Analytics-blog

I’ve been walking the halls at AOD speaking with folks about “what it is we do.” At the end of the day, what we do is give folks tools to optimize their business decisions.  But that phrase “optimize business decisions” is still meaningless to the average bear (or CEO).

What I’m hoping to do is get into some details, and expose folks to some of the metrics we present to help organizations optimize their business.  Please let me know if this is helpful or not.

So here goes our first metric, Cost Per Lead (CPL) by Media Channel:

The metric is calculated by dividing the Total Advertising Cost (TAC)  for a Media Channel by the Total Leads Generated (TLG).

So CPL = TAC / TLG

This chart helps you understand the spend required to acquire a somewhat qualified potential customer.  For those of you with a CRM or sales background, you know that a lead is nothing more than someone who has responded to your messaging, or someone that you SUSPECT might be interested in your services.

Here are the decisions you could potentially make using this report:

• Decide to further research your efficiency by looking at a Cost of Conversion by Media Channel report.
• Decide to allocate additional funds toward lower cost lead sources with the goal of understanding your spend limit before diminishing returns occur.
• Decide to further drill down into each Media Channel to understand why some costs are higher than others.  You might find that a few specific media vehicles are costing more than they should to generate leads.
• Decide to further drill down and research the differences in the creative across those Media Channels.  You might find that that the creative is driving your efficiency more than your media channel.

Obviously, what you don’t want to do is make a knee-jerk decision based on this one marketing metric alone.

Given that fact, just like virtually any other measurement criteria on the planet, it is only useful if compared against other metrics.  In this case your would want to understand the conversion rate by Media Channel as well.  It might turn out that while you are paying more for leads in certain channels, those leads are better qualified and thus convert at a higher rate.

Hope this made sense.  I look forward to any and all comments.