Do You Understand The Numbers Your Business Gives You?
You probably receive a lot of reports and most of these reports will include numbers that reveal a lot about your business. Do you understand the message?
Some reports are easy to understand and others may be a bit more challenging and almost all reports can be skewed to represent either a better or worse performance than actually exists.
Here are some of the reports that you may be familiar with and some that may not be quite as familiar:
- inventory report
- cash flow report
- profit and loss statement
- balance sheet
- bank statement
- Google analytics report
- bounce rate
- time on site
- anchor text report
- backlinks report
- PPC report
- Facebook analytics
- and many, many more
Some of the terms mentioned above are not reports by themselves. They are, however, parts of reports that you do need to understand if you are doing any kind of SEO or online marketing.
Your Google analytics report, when set up and used effectively, can give you a lot of very useful information that will let you tweak your marketing efforts to improve conversions and, hopefully, sales.
The bounce rate, which is part of Google analytics, will give you an idea of how quickly people are leaving your site once they get to it. If the only page they visit once they get to your site is the page that they land on and they leave in under a minute, which should tell you that your message is not solving the problem that they have or it is presented in a manner they are willing to consume. (You have 3 to 5 seconds to capture their attention.)
Within the bounce rate, you will be given a set a numbers that tell you the percentage of increase or decrease in the bounce rate over the previous 30 days. (Note: if there is an improvement in this number but the overall bounce rate is too high (usually above 80%), some search engine optimization firms will share with you the percentage of improvement rather than the total bounce rate so that their business looks good in the report.)
PPC can generate a lot of traffic very fast but you need to know your numbers for it to be profitable. If you have hired someone to manage your PPC for you, you need to keep track of what ads they are using with each keyword. You also need to know where the people are being sent when they click on your ad, the average cost per click and how many clicks it takes before you get a conversion.
You also need to understand what is meant by a conversion. Is a conversion and opt in to your mailing list or are you going straight for the sale?
Example: if the conversion you want is an opt in to your mailing list, you need to know how many clicks you have to have to get an optin and that number is your cost of acquisition.
Another set of numbers that you need to know is how many of those optins convert into sales and you also need to know the lifetime value of your customer so that you can adequately judge how much you are willing to spend to acquire each lead.
If you have to spend $10 per click to get people to your landing page and you need 10 clicks to get an optin than your cost per lead is going to be $100.
When you know that you need 10 new leads to make one sale, you will know that is costing you $1000 to get that sale.
Depending upon that cost you are paying someone to manage your PPC and the cost of delivering your product or service you will probably need a lifetime value that is at least three times what it cost you to acquire that sale but five times the cost is more realistic.
You must have your PPC tied into your Google analytics so that you can set up tracking and so that you can get an idea of the demographics that are clicking on your ads.
In some niches, it’s easy to put up a good sounding ad that gets clicks but it could be attracting people that are completely outside of the demographics that make up your customer base. Hypnotherapy is one such niche.
There are a lot of hobbyists that are interested in learning hypnosis for personal use, entertainment purposes or nefarious purposes instead of the professionals that you be seeking. The keywords that would be used to attract a potential hypnotherapist are very similar to the keywords that would be used to target a hobbyist so the words you use, the ad you use in the demographics you target have to be very specific or you would be wasting a lot of money.
Knowing the numbers and knowing how to interpret the numbers correctly can help give you a very clear understanding of whether or not your marketing efforts are helping you build a profitable business.
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