Originally posted on October 15, 2018 @ 9:16 pm
Fads come and go. As do trends in the world of business. Last decades giants, and yesterdays superstars become faint blips on the radar.
How often do people talk about Zuckerberg and Jobs, over Iacocca & Welch? Heck, 5 years ago DM referred to a direct message on Twitter, now it predominantly indicates a direct message on Instagram.
When it comes down to it there are only 27 digital marketing terms that every business owner really needs to know. These terms get thrown around a lot, but they really represent tremendous concepts that business owners should know.
- ROI – Return on Investment: ROI is the performance of your resources from an investment, namely revenue produced by your cash, resources, and time. If you spent $1,000 to get $2,500 back, we get an ROI of 150%. (2500-1000)/1000 = 1.5 or 150%. Along with your time and cash flow there is no better value to be aware of.
- RoAS – Return on Ad Spend: Now if you take the ROI from above, RoAS is actually a more straightforward figure to monitor. Usually it’s calculated as a direct ratio of ad return and spend. So if you spent $1,000 to make $3,000, then you get an RoAS of 300%. ROI tends to be a more useful figure in my opinion since you’re asking your marketers to calculate the real cost of ads, management and time to really gauge results. The fact that most agencies don’t calculate real ROI is the dirty little secret of the ad industry in my opinion. And really it might be silly to calculate every marketing expense this way because it’s impossible to gauge the opportunity cost of not investing, and how much damage they may have done to revenue.
- CPA – Cost Per Acquisition: The question that anyone using digital advertising needs to be thinking about at the end of the day is how much am I really spending to get someone into my marketing funnel? From end to end on a platform how much money does it really take you to get an email a salesperson can call? If you want to be even more disciplined, then how many of those leads you paid for actually turn into buying customers. While there are many intangible benefits, like exposure, or people that might convert after 4+ touch points across multiple channels, which might make CPA looks worse than it is in real life. (you’d need to turn off the marketing channel for the entirety of your sales cycle to gauge this) but it’s still useful to look at marketing channels, or at least specific campaigns by their returns in revenue in the most strict terms.
- CPL – Cost-per-Lead: CPL is what most people are tracking when they look at CPA. If you spent $1,000 to get 10 leads, than your campaign had a Cost Per Lead of $100. If you spent $1,000 to get 10 leads, and one of them closed, then our real Cost Per Acquisition was $1,000. Now we better hope the LTV (to be covered soon) of that customer was more than $1,000. Now let’s say that customer bought $6,500 worth of product. If we spent $1,000 for that lead, and $500 managing that campaigns ROI was 333%.
- CLV – Customer Lifetime Value: Customer lifetime value tracks and predicts the total net value of a customer to your business. For a company that sells fireplaces the CLV of a customer might be limited since you’d only expect them to get one fireplace for their house. For a barbershop the customer lifetime value is probably huge, especially relative to the cost of an individual haircut, since someone might get their haircut hundreds of times in their life. At the end of the CLV is an important metric to track because it let’s you know how much your customers are “worth” and how much you should really be paying for them in terms of advertising.
- MQL – Marketing Qualified Lead: A marketing qualified lead is a lead that is ready and worth marketing to. From the perspective of viewing all visitors to your site as “potential” leads (in theory we could sell to anyone) a marketing qualified lead is one that has the desire and need to buy, but just doesn’t know it yet. It’s important to track your ratio of marketing qualified leads as a business owner precisely because your marketing is only efficient if it’s reaching people who are truly worth marketing to with services like re-marketing, email, or other direct offers.
- SQL – Sales Qualified Lead: Sales qualified leads, not to be confused with the database language, are people who have come through your marketing funnel and are ultimately worth having sales people actually speak to. Tracking your ratio of sales qualified leads to marketing qualified to general leads is key as a business owner because at the end of the day you need to know the total ROI for acquiring a new customer given all your other marketing work. Obviously some percentage of our marketing qualified leads will become sales qualified through our marketing, and it’s key to track that since that also lets you know how effective your marketing is in turning people into actual customers.
- UVP – Unique Value Proposition (or USP): Unique Value or Unique Selling Proposition, indicates the primary reason why a customer would choose the value of a particular product or service in a market over the competition. Wether we intend to or not every one of our brands has a specific UVP. For fast food chains the UVP might just be price, whereas a local gourmet burger joint, might have a UVP or quality and local ingredients. Take care to focus on your own UVP as a business. You should consciously shape yours. Wether you like it or not your business will have one in users mind, and that emotional gut feel towards your brand will determine how much you can price and sell your services.
- CR – Conversion Rate: CRO is one of the primary metrics you should be tracking across all marketing channels. CR tracks the percentage of people that actually take a desired action on your site. If 1,000 people visit our site, and 23 download our ebook, and 100 signup for our newsletter, then our conversion rate was 2.3% for our eBook, and 10% (pretty good) for our newsletter. Now we may have far more interest in our newsletter, but our ebook actually results in more customers, even at a lower conversion rate, that’s a better time investment. Generally speaking any conversion rate above 2% for an actual transaction or signup is good, and anything below 1% usually indicates an issue.
- CRO – Conversion Rate Optimization: CRO is the art of increasing your conversion rate through monitoring site usage and testing new design and interface tactics. Site owners should monitor their CR and consider CRO if they are consistently failing to turn new users into customers. It still could be an issue of the wrong marketing, but it may not be, and working on CRO will alert you to weaknesses on your site.
- CTA – Call to Action: Now how to we get people to “convert” on our site? Well calls to action are the name of the game here. Calls to action can be as basic as “Submit” or can be as lengthy as “Doctors Hate This Free Cancer Cure.” Generally Call’s to action are just specific asks for users that are well highlighted on the site. CTA’s get tweaked most for Ads or in the process of CRO, but as a site owner you should be monitoring and thinking about the best possible headlines to get users to act.
- KPI – Key Priority Indicators: KPI’s are really an acronym of acronyms. Of all the indicators of success we could be monitoring which one do we care most about? Total ROI for a campaign? Cost per acquisition? Cost per lead? KPI’s help marketers and business leaders align their work around well defined and specific work.
- CTR – Click Through Rate: CTR applied through many levels of digital marketing. From ads to Google’s Search Engine results Page, Click through rate gauges how often users that see your ad, listing, or banner image, actually click on it, and go where you want them to. CTR is calculated by dividing the total impressions (people who could have possibly seen your listing) and those that actually clicked. So if our impression rate was 400 people on Facebook, and 40 people clicked our ad, then we had a 10% CTR. CTR is important to monitor because it lets you now how effective your work is.
- KRAs – Key Result Areas: We borrowed this one from the Dave Ramsey and the folks over at Ramsey Solutions, but find that this is essential for any marketing team. Unfortunately most agencies and internal marketing managers tend to have a hands off approach to the specifics of the work in digital marketing. The goals feel to amorphous, and success if often (rightly) left to the experts. but KRAs outline the key areas that are required to succeed, and the behaviors that are expected to be maintained as an organization.
- CRM – Customer Relationship Management: CRM systems allow companies and sales staff to work with a unified understanding of a customer’s business and their organizational interactions with them. Philosophically CRM systems help companies tear down silos between operations, marketing, ad sales and view customers on one continuous buyers journey. Employing a CRM at your business is practical simply for tracking contact information but also key to understanding the conversion of leads, and the overall development of an account.
- ABM – Account Based Marketing: Refers to companies that keep what would be CRM data in line with all their CRM data, with the effect that individual companies (accounts) are marketed to with a singular message across the organization rather than just to individuals. While ABM is a much newer term than CRM, you can expect companies to be driven by goal and need to unify all of their marketing across channels in the coming years. The sooner you can unify this data in a world where people expect a singular experience the faster you’ll be able to build your sales machine and prioritize leads.
- SEM – Search Engine Marketing: Google AdWords, BingAds, Google Shopping and SEO all fall under the broad label of Search Engine Marketing. While the above services used to be more dominant in the space of digital marketing, and digital marketing might as well have all been SEM, channels like native content, social, and email ads have become more dominant forces in the advertising landscape in recent years.
- SEO – Search Engine Optimization: If you’re reading this you probably know what search engine optimization is, but I do hear SEO, SEM (search engine marketing), and PPC (pay per click ads) confused frequently. SEO is about making technical improvements and UX improvements on your site in order to strategically increase the quantity and quality of traffic coming into your site from search engines. The end goal is to increase rankings for keywords and long tail search queries that should result in more sales qualified leads coming to your site from search engines (for free). While SEO has had a bad rap in years past, and is actually “illegal” as far as Google is concerned (after all they want people to buy ads) this “free” organic traffic from search engines is where most businesses get their revenue from.
- SERP – Search Engine Results Page: SERP is shorthand for what users see when they type something into Google or Bing. It’s key to monitor the SERP for search terms in your industry because you need to understand what the competition is up to.
- PPC – Pay Per Click: PPC is the dominant pricing model in the advertising industry outside of CPM (which is cost per thousand exposures). The benefit of PPC tends to be that you don’t pay for impressions (an ad that someone might “see” but never actually look at on a site) but rather pay whenever someone actually clicks on your ad. While PPC is priced appropriately for this benefit, I personally am not impressed (terrible pun intended) with the idea of paying for “impressions” without being assured of actual prospects clicking through.
- CPC – Cost per Click: Cost per click payment models in digital advertising track how much a customer is being charged eat time they click on an ad. The thing to keep in mind here for any business running paid advertising on a CPC model is that the best keywords to run actually may be the most expensive to get customers your way, while cheaper keywords may not get you the best prospects. For example if you ran a plumbing business, the CPC for something like “plumber in Portland” would cost more than running on a term like “what to do about leaky pipes” depending on your market or site, either of those terms may results in an ultimately lower CPA (cost per acquisition) of new customers.
- MLM – Multi Level Marketing: The reason why I included MLM here is that it’s really a modern day code word for a pyramid scheme. If you hear MLM surrounding anything, or as an internal distribution system of products, I’d run the other way.
- UI – User Interface: UI denotes the visual design of a digital device with which a human may interact. As far as your business goes, the key thing to remember with UI is that increasing familiarity and reducing the degree to which users have to think while using your product should increase sales.
- UX – User Experience: UX or User Experience Design is the multidisciplinary pursuit of the best possible experience for users on your site. Rather than just concentrating on the interface and visual design of a site or app, user experience is concerned with gauging the overall usage rates and experience users have towards an app. At a macro level as a business owner, we want to make sure we’re reducing cognitive load for customers and giving them an easy to use experience on site.
- UV – Unique Visitor – (in Google Analytics a User): Each time an individual person on a singular device (though you could in theory have multiple people on the same device) visits or interact with your site or a piece of content over a defined period. Tracking users or unique visitors, depending on the analytics platform, should help you gauge the real number of people your site is impacting. For example if 5 users visit your site at two different times each, and look at 15 pages each each time, your would have a total of 5 users or unique visitors, with 150 site pages views, and 10 sessions (2 from each) in Google analytics. The whole point here is that, if you just track page views you might have one user with 80% of page views and no understanding of why your other (probably dissatisfied users) interacted so little.
- BR – Bounce Rate: Bounce rate is the percentage of people who come to your site and leave without clicking through to any other pages on your site. While there may be other metrics like time on page that indicate a good quality session it’s important to track bounce rate so you understand if you site is failing to convince people to stay around.
- CMS – Content Management System: A CMS is a programming architecture that runs below the UI elements you see on your site that allows you to make changes on your site without programming.
Tracking What Matters
Nowhere is the rise and fall of industry specific terms more precipitous than in the world of digital marketing. Worse still, you’ll encounter digital marketing agencies, gurus, and marketing executives who will coin and use their own company wide lexicon. If you feel like you can’t understand your head of marketing anymore, you’re not alone. The thing to realize is that at its best digital marketing should be the most transparent form of marketing. You should be able to learn more about your customer and the impact you’re having on them most here.