In our previous articles, we went over how to plan your digital marketing strategies. If you’ve implemented some of those tips, you should have gathered data from your campaigns by now.
The next step is understanding the data you’ve collected - this information is a goldmine for any savvy marketer or business owner!
That’s because it gives you the chance to make informed, data-driven business decisions. You can make choices intelligently, in other words, instead of taking wild guesses and hoping for the best.
To help you out, we’ll cover three key metrics in this guide: Click-Through Rate (CTR), Conversion Rate, and Returning Customer Rate. Each of these provides valuable insights that can refine your business offerings and guide your strategic planning hence.
1. Click-Through Rate (CTR)
What it is: The Click-Through Rate or CTR refers to the percentage of people who click on your ad or content out of the total number who view it.
How you calculate it: CTR = (Total Clicks / Total Impressions) × 100
Why it matters: CTR is crucial because it’s an indication of how effective your content actually is.
Here’s an easy way to look at it. Say you’re checking the effectiveness of an ad. CTR tells you the answer: a high CTR means the ad is working and a low CTR means it’s not.
It essentially gives you an easy measure of whether or not your ad copy, creative elements, or even targeting strategies are doing what they should. That’s why CTR analysis for SMEs is so important!
The basics of CTR or clickthrough rate optimisation
CTR optimisation is the process of tweaking marketing material, strategies, or tactics in order to get a higher CTR from it.
The trick here is to begin with CTR analysis. Is your CTR high or low? Specifically, is it high or low for your case, because different industries and even marketing channels have different average CTRs!
Here’s an example of the same marketing campaign type having different CTRs when different industries. Mailchimp states that the average open rates CTRs for email marketing for some industries come out to these:
Arts & Artists | 2.8% |
Beauty & personal care | 1.3% |
Computers & Electronics | 2.19% |
Insurance | 2.96% |
Legal | 3.14% |
Big differences! So, it pays to know what the average is for others in the same
space and channel.
Now, say you find out your CTR is lower than the average. What then? Then you do optimisation!
Figure out what issues people are having with your content or campaign. Does your USP (unique selling proposition) actually get highlighted? Is it aligned with what your target audience wants? Is your messaging not easily understood?
Sometimes it may even be the ad format you’re using. One agency saw a 94% CTR boost for a client after switching from traditional to dynamic ads, for example.
2. Conversion rate
What it is: The Conversion Rate measures the percentage of visitors who take a desired action (i.e. convert) after clicking on your ad or content.
How you calculate it: Conversion Rate = (Total Conversions / Total Visitors) ×100
Why it matters: This is a direct measure of how well your ad, website, or other marketing material converts visitors into customers.
It shows how often they sign up for memberships or buy products, for example. You would typically aim for a high conversion rate because this means your marketing efforts are translating into real-life gains or results.
You would usually assess this against the CTR as well.
The basics of conversion rate optimisation
Conversion rate optimisation is the process of tweaking your marketing so that it results in more conversions.
Let’s say you notice that your ad has a high CTR. It means people are clicking through or on the ad and are being taken to the next step in your marketing funnel, like a landing page.
But then you notice that your ad also has a low conversion rate. So, even if they’re clicking on the ad and ending up on your website, they’re not making a purchase once they get there.
That’s when you need to do conversion rate optimisation. Here are some things you can do for that:
Find out which competitors they’re buying from and why. |
Try asking potential customers why they’re not buying. |
Run surveys to better understand your target buyers’ decision-making processes. |
Assess the 4Ps (product, price, place, and promotion). |
Look for possible roadblocks in your customer journey. |
You’d be surprised how often small things can ruin conversion rates. Sometimes, it could even be as simple a problem as an e-commerce shop that’s not mobile-friendly!
A similar example is the outdoor adventure brand Swiss Gear’s. The company had problems with its conversion rate until it improved its checkout process.
The result? A 14.1% year-on-year conversion rate increase. Think about things like that when trying to boost SME sales conversion rates!
3. Returning Customer Rate
What it is: The Returning Customer Rate measures the percentage of customers who return to make another purchase or conversion, or who engage with your business again.
How you calculate it: Returning Customer Rate = (Number of Returning Customers / Total Customers) ×100
Why it matters: It helps you gauge customer satisfaction and loyalty. If it’s high, it suggests your retention strategies are working.
That’s great because you can’t maintain a viable business model over time without it. And it’s good for the bottom line! Focusing on existing customers often yields higher returns compared to constantly trying to get new ones.
The basics of repeat customer analysis
Again, you need to look at returning customer rates for your industry before making assessments. If you find that yours are lower than the average, it can mean many things:
You may not be delivering on promises made in the marketing campaign.
Your customers may be dissatisfied with your products or services.
Your customers may be finding better alternatives (which you should study!).
It’s best to focus on addressing whatever the issue is pronto. In fact, it’s even advised to stop trying to recruit new customers before you do so.
That’s because it’s often harder to persuade customers to buy from you again after you’ve failed once. You want to cultivate a strong reputation, not constantly patch one.
In such cases, it’s crucial to halt new customer recruitment until you address these delivery issues; ineffective marketing can harm your business's reputation faster than you can grow.
One of the best ways to work on this is by creating strong feedback and customer service loops for your customers. They’ll often tell you exactly what’s wrong.
You can even leverage these as active parts of your retention strategy, by the way. Just take a look at how Zappos does it. It’s famous for its customer service, which goes so far as its reps taking midnight shoe orders and hand-delivering them to doorsteps.
Sounds mad? Maybe, but so does the fact that 75% of its business comes from repeat buyers as a result.
Let us help you with your marketing data analysis
Think you need more help interpreting your data or putting it to good use?
There’s no shame in that. Marketing can be tricky and there’s so much to learn in it! If you want expert help optimising your CTR, conversion rates, or returning customer rates, talk to us.
We can help you refine your marketing strategies and enhance your overall business outcomes. We perform continuous analysis and adjustment of this type for many other SMEs and can do the same for yours.
Contact us for a chat about your digital marketing needs anytime!
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