attract more traffic. This strategy then needs to be implemented using website tools and online techniques to drive more relevant traffic to a website.

3. What do we mean by online goal conversion?
A goal looks at what do we want to achieve once a visitor has visited our website? What do we want the visitor to do? What do we want to sell or market to them? The website goal conversion is having visitors come to your website and encouraging them to take an action such as making a purchase online or signing up for your online newsletter. By doing so, they have converted into a measurable online relationship with you.

4. What do we mean by achieving online goal conversion?
If your goal is defined as what you want your visitor to do in terms of an action, the conversion can be defined as the success rate of reaching the goal. Basically, a Goal is what you want someone to do on your site, and a Conversion is when that user actually does what you wanted them to do. Whether you want visitors to buy your products online (sales), register on your website or increase your database for later marketing campaigns, high conversions are good!

4. How do you measure the achievement or conversion rate of a set goal on a website?
Once a goal is set, we need to know how effective our online marketing effort are. We take an average visitor baseline of the past 3 months, prior to our marketing efforts,

There are 2 sets of goal conversions, simple and complex. Let look at them.

Simple:
Simple goal conversion is mostly used to measure pure marketing websites.  If the goal is to attract as much visitors as possible to the website product catalogue and then to the “contact us” or “check out” section as final target destination of the website, the goal is simple. Let us say that out of new marketing efforts attracted 100 more visitors over and above a baseline of 200 visitors per month.
Than means we (through our marketing efforts) have achieved a conversion rate of 50% (or 50% more vistors than before)

Therefore:
Baseline: 200 visits
Increased visits: 100
Simple goal conversion: 50%

Complex:
Complex goal conversion is mostly used to measure e-commerce websites. Take the simple example above but set the goal convesrion to sell at least 10% products from the of the overall website visitors base. Let us assume we achieve 3% sales, what will our goal conversion look like?

Therefore:
Baseline: 200 visits
Increased visits: 100
Complex goal conversion target: 10% x 300 = 30 product sales
Actual goal conversion: 3% x 300 = 9.9 product sales
Actual goal conversion ratio: 33.33%

5. Lastly, how do we measure a ROI?
A ROI report is a barometer of the success of the campaign, marketing effort, or e-commerce or software platform.  Again one can have simple measurement or a complex one.

Simple ROI : Total increase visitor rate – Cost of the campaign = Rate per visitor
Complex ROI : Total Revenue from convertion rate – Cost of the campaign = Rate per product sold

Formula’s to measure:
Conversion Rate =
Total Conversions / Total Visitors (as a percentage)

Cost Per Visitor =
Total Website Spend / Total Visitors (as a amount)

Cost Per Conversion =
Total Website Spend / Total Conversions (as a dollar amount)

Objective =
Total Conversions required to break even or turn a profit

ROI =
Total Revenue from Converts – Cost of the Campaign

Conclusion:
Let’s look at our examples again:

Let’s assume you sell laptops at R5000 per computer and you spend R10 000 per month on Internet marketing (i.e. PPC, development costs, etc.) and attract 300 total visitors per month and receive 5 sales per month. Your metrics would look something like this:

Cost of Campaign = R10 000 in Month 1
Average Order Value (AOV) = R5000
Total amount of visitor = 300
Sales: From total online visitor =15
Conversion Rate = 15/300 = 5%
Cost Per Visitor = R10000/300 = R33.33 p/visitor
Cost Per Conversion = R10 000/15 = R666.66 per online sale
Objective = Break even number is 2 x R5000 = R10 000
Sales made: R5000 x 15 = R75 000
Marketing value add (Gross profit) R10 000 – R75 000 = R65 000

As you can see the ROI report should clearly and simply indicate the success of the online campaign. All campiagns should be setup with the end (ROI reporting) in mind as this is the most intelligent way of spending an online budget.

For more information on B2B online marketing please visit our website at www.pandp.co.za or contact me at
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