Let's face it, all the marketing jargon can get very confusing and it's easy to feel overwhelmed.
In this blog post, we'll go over some of the most commonly used marketing jargon in online marketing and digital sales, with some practical examples to grow your business.
Data, Data, Data
It doesn't matter if you're a startup or a 100+ employee business with years of experience, data is equally important to everyone. A typical question that is asked by many entrepreneurs;
"What kind of data and why does it matter?".
This is one of the hardest questions to answer without having a good understanding of the business model, but let's cover the basics.
1. Website Analytics
The simplest way to start tracking how your online business is performing is by installing Google Analytics. This tool gives you all sorts of insights without requiring much setup or tech knowledge.
Some of the most useful metrics provided by Google Analytics are:
- Session time - The time a user spends on your website
- Acquisition Source - Where are your visitors coming from
- Devices Used - What devices are your customers using to access your website
- Bounce Rate - The % of visitors that leave your website without performing any meaningful action
2. Customer's LTV (Lifetime Value)
In short, the LTV is a financial figure that shows, how much revenue you should expect to receive from your customers before they churn. This figure will guide you on how much to spend on acquisition.
To simplify; Let's assume your customer LTV is €500, and your average cost of goods is €250. That leaves us with a 50% margin (before taxes). In conclusion, if you're spending more than €250 to acquire a customer, your business is on track to bankruptcy.
In this article, we won't elaborate on how to calculate the LTV as it's different for each business.
3. CPA (Cost per action)
If you're running any sort of marketing, be it "organic" or "paid", it's good to understand how much it's costing you to make someone perform an action.
This also varies for every business but let's take online shopping as an example. In this scenario, we have two main types of actions;
- Visit website
- Checkout / Sale
To keep this simple, let's focus on the CPA for visiting our website or online store. To get this we simply calculate how much we spent on marketing and divide that by the number of visitors we had in the same time frame.
Visit website CPA = Marketing Spend / # of visitors
Attribution is somewhat of a vague term used in online marketing, but what most marketers are referring to is; "What % of revenue is coming in from each marketing/sales channel".
So let's take on a practical example:
You currently have 3 sales channels;
- Store walk-ins
- Social Media Marketing
- Online Shop
Now, you want to determine what your next investment should be. Without having a well-curated attribution model, you'd be basing your decision mostly on luck. So how do we tackle this?
The most basic form of attribution is called the "Last Click" or "Last Action" model, where we attribute each sale to where it happens. For this example, the Last Action attribution model would look something like this;
- Store walk-ins - €1,000
- Social Media - €750
- Online Shop - €1,200
This is all well and good if you're running a small business and you just want to understand how each channel is doing, but it's far from the real picture. In this day and age people shop around before committing to a purchase, so that store walk-in could have very easily been thanks to your social media, so how do we deal with that?
In short, you don't. If you're at a point in your business where this kind of data is important to you, hire a professional. This kind of advanced attribution can lead to very misleading information if not done right.
The phrase Conversion Funnel is one of the most commonly used phrases in digital marketing, but what does it mean?
In short, it's how your leads become paying customers after interacting with your content. In it's simplest form a conversion funnel can be;
- Lead views an Ad
- Lead calls your business
- Your sales team closes the sale
However, in digital marketing, this can get a bit more complex. Once you factor in your Facebook Ads, Email marketing, Landing pages, etc.
Every business needs to understand how their conversion funnel looks like, and how leads are interacting with it to make the necessary adjustments and increase profitability. So how do we measure?
The simplest way to measure it to use Google Analytics and specifically create events related to each meaningful interaction, example:
- Clicked Ad
- Filled in the contact form
- Completed checkout
Once you have the events configured, you can then create reports to identify how each interaction is manifesting in sales.
There is more marketing jargon we could explore, but we'll leave that up to you to research. In the meantime let us know what did you think of the phrases and keywords we talked about today. Did you find it helpful? Are you going to use them?