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EcommerceMarketingGoals PDF
EcommerceMarketingGoals PDF
EcommerceMarketingGoals PDF
How much should you spend on advertising to All advertising programs are then measured
make a sale? against this target. The director & executives are
happy that their advertising goals are being met.
Though a central influence on your rate of This makes the manager happy, which locks in
growth and profit, the target ROI goal is rarely this target ROI figure as the key to professional
f
given adequate consideration by ecommerce approval and marketing channel success.
merchants. A simple review of average product
margin is often enough to propose a safe- Since a target ROI figure contrived in such a
sounding metric to be the company’s target ROI. manner holds precarious underpinnings, stubborn
Heads nod in agreement that this “seems like a resolve must often be employed to maintain the
reasonable amount of money to pay for a sale.” honor of this number. The first rule of the target
ROI is: you do not question the target ROI.
Key Thought
A one-dimensional approach to ecommerce goal setting reveals an
inadequate understanding of the true goal of your marketing and the
true levers of business growth.
Setting Ecommerce Marketing Goals 2 | •••••••••••••••••
LOREM IPSUM
Congratulations!
Your willingness to continue reading implies This report presents critical, yet often
your refusal to blindly accept an arbitrary overlooked considerations in determining
number as your definition of success. You’re your target ROI. Each of the considerations
willing to think through the core tenets of presented herein assume the following two
your marketing goals to uncover any blind core assumptions:
spots. You want to drive real growth.
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Initial Considerations
The considerations presented in this report During initial optimization, multiple goals
are equally applicable whether your target can compete with one another. For example,
metric is defined by Return on Investment optimizing for increased ROI often results in
(ROI), Return on Ad Spend (ROAS), Effective a decrease in ad spend, which in turn may
Revenue Share (ERS), Value/Cost (V/C), or any decrease your sales volume and total revenue.
other revenue-based performance indicator. Oftentimes, however, you need to take one
step back to take two steps forward.
Occasionally an ecommerce merchant will
define their goal as hitting a specific amount The “investment” part of ROI is pretty
of ad spend (per week, month, etc.). Don’t straightforward. The real gains come when you
be mistaken, this is not really the “goal.” Ad understand the true nature of the “returns”
budget is instead a testing parameter when part of ROI. Let’s dive in!
optimizing to an ROI-based goal.
Key Thought
You can only optimize for ONE metric at a time. 'But I’d like to grow total revenue by
50% and increase my ROI from 8:1 to 10:1!' No. This can indeed be a long-term goal,
but in a pragmatic sense, you will need to give one of these goals the priority.
A broad-brush ROI goal assumes your average The best way to take this variation into
65% COGS
gross margin holds steady, even when you account is to track the gross profit of every
segment orders by brand, category, acquisition sale, not just the revenue. “Returns” will then
channel, campaign, and ad group. be normalized as gross profit when analyzing
the data, allowing you to gauge (and optimize)
In truth, however, unless you’re the uncommon the real profitability of any segment.
25% COGS
merchant with an identical margin on every
product, it is almost always wrong to set your We’ve developed an integration between a 35% Margin
ROI goal based on average product margin. backend product catalog, customer orders,
Averages can lie. Campaigns target small and Google Analytics for clients to perform
subsets of your product line, with individual this non-trivial analytics feat in real-time. 50% COGS
products often driving a disproportionate But, short of this, you can perform a one-off
amount of sales. Ad groups often attract analysis in Excel to uncover any outliers.
orders out-of-line with campaign averages.
75% Margin
50% Margin
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Co ns i d e rat i on 2: C hanne l-Spe c if ic Profit Potential
As you’re well aware, profitability does not equal potential and the expected ROI. Competition Would you rather have...
profit. A “10 to 1 ROI” may look good on paper, will increase with the size of the opportunity,
5 5
PROFITABILITY PROFIT
but companies grow based on gross profit, not which tends to shrink returns.
FIVE
by simply hitting a target ROI. Oftentimes the
volume of sales available at a lower ROI results Great advertising will certainly help boost your
in more total gross profit to the business. ROI. The best strategy, however, involves
unlocking all the revenue potential in your 5 FIVE DOLLARS 5
As a general rule, there tends to be an inverse market.
relationship between the traffic volume 50% of $5
or
Key Thought 25% of $20?
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Consideration 4: Cross-Channel Influences and Attribution
No acquisition channel operates in a silo. You must maintain mindfulness and a global
Instead, while the attribution percentages vary, perspective on customer acquisition as a whole.
every channel is both helped by and helps other When performing changes in one channel to
PPC
channels on the path to making the sale. hit certain ROI goals, you may inadvertently
cause another channel’s performance to shift.
• Paid search and SEO
• Desktop and Mobile Don’t fixate on making a big adjustment to ad
spend or ROI without at the same moment
• Category and Branded keywords
closely monitoring the performance of other
• Online and Call Center channels.
Every follow-on order from a loyal customer has KNOW that a predictable percentage of these
virtually zero additional advertising costs. As such, customers will become repeat buyers.
this is where the majority of profit can be made. If
your marketing budget doesn’t take into account the Be aware that optimizing to an “average” customer
lifetime value of a customer, then it’s safe to say that lifetime value can be a dangerous endeavor. With
your business isn’t optimizing for this key metric. some digging, you’ll likely discover variables in the
Lifetime Value
source campaign and initial order which correlate
Of course, you’ll need several months of working to customers with lifetime values much higher or
capital to pull this off, but paying to win a new much lower than the average.
customer is a fantastic investment when you
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Customer Lifetime Value (Continued) $$??
Similar to the method described in the first As with all “complete customer value”
consideration (“Variation in Product Margin”), considerations, which include considerations
you can pipe in a predicted lifetime value below, the “R” in your ROI target takes on
number into Google Analytics at the time of new meaning when accounting for these
the initial order. This allows you to maintain additional returns.
a consistent ROI target across campaigns,
while optimizing campaigns and ad groups Just because you earn money 3-6 months
which drive higher lifetime value. from today instead of today doesn’t make it
any less real. (Well, in an accounting sense
These campaigns will now have a higher the present value of this future cash is
value as the return, which produces a very diminished by a few percentage points when
strong ROI. Such a metric would prompt an you factor in the time value of money—you
analyst to increase the bid, which in turn will could have invested the money and earned
result in even more sales of this high-value some interest.)
variety. A win!
Any good ecommerce retailer will benefit should be taking this into account, as part of
from some level of customers referring other your Complete Customer Value.
customers. Happy customers tell others. You
paid for the initial customer. The additional For example, if 1 out of every 10 customers
customer brought to you through word-of- refers a new customer, each new customer
mouth referrals was actually “paid” for by is actually worth the value of 1.1 customers.
your marketing investment for the initial In such a scenario, your true returns can be
customer. If referrals are a predictable part adjusted up by 10%.
of your business, your advertising goals
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The Underutilized Master Lever
Conversion Rate Optimization
More foundational than countless channel- bottlenecks in the flow from visitor to
specific optimization strategies, work done to customer, then implementing the proposed
increase the conversion rate of your website changes as a test (current website vs. hopefully
will increase the ROI of all your acquisition better performing updates). When the test
channels in one fell swoop. This affects your wins, you win more revenue. These results of
top-line revenue, sometimes by double-digit these wins continue day after day. Then you
percentages. test again. Iterative testing compounds your
wins further.
Conversion rate optimization involves
understanding the goals of your site visitors, Yes, it’s a solid strategy. Even so, conversion
proposing website changes to remove rate optimization is severely underutilized.
Key Thought
Conversion Rate Optimization can be performed by anyone, yet the biggest wins usually flow from
tests following specific, experience-proven principles and methodologies. The Conversion Rate
Optimization team at ROI Revolution possesses such experience with ecommerce merchants.
Email cro@roirevolution.com to set up a free consultation.
Setting Ecommerce Marketing Goals 12 | •••••••••••••••••
Pulling it All Together
Devising Your Target ROI
Note that any adjustment to your expected provide a great ROI – yet these channels
returns in light of the above considerations may provide substantial volume to grow
does not mean your marketing investment your market share. It is conceivable that
must raise proportionally. Instead, let your certain channels may even have a negative
eyes adjust to the newfound light source ROI where you actually lose money to make
placed upon your business as you make the sale.
sound business decisions to maximize your
revenue as a whole – not just your initial While this would be an absurd proposition if
order revenue. you were simply looking at initial order value
as the measure of your returns, a knowledge
You may now have much more ROI wiggle of the full value of new customers can make
room to test. As explained in the second such channels an incredibly compelling
consideration (“Channel-Specific Profit opportunity. Or not. Either way, you know
Potential”), certain channels may never your business better.
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Communicating Your Target ROI with an In-House/Agency Team
Key Thought
Take the lead by communicating the ROI range you’d be comfortable with, along with
a hard-limit that should never be crossed. For example: “I’d like to hit between 425%
and 500% ROI, and I NEVER want to go below 350%.”
Setting Ecommerce Marketing Goals 14 | •••••••••••••••••
Communicating Target ROI (Continued)
Additionally, even though the advertising Once your ROI goals are met, consistent
budget itself isn’t a legitimate “marketing goal,” budget increases are the most scalable way to
it is definitely a solid business concern for all grow revenue. As such, a growing company will
stakeholders. almost always be marked by an ongoing growth
in ad spend.
So, when communicating the target ROI range,
also communicate your comfortable budget And, as has been a major theme in this entire
range. Something like, “Let’s keep the monthly report, you want your front-line analysts to
ad spend between $45,000 and $50,000.” consider your true business interests. You don’t
(Budget can be controlled more directly than want to encourage a machine-like fixation on a
ROI, so the top-end figure is assumed to be specific profitability goal.
your budget cap. If it isn’t, say so!)
Key Thought
Unless you’re trying to pad your revenue or customer stats for an acquisition, gross profit is the
real name of the game. Assuming great back-and-forth communication, give your analyst the
freedom to test the variables of your campaigns. This, in the end, is the surest path to growth.
roirevolution.com 15 | •••••••••••••••••
Additional Resources
Guide to Diagnosing 5 Underutilized Developments
Get a No Obligation in Ecommerce Marketing
Questionable Spend
20-Minute Account
Do you know how much of your The ecommerce digital marketing landscape
Review AdWords budget is wasted every changes constantly. Early adopters gain a
day? The answer may shock you. competitive advantage; stagnant merchants
Whether you’re looking for help This guide will help you to cut waste, slowly lose ground. For this report, we compiled
with paid search, marketplaces, reallocate ad spend, find profitable and parasitice the top marketing strategies that remain underutilized by most
A d Wo r d s , s o c i a l m e d i a keywords, and raise your overall ROI. merchants.
16 | •••••••••••••••••
Company Profile
ROBUST TECHNOLOGY. RESPONSIVE EXPERTS.
ROI Revolution is an e-commerce-focused digital Dedicated to Achieving Client Success Through:
marketing agency providing expert full-service • Industry-leading paid search management
management of paid search, online shopping, of Google, Bing, and Yahoo.
social media advertising, and search engine
optimization. • Reaching and expanding your audience
through Facebook Ads management.
ROI’s dedicated experts use a full suite of proprietary
software applications to deliver exceptional results • Driving additional customers and sales
for our 270+ clients. This ever-growing list of clients through Amazon Marketplace management.
includes: Peter Millar, Vermont Teddy Bear Company,
Silver Jeans, and many others. • Giving clients a competitive advantage with
our ecommerce-empowered proprietary
Most campaigns can gain at least 20% efficiency software suite.
almost immediately with the right tactics in place.
Meet with ROI Revolution for a complimentary • Offering expert resources, special reports, Learn more at ROIRevolution.com
campaign review & gift. and white papers.
roirevolution.com 17 | •••••••••••••••••
Setting Ecommerce Marketing Goals
Target ROI Considerations for Growing Merchants