You may be asking how to determine whether your efforts are effective if you’re new to performance marketing. You’re in luck, though, since Vxplore Technologies, a reliable Performance Marketing Company In India, will dissect some important measures that will enable you to gauge your success. It is a plain conversation on what counts most in performance marketing, with no fancy jargon.
Let’s have a look:-
- Conversion Rate (CR)
- Cost Per Acquisition (CPA)
- Return on Ad Spend (ROAS)
- Click-Through Rate (CTR)
- Customer Lifetime Value (CLV)
- Bounce Rate
- Average Order Value (AOV)
Conversion Rate (CR):
The most important one is the conversion rate. This is essentially the number of people that are acting in the way that you would like them to. Whether it’s a purchase, a newsletter sign-up, or the download of an app, your conversion rate indicates how successful your marketing is in persuading consumers to take action.
Simply divide the total number of clicks or visitors by the number of conversions, then multiply the result by 100 to compute the conversion rate. For instance, if 100 individuals visit your landing page and 5 of them make a purchase, your conversion rate is 5%.
Though industry-specific standards vary, anything over 2–5% is generally considered respectable. If your rate is low, it could be time to review your landing page.
Cost Per Acquisition (CPA):
The amount you spend on each new customer is your cost per acquisition, and it comes next. It matters greatly because it has an immediate effect on your revenue.
Divide the total amount you spent on marketing by the total number of new clients you brought on to determine your CPA. Imagine spending $1000 on advertisements and attracting 20 new clients. $50 would be your CPA.
Determining what constitutes a “good” CPA is difficult. It depends on how you run your business and how much you value each client in the long run. You can probably pay a higher CPA if your business sells expensive goods or operates a subscription business. However, you must keep that CPA extremely low if you sell inexpensive goods.
Return on Ad Spend (ROAS):
ROI’s hipper cousin is ROAS. It gives you an estimate of your revenue generation for each dollar you spend on advertising. Divide the total revenue from a campaign by the entire money you spend on it to get the answer.
If a $500 Facebook ad campaign yields $2000 in sales, your return on advertising spend (ROAS) would be 4:1, or just 4, if you keep things simple. It implies that you earned four dollars for every dollar you spent.
Your profit margins will determine a good ROAS, but in general, you should aim for at least 3:1. If it’s less, depending on your other expenses, you may be close to cutting it.
Click-Through Rate (CTR):
The key to CTR is making your adverts persuasive. The proportion of viewers who click on your ad after seeing it. To compute it, split the total clicks by the total impressions and then multiply the result by 100.
Suppose you had 10,000 impressions on your advertisement and 300 clicks. You would have a 3% CTR.
What constitutes a strong CTR? It varies greatly depending on the platform and kind of advertisement. 2% is the typical amount for Google Search advertisements. It might be closer to 0.35% for display ads. Social media advertisements are in the middle.
A low CTR could indicate that your targeting is incorrect or that the copy in your ads isn’t connecting with the target demographic. It’s time to adjust and experiment! If you are looking for the best place to get top-notch Performance Marketing Services, reach out to Vxplore Technologies today. We can help you measure your campaigns properly.
Customer Lifetime Value (CLV):
Although it’s a little more difficult to calculate, this is crucial. CLV indicates the total value a customer has given your company during their association.
To calculate your CLV, you must know your average purchase amount, the frequency of your customers’ purchases, and the average length of time they stay customers. Once you multiply these together, you will obtain your CLV.
Why is this relevant to marketing performance? Mainly because it aids in determining the amount you can afford to spend on bringing in new clients. You can defend a higher CPA if your CLV is high.
Bounce Rate:
The percentage of people visiting your website, landing on it, and leaving without doing anything is known as your “bounce rate.” If your site’s bounce rate is high, likely, visitors aren’t getting what they’re looking for.
Divide the total number of visits by the number of single-page visits to compute it. Your bounce rate would be 60% if you had 100 visitors, and 60 of them only looked at one page before leaving.
Which bounce rate is ideal? Once more, it is dependent upon your sector and website type. Anything around 40% is generally considered good for most websites. It could be higher for informational or blog pages.
If your bounce rate is high, you may need to speed up your website, enhance the look of your landing page, or ensure that your ad copy aligns with what’s on your site.
Average Order Value (AOV):
Let’s not forget to discuss Average Order Value. It is how much a buyer typically spends with you when they buy something. Divide your total revenue by the number of orders to get the amount.
Why does performance marketing need to know this? Because raising your AOV can enhance your ROAS and help offset your marketing expenses. You can pay more to gain them if you persuade them to spend more on each order.
Offering package deals, upsells, or free delivery thresholds are just a few strategies for raising AOV. Watch this metric and find ways to raise it.
Wrapping It Up
So those are the seven essential KPIs to monitor in your performance marketing initiatives. Recall that no single metric provides all the information. It’s important to consider the larger picture and comprehend how these figures relate to one another.
Additionally, avoid being overly fixated on industry benchmarks. The most important thing is to gradually raise your metrics. Continue to test, adjust, and gain knowledge from your data. That’s the actual key to performance marketing success. Contact Vxplore Technologies, one of the top Performance Marketing Companies in Kolkata, for the Best Performance Marketing Services today.
