ROI metrics - web metrics part 2

Ok, first of all i've got to apologise as I haven't been posting for a month now, lazy me.
Things have been very busy at work and I did feel quite lazy during weekends, but enough excuses....and thanks Rochelle for nagging me and pushing me to write again.

Let's try and pick things where we left them, web metrics and how to choose the right metrics for your business. In the previous post we covered the basic metrics that any business should measure, but there is a potentially infinite number of metrics you could use for your own business, some of them more complicated than others.

ROI metrics
Let's take a look at some ROI (return on investment) metrics. These metrics are often needed to justify marketing spend and understand which of your marketing channels are working the best.
If your a new business/start-up, then you'll want to make sure that your limited resources are used to their full potential, so ROI will be crucial to you.

• CPL - Cost per lead
  This is a measure of how much each lead that comes into your business costs you (a lead can be a quote request, a phone enquiry, an email or whatever you think could generate revenue for your business). To find out the cost per lead for your business, add the total of leads you're getting on a daily/weekly or monthly basis and compare it to your marketing costs for the same period: Cost / leads = CPL
  So for example if you received 20 leads in a week and spent £100 on marketing, then you CPL will be 100/20= £5
• CPA - cost per action / Cost per Click (CPC)
  This is very similar to the CPL but measurement is done on action (eg a click to a page). The formula is the same as CPL: Costs / Total actions= CPA. The CPC model is the one used in search engine advertising programmes such as Google Adwords.
  
• CPA - cost per acquisition / cost per conversion
  Once again the principles are very similar to CPL/CPA but the metric used here is conversion. As mentioned above for CPL, it is up to you to decide what a conversion is for your business. If you are an ecommerce shop, then a conversion could be a completed sale, but it could also be a completed questionnaire, a registration to an event... So the Cost per conversion formula is Costs/ total conversions= CPAcquisition

ROI metrics are vital in a business environment, especially if you work in a competitive industry with limited budgets. You need to make sure that you get as much impact from your marketing dollars as possible, more bang for your bucks!
Whatever business you're in, make sure to establish clear and accurate metrics from the beginning so that you don't lose track of what marketing activities work for you.

Have a good weekend!