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7 Ecommerce Metrics to Track and Improve in 2024
12 avril 2024, par ErinYou can invest hours into market research, create the best ads you’ve ever seen and fine-tune your budgets. But the only way to really know if your digital marketing campaigns move the needle is to track ecommerce metrics.
It’s time to put your hopes and gut feelings aside and focus on the data. Ecommerce metrics are key performance indicators that can tell you a lot about the performance of a single campaign, a traffic source or your entire marketing efforts.
That’s why it’s essential to understand what ecommerce metrics are, key metrics to track and how to improve them.
Ready to do all of the above? Then, let’s get started.
What are ecommerce metrics?
An ecommerce metric is any metric that helps you understand the effectiveness of your digital marketing efforts and the extent to which users are taking a desired action. Most ecommerce metrics focus on conversions, which could be anything from making a purchase to subscribing to your email list.
You need to track ecommerce metrics to understand how well your marketing efforts are working. They are essential to helping you run a cost-effective marketing campaign that delivers a return on investment.
For example, tracking ecommerce metrics will help you identify whether your digital marketing campaigns are generating a return on investment or whether they are actually losing money. They also help you identify your most effective campaigns and traffic sources.
Ecommerce metrics also help you spot opportunities for improvement both in terms of your marketing campaigns and your site’s UX.
For instance, you can use ecommerce metrics to track the impact on revenue of A/B tests on your marketing campaigns. Or you can use them to understand how users interact with your website and what, if anything, you can do to make it more engaging.
What’s the difference between conversion rate and conversion value?
The difference between a conversion rate and a conversion value is that the former is a percentage while the latter is a monetary value.
There can be confusion between the terms conversion rate and conversion value. Since conversions are core metrics in ecommerce, it’s worth taking a minute to clarify.
Conversion rates measure the percentage of people who take a desired action on your website compared to the total number of visitors. If you have 100 visitors and one of them converts, then your conversion rate is 1%.
Here’s the formula for calculating your conversion rate:
Conversion Rate (%) = (Number of conversions / Total number of visitors) × 100
Using the example above:
Conversion Rate = (1 / 100) × 100 = 1%
Conversion value is a monetary amount you assign to each conversion. In some cases, this is the price of the product a user purchases. In other conversion events, such as signing up for a free trial, you may wish to assign a hypothetical conversion value.
To calculate a hypothetical conversion value, let’s consider that you have estimated the average revenue generated from a paying customer is $300. If the conversion rate from free trial to paying customer is 20%, then the hypothetical conversion value for each free trial signup would be $300 multiplied by 20%, which equals $60. This takes into account the number of free trial users who eventually become paying customers.
So the formula for hypothetical conversion value looks like this:
Hypothetical conversion value = (Average revenue per paying customer) × (Conversion rate)
Using the values from our example:
Hypothetical conversion value = $300 × 20% = $60
The most important ecommerce metrics and how to track them
There are dozens of ecommerce metrics you could track, but here are seven of the most important.
Conversion rate
Conversion rate is the percentage of visitors who take a desired action. It is arguably one of the most important ecommerce metrics and a great top-level indicator of the success of your marketing efforts.
You can measure the conversion rate of anything, including newsletter signups, ebook downloads, and product purchases, using the following formula:
Conversion rate = (Number of people who took action / Total number of visitors) × 100
You usually won’t have to manually calculate your conversion rate, though. Almost every web analytics or ad platform will track the conversion rate automatically.
Matomo, for instance, automatically tracks any conversion you set in the Goals report.
As you can see in the screenshot, your site’s conversions are plotted over a period of time and the conversion rate is tracked below the graph. You can change the time period to see how your conversion rate fluctuates.
If you want to go even further, track your new visitor conversion rate to see how engaging your site is to first-time visitors.
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Cost per acquisition
Cost per acquisition (CPA) is the average cost of acquiring a new user. You can calculate your overall CPA or you can break CPA down by email campaign, traffic source, or any other criteria.
Calculate CPA by dividing your total marketing cost by the number of new users you acquire.
CPA = Total marketing cost / Number of new users acquired
So if your Google Ads campaign costs €1,000 and you acquire 100 new users, your CPA is €10 (1000/100=10).
It’s important to note that CPA is not the same as customer acquisition cost. Customer acquisition cost considers the number of paying customers. CPA looks at the number of users taking a certain action, like subscribing to a newsletter, making a purchase, or signing up for a free trial.
Cost per acquisition is a direct measure of your marketing efforts’ effectiveness, especially when comparing CPA to average customer spend and return on ad spend.
If your CPA is higher than the average customer spend, your marketing campaign is profitable. If not, then you can look at ways to either increase customer spend or decrease your cost per acquisition.
Customer lifetime value
Customer lifetime value (CLV) is the average amount of money a customer will spend with your ecommerce brand over their lifetime.
Customer value is the total worth of a customer to your brand based on their purchasing behaviour. To calculate it, multiply the average purchase value by the average number of purchases. For instance, if the average purchase value is €50 and customers make 5 purchases on average, the customer value would be €250.
Use this formula to calculate customer value:
Customer value = Average purchase value × Average number of purchases
Then you can calculate customer lifetime value using the following formula:
CLV = Customer value × Average customer lifespan
In another example, let’s say you have a software company and customers pay you €500 per year for an annual subscription. If the average customer lifespan is 5 years, then the Customer Lifetime Value (CLV) would be €2,500.
Customer lifetime value = €500 × 5 = €2,500
Knowing how much potential customers are likely to spend helps you set accurate marketing budgets and optimise the price of your products.
Return on investment
Return on investment (ROI) is the amount of revenue your marketing efforts generate compared to total spend.
It’s usually calculated as a percentage using the following formula:
ROI = (Revenue / Total spend) × 100
If you spend €1,000 on a paid ad campaign and your efforts bring in €5,000, then your ROI is 500% (5,000/1,000 × 100).
With a web analytics tool like Matomo, you can quickly see the revenue generated from each traffic source and you can drill down further to compare different social media channels, search engines, referral websites and campaigns to get more granular view.
In the example above in Matomo’s Marketing Attribution feature, we can see that social networks are generating the highest amount of revenue in the year. To calculate ROI, we would need to compare the amount of investment to each channel.
Let’s say we invested $1,000 per year in search engine optimisation and content marketing, the return on investment (ROI) stands at approximately 2576%, based on a revenue of $26,763.48 per year.
Conversely, for organic social media campaigns, where $5,000 was invested and revenue amounted to $71,180.22 per year, the ROI is approximately 1323%.
Despite differences in revenue generation, both channels exhibit significant returns on investment, with SEO and content marketing demonstrating a much higher ROI compared to organic social media campaigns.
With that in mind, we might want to consider shifting our marketing budget to focus more on search engine optimisation and content marketing as it’s a greater return on investment.
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Return on ad spend
Return on ad spend (ROAS) is similar to return on investment, but it measures the profitability of a specific ad or campaign.
Calculate ROAS using the following formula:
ROAS = Revenue / Ad cost
A positive ROAS means you are making money. If you generate €3 for every €1 you spend on advertising, for example, there’s no reason to turn off that campaign. If you only make €1 for every €2 you spend, however, then you need to shut down the campaign or optimise it.
Bounce rate
Bounce rate is the percentage of visitors who leave your site without taking another action. Calculate it using the following formula:
Bounce rate = (Number of visitors who bounce / Total number of visitors) × 100
Some portion of users will always leave your site immediately, but you should aim to make your bounce rate as low as possible. After all, every customer that bounces is a missed opportunity that you may never get again.
You can check the bounce rate for each one of your site’s pages using Matomo’s page analytics report. Web analytics tools like Google Analytics can track bounce rates for online stores also.
Bounce rate is calculated automatically. You can sort the list of pages by bounce rate allowing you to prioritise your optimisation efforts.
Don’t stop there, though. Explore bounce rate further by comparing your mobile bounce rate vs. desktop bounce rate by segmenting your traffic. This will highlight whether your mobile site needs improving.
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Click-through rate
Your clickthrough rate (CTR) tells you the number of people who click on your ads as a percentage of total impressions. You can calculate it by dividing the number of clicks your ad gets by the total number of times people see it.
So the formula looks like this:
CTR (%) = (Number of clicks / Total impressions) × 100
If an ad gets 1,000 impressions and 10 people click on it, then the CTR will be 10/1,000 × 100 = 1%
You don’t usually need to calculate your clickthrough rate manually, however. Most ad platforms like Google Ads will automatically calculate CTR.
What is considered a good ecommerce sales conversion rate?
This question is so broad it’s almost impossible to answer. The thing is, sales conversion rates vary massively depending on the conversion event and the industry. A good conversion rate in one industry might be terrible in another.
That being said, research shows that the average website conversion rate across all industries is 2.35%. Of course, some websites convert much better than this. The same study found that the top 25% of websites across all industries have a conversion rate of 5.31% or higher.
How can you improve your conversion rate?
Ecommerce metrics don’t just let you track your campaign’s ROI, they help you identify ways to improve your campaign.
Use these five tips to start improving your marketing campaign’s conversion rates today:
Run A/B tests
The most effective way to improve almost all of the ecommerce metrics you track is to test, test, and test again.
A/B testing or multivariate testing compares two different versions of the same content, such as a landing page or blog post. Seeing which version performs better can help you squeeze as many conversions as possible from your website and ad campaigns. But only if you test as many things as possible. This should include:
- Ad placement
- Ad copy
- CTAs
- Headlines
- Straplines
- Colours
- Design
To create and analyse tests and their results effectively, you’ll need either an A/B testing platform or a web analytics solution like Matomo, which offers one out of the box.
Matomo’s A/B Testing feature makes it easy to create and track tests over time, breaking down each test’s variations by the metrics that matter. It automatically calculates statistical significance, too, meaning you can be sure you’re making a change for the better.
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16 Website Metrics to Track If You Want to Grow Your Business
9 avril 2024, par ErinConversion rate.
Bounce rate.
Sessions.
There are dozens of metrics to keep up with in web analytics. It can be confusing at times trying to keep up with everything.
But, if you want to improve your website performance and grow your business, you need to know what they are and how they work.
Why?
Because what you measure gets managed. This is true in your personal life and business. You must track various website metrics to help your business reach new heights.
In this guide, you’ll learn about the most important website metrics, why they’re important and how to track them to grow your brand.
What are website metrics?
Your website is your digital headquarters.
It’s not a static place. Instead, it’s a vibrant, interactive hub your visitors and customers can engage with daily.
Every time a user interacts with your website, you can track what’s happening.
Website metrics help you measure how much your visitors and customers interact with your website.
These engagement metrics help you understand what your visitors are doing, where they’re coming from, how they’re moving on your website and how long they stay. They can even give you insights into what their goals are.
If you aren’t tracking your website metrics, you won’t know how effective your website is.
By paying close attention to your key metrics within a web analytics platform like Matomo, you’ll be able to see how well your marketing is doing and how your visitors are engaging so you can improve the user experience and increase conversions.
16 website metrics to track
Here are the top 16 website metrics you need to be tracking if you want to grow your business:
1. Pageviews
A pageview is the number of times a web page has been viewed.
Many pageviews can indicate a successful search engine optimisation (SEO) or marketing campaign — it can be used to show positive results for these initiatives.
It can also help you determine various issues on individual pages. For instance, performance issues or poor website structure can cause visitors to get lost or confused while navigating your website.
2. Average time on page
Average time on a page is simply the time visitors spend on a specific page (not the entire website); tracking users’ time on various pages throughout your website can give you insights that can help you improve certain pages.
If you get tons of traffic to a particular page, but the average time a visitor stays on that page is minimal, the content may need some work.
Tracking this data can help determine if your website is engaging for your visitors or if you need to modify certain aspects to increase your visitors’ stay. Increasing the average time on the page will help boost your conversions and search engine rankings.
3. Actions per visit
Actions per visit is a key metric that tracks the average number of actions a visitor takes every time they visit your website. This data can help you track your audience engagement and the effectiveness of your content across your entire website.
An action is any activity performed by your visitors on your website like:
- Outlinks
- Downloads
- Page views
- Internal site searches
The higher your actions per visit, the more engaging your audience finds your website content. A side effect of increased actions is staying longer on the site and more likely to convert to your email list as a subscriber or pay for products as a customer.
4. Bounce rate
Like a bouncy ball, your website’s bounce rate measures how many users entered your site and “bounced” out without clicking on another page. This metric can be extremely helpful in determining user interest in your content.
You might be getting many visitors to your website, but if they “bounce” after visiting the first page they land on, that’s a great indicator that your content is not resonating with your audience.
Remember, this metric should be taken with a grain of salt.
Your bounce rate may indicate that visitors are finding the exact information that they wanted and leaving pleased, so it’s not a black-and-white metric.
For example, if you have a landing page with a high bounce rate, then that’s likely not a sign of a good user experience. But, if you have a knowledge base article and they just need to find some quick information, then it could be a good indicator.
5. Conversions
The first step in tracking conversions is defining what a conversion is for your website.
Do you want your audience to:
- View a blog post
- Purchase a product
- Download an eBook
- Sign up for a consultation call
Determine what that conversion is and track how often users take that action on your website.
This helps you understand if your marketing and content strategies are working toward your pre-defined conversion goal.
6. Conversion rate
A conversion rate is the percentage of visits that triggered a conversion. Knowing this metric lets you plan, budget, and forecast future growth.
For example, 5% of your website visitors take action and convert to customers. With this information, you can make better informed financial decisions regarding your marketing efforts on your website to help increase traffic and future conversions.
While there are basic conversion rate benchmarks to strive toward, it ultimately depends on your goals and the specific conversions you decide to track that are best for your business.
That being said, Matomo has some best practices to help you optimise your conversion rates, no matter what conversion metric you are tracking.
7. Exit rate
While “bounce rate” and “exit rate” are similar, “exit rate” is the percentage of visits to a website that ended on a particular page.
Knowing which pages have the highest percentage of visitors exiting your website gives you key information on the pages that may need to be improved.
If you see that your “exit rate” is highest on pages before the checkout (or other CTA’s you have established), you will want to dive into what’s causing visitors to leave from that page. For example, maybe it’s the content, the copy or even a broken link.
This is a great metric to help determine where you have breakdowns between you and your visitors. Improving your exit rate can help guide visitors through your website funnel more easily and boost your conversion rates.
8. Top pages
The top pages on your website are the pages that receive the most visits. Understanding what your top pages are can be crucial in planning and guiding your marketing strategies moving forward.
Your top pages can help you determine the most engaging content for your audience. This can be extremely helpful in guiding your visitors to certain pages that other users find more valuable.
It also helps you determine if you need to focus more attention on different parts of your website to increase user engagement in those areas.
For example, maybe your most-viewed pages have less copy and more photos or videos. Understanding this lets you know that incorporating more media into other pages will boost future engagement.
9. Traffic sources
Your traffic sources are the channels that are driving visitors to your website. The four most common traffic sources are:
- Direct Entry: Typing your website URL into their browser or visiting via a bookmark they saved
- Websites/Referral: Clicking on a link to your site from another website
- Search Engines: Using search engines (Google, Bing or Yahoo) to find your website
- Campaigns: Visitors directed to your website through specific marketing campaigns, such as email newsletters, Google Ads, promotional links, etc.
- Social Networks: Visitors accessing your website by clicking on links shared on social media platforms like Facebook, X (Twitter), LinkedIn, etc.
Understanding where your visitors are coming from can help you focus your marketing efforts on the traffic sources with the highest conversion rates.
Suppose your email marketing campaign isn’t driving any traffic to your website, but your ad campaign is responsible for over 25% of your conversions. In that case, you might consider doubling your advertising efforts.
10. Form average time spent
Forms are a crucial part of your website’s marketing strategy. Forms can help you:
- Learn more about your visitors
- Gather feedback from your audience
- Convert visitors into email subscribers
- And more
Form average time spent is the average amount of time a visitor spends on a specific form on your website. The time is calculated as the difference between the first interaction with a form field (for example, a field focus) and the last interaction with a form.
Want to convert more visitors into leads? Then, you need to understand your form analytics better. Learn more here.
11. Play rate
If you want to keep your audience engaged (and convert more visitors), you need to publish different types of media.
But if your video or audio content isn’t performing well, then you’re wasting your time.
That’s where play rate comes in. It’s calculated by analysing visitors who watched or listened to a specific media after they have visited a web page.
With play rate, you can track any video, podcast, or audiobook plays.
You can easily track it within Matomo’s Media Analytics. The best part? This feature works out of the box, so you don’t need to configure it to start leveraging the analytics.
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12. Returning visitors
Returning visitors are users who visit your website more than once over a specific time.
You will want to measure the number of returning visitors to your website, as this information can give you additional insights into your marketing strategies, company branding and content.
It can also help you better understand your customer base, giving you a clearer sense of their top desires and pain points.
13. Device type
Device type tracks the different devices visitors use to visit your website. These could be:
- Tablets
- Mobile phones
- Desktop computers
Knowing what your visitors are using to access your website can help you improve the overall user experience.
For example, if 80% of your visitors use mobile phones, you could think about optimising your web pages to format with mobile devices.
14. Top exit pages
Top exit pages are the pages that a visitor leaves your website from the most.
Each web page will have a specific exit rate percentage based on how many people leave the website on a particular page.
This can be quite helpful in understanding how visitors interact with your website. It can also help you uncover and fix any issues with your website you may not be aware of.
For instance, one of your product pages has the highest exit rate on your website. By looking into why that is, you discover that your “Add to Cart” button isn’t functioning correctly, and your visitors can’t buy that particular product, so they exit out of frustration.
15. Marketing attribution
Marketing attribution (multi-touch attribution) helps you see which touchpoints have the greatest impact on conversions.
Within Matomo, revenue attribution involves assigning credit for revenue across multiple touchpoints that contribute to a conversion.
Matomo’s multi-touch attribution models use different weighting factors, like linear or time decay, to allocate credit to each touchpoint based on its influence.
Matomo’s multi-touch attribution reports provide insights into how revenue is distributed across different touchpoints, marketing channels, campaigns, and actions. These reports allow you to analyse the contribution of each touchpoint to revenue generation and identify the most influential interactions in the customer journey.
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16. Event tracking
Every website has multiple actions a user can perform called “events”. These could be downloading a template, submitting contact information, signing up for a newsletter or clicking a link.
Tracking events can give you additional context into what your visitors are interested in or don’t care about. This allows you to target them better through those events, potentially creating new, unique conversions and boosting the growth of your business.
It can also lead to discovering potential issues within your website if you notice visitors aren’t taking action on certain CTAs, such as broken links or lack of content on certain pages. By uncovering these issues, you can quickly fix them to increase your conversions.
Start tracking your website metrics with Matomo today
There’s much to consider when creating and running your website, such as the design, copy and flow.
While these are necessary, tracking your website’s data is one of the most important aspects of running a site. It’s crucial in helping you optimise your site’s performance and create a great experience for your visitors.
Every interaction a visitor has on your site is unique and leaves valuable clues you can use to improve all aspects of your site experience.
Understanding what your visitors like, what website performance issues they’re running into and how they interact across your website is crucial to improving your marketing and sales efforts.
While tracking this much data can feel overwhelming, having all your key metrics in one place and broken down into easy-to-understand benchmarks can help alleviate the stress and headache of data tracking.
That’s where a web analytics platform like Matomo comes in.
With Matomo, you can easily track, store and analyse every piece of data on your website automatically to improve your site performance and user experience and drive conversions.
With Matomo, you can take back control with a platform that gives you 100% data ownership.
Used on over 1 million websites in over 190 countries, Matomo gives you:
- Accurate data (no data sampling)
- Privacy-friendly and GDPR-compliant analytics
- Open-source access to create a custom solution for you
Try Matomo for free for 21 days now. No credit card required.
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Incrementality Testing : Quick-Start Guide (With Calculations)
26 mars 2024, par ErinHow do you know when a campaign is successful? When you earn more revenue than last month?
Maybe.
But how do you know how much of an impact a certain campaign or channel had on your sales?
With marketing attribution, you can determine credit for each sale.
But if you want a deeper look, you need to understand the incremental impact of each channel and campaign.
The way you do this?
Incrementality testing.
In this guide, we break down what incrementality is, why it’s important and how to test it so you can double down on the activities driving the most growth.
What is incrementality?
So, what exactly is incrementality?
Let’s say you just ran a marketing campaign for a new product. The launch was a success. Breakthrough numbers in your revenue. You used a variety of channels and activities to bring it all together.
So, you launch a plan for next month’s campaign. But you don’t truly know what moved the needle.
Did you just hit new highs because your audience is bigger? And your brand is greater?
Or did the recent moves you made make a direct difference?
This is incrementality.
Incrementality is growth directly attributed to marketing efforts beyond the overall impact of your brand. By measuring and conducting incrementality testing, you can clearly see how much of a difference each activity or channel truly impacted business growth.
What is incrementality testing?
Incrementality testing allows marketers to gauge the effectiveness of a marketing tactic or strategy. It tells you if a particular marketing activity had a positive, negative or neutral impact on your business.
It also tells you the overall impact it can have on your key performance indicators (KPIs).
The result?
You can pinpoint the highest-performing moves and incorporate them into your marketing workflows. You also discard marketing strategies with negligible, neutral or even negative impacts.
For example, let’s say you think a B2B LinkedIn ads campaign will help you reach your product launch goals. An incrementality test can tell you if the introduction of this campaign will help you get to the desired outcome.
How incrementality testing works
Before diving into your testing phase, you must clearly identify your KPIs.
Here are the top KPIs you should be tracking on your website:
- Ad impressions
- Website visits
- Leads
- Sales
The exact KPIs will depend on your marketing goals. You’re ready to move forward once you know your key performance indicators.
Here’s how incrementality testing works step-by-step:
1. Define a test and control group
The first step is to define a test group and control group.
- A test group is a segment of your target audience that’s exposed to the marketing campaign.
- A control group is a segment that isn’t.
Keep in mind that both groups have similar demographics and other relevant characteristics.
2. Execute your campaign
The second step is to run the marketing campaign on the test group. This can be a Facebook ad, LinkedIn ad or email marketing campaign.
It all depends on your goals and your primary channels.
3. Measure outcomes
The third step is to measure the campaign’s impact based on your KPIs.
Let’s say a brand wants to see if a certain marketing move increases its leads. The test can tell them the number of email sign-ups with and without the campaign.
4. Compare results
Next, compare the test group results with the control group. The difference in outcomes tells you the impact of that campaign. You can then use this difference to inform your future marketing strategies.
With Matomo, you can easily track results from campaigns — like conversions.
Our platform lets you quickly see what channels are getting the best results so you can gain insights into incrementality and optimise your strategy.
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Why it’s important to conduct incrementality tests
The digital marketing industry is constantly changing. Marketers need to stay on their toes to keep up. Incrementality tests help you stay on track.
For example, let’s say you’re selling laptops. You can increase your warranty period to three years to see the impact on sales. An incrementality test will tell you if this move will boost your sales (and by how much).
Now, let’s dive into the reasons why you need to consistently conduct incrementality tests:
Determine the right tactics for success
Identifying the best action to grow your business is a challenge every marketer faces.
The best way to identify marketing tactics is by conducting incrementality testing. These tactics are bound to work since data back them. As a result, you can optimise your marketing budget and maximise your ROIs.
It lets you run multiple tests to identify the most impactful strategy between:
- An email marketing strategy
- A social media strategy
- A PPC ad
For instance, an incrementality test might suggest email marketing will be more cost-effective than an ad campaign. What you can do is:
- Expose the test group to the email marketing campaign and then compare the results with the control group
- Expose the test group to the ad campaign and then compare its results with the control group
Then, you can calculate the difference in results between the two marketing campaigns. This lets you focus on the strategy with a better ROI or ROAS potential.
Accurate data
Marketing data is powerful. But getting accurate data can be challenging. With incrementality testing, you get to know the true impact of a marketing campaign.
Plus, with this testing strategy, you don’t have to waste your marketing budget.
With Matomo, you get 100% accurate data on all website activities.
Unlike Google Analytics, Matomo doesn’t rely on inaccurate data sampling — limiting the amount of data analysed.
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Get the web insights you need, without compromising data accuracy.
Get the most out of your marketing investment
Every business owner wants to maximise their return on investment. The ROI you get mainly depends on the marketing strategy.
For instance, email marketing offers an ROI of about 40:1 with some sources even reporting as high as 72:1.
Incrementality testing helps you make informed investment decisions. With it, you can pinpoint the tactics that are most likely to bring the highest return. You can then focus your resources on them. It also helps you stay away from low-performing strategies.
Increase revenue
It’s safe to say that the goal behind every marketing effort is a revenue boost. The higher your revenue, the more profits you generate. However, for many marketers, it’s an uphill battle.
With incrementality testing, you can boost your revenue by focusing your efforts in the right direction.
Get more traffic
Incrementality testing tells you if a particular strategy can help you drive more traffic. You can use it to get more high-quality leads to your website or landing pages and double down on high-traffic strategies to increase those leads.
How to test incrementality
Developing an implementation plan is crucial to generate accurate insights from an incrementality test. Incrementality testing is like running a science experience. You need to go through several stages. Each stage is important for generating accurate results.
Here’s how you test incrementality:
Define your goals
Get clarity on what you want to achieve with this campaign. Which KPIs do you want to test? Is it the return on your overall investment (ROI), return on ad spend (ROAS) or something else?
Segment your audience
Selecting the right audience segment is crucial to getting accurate insights with an incrementality test. Decide the demographics and psychographics of the audience you want to target. Then, divide this audience segment into two sub-parts:
- Test group (people you’ll expose to the marketing campaign)
- Control group (people who won’t be exposed to the campaign)
These groups are a part of the larger segment. This means people in both groups will have similar attributes.
Launch the test at the right time
Before the launch, decide on the length of the test. Ideally, it should be at least one week. Don’t run any other campaigns in this window, as it can interfere with the results.
Analyse the data and take action
Once the campaign is over, measure the results from both groups. Compare the data to identify incremental lift in your selected KPIs.
Let’s say you want to see if this campaign can boost your sales. Check to see if the test group responded differently than the control group. If the sales equal your desired outcome, you have a winning strategy.
Not all incrementality tests result in a positive incremental lift; Some can be neutral, indicating that the campaign didn’t have any effect. Some can even indicate a negative lift, which means your core group performed better than the test group.
Lastly, take action based on the test findings.
Incrementality test examples
You can use incrementality testing to identify gaps and growth opportunities in your strategy.
Here’s an example:
Let’s say a company runs an incrementality test on a YouTube marketing strategy for sales. The results indicate that the ROI was only $0.10, as the company makes $1.10 for every $1.00 spent. This alarms the marketing department and helps them optimise the campaign for a higher ROI.
Here’s another practical example:
Let’s say a retail business wanted to test the effectiveness of its ad campaign. So, the retailer optimises its ad campaign after conducting an incrementality test on a test and control group. As a result, they experienced a 34% incremental increase in sales.
How to calculate incrementality in marketing
Once you’ve aggregated the data, it’s time to calculate. There are two ways to calculate incrementality:
Incremental profit
The first one is incremental profit. It tells you how much profit you can generate with a strategy (If any). With it, you get the actual value of a marketing campaign.
It’s calculated with the following formula:
Test group profit – control group profit = incremental profit
For example, let’s say you’re exposing a test group to a paid ads campaign. And it generates a profit of $3,000. On the other hand, the control group generated a $2,000 profit.
In this case, your incremental profit will be $1,000 ($3,000 – $2,000).
However, if the paid ads campaign generates a $2,000 profit, the incremental profit would be zero. Essentially, you’re generating the same profit as before, which means the campaign doesn’t work. Similarly, a marketing strategy is no good if it generates lower profits than the control group.
Incremental lift
Incremental lift measures the difference in the conversions you generate with each group.
Here’s the formula:
(Test – Control)/Control x 100 = Lift
So, let’s say the test group and control group generated 2,000 and 1,000 conversions, respectively.
The incremental lift you’ll get from this incrementality test would be:
(2,000 – 1,000)/1,000 x 100 = 100
This turns out to be a 100% incremental lift.
How to track incrementality with Matomo
Incrementality testing lets you use a practical approach to identify the best marketing path for your business.
It helps you develop a hyper-focused approach that gives you access to accurate and practical data.
With these insights, you can confidently move forward to maximise your ROI since it helps you focus on high-performing tactics.
The result is more revenue and profit for your business.
Plus, all you need to do is identify your target audience, divide them into two groups and run your test. Then, the results will be compared to determine if the marketing strategy offers any value.
Conducting incrementality tests may take time and expertise.
But, thanks to Matomo, you can leverage accurate insights for your incrementality tests to ensure you make the right decisions to grow your business.
See for yourself why over 1 million websites choose Matomo. Try it free for 21-days now. No credit card required.
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7 Benefits Segmentation Examples + How to Get Started
26 mars 2024, par ErinEvery copywriter knows the importance of selling a product’s benefits, not its features. So why should your marketing efforts be different?
Answer: they shouldn’t.
It’s time to stop using demographic or behavioural traits to group customers and start using benefits segmentation instead.
Benefits segmentation groups your customers based on the value they get from your product or service. In this article, we’ll cover seven real-life examples of benefits segmentation, explain why it’s so powerful and show how to get started today.
What is benefits segmentation?
Benefits segmentation is a way for marketers to group their target market based on the value they get from their products or services. It is a form of customer segment marketing. Other types of market segmentation include:
- Geographic segmentation
- Demographic segmentation
- Psychographic segmentation
- Behavioural segmentation
- Firmographic segmentation
Customers could be the same age, from the same industry and live in the same location but want drastically different things from the same product. Some may like the design of your products, others the function, and still more the price.
Whatever the benefits, you can make your marketing more effective by building advertising campaigns around them.
Why use benefits segmentation?
Appealing to the perceived benefits of your product is a powerful marketing strategy. Here are the advantages of you benefit segmentation can expect:
More effective marketing campaigns
Identifying different benefits segments lets you create much more targeted marketing campaigns. Rather than appeal to a broad customer base, you can create specific ads and campaigns that speak to a small part of your target audience.
These campaigns tend to be much more powerful. Benefits-focused messaging better resonates with your audience, making potential customers more likely to convert.
Better customer experience
Customers use your products for a reason. By showing you understand their needs through benefits segmentation, you deliver a much better customer experience — in terms of messaging and how you develop new products.
In today’s world, experience matters. 80% of customers say a company’s experience is as important as its products and services.
Stronger customer loyalty
When products or services are highly targeted at potential customers, they are more likely to return. More than one-third (36%) of customers would return to a brand if they had a positive experience, even if cheaper or more convenient alternatives exist.
Using benefits segmentation will also help you attract the right kind of people in the first place — people who will become long-term customers because your benefits align with their needs.
Improved products and services
Benefits segmentation makes it easier to tailor products or services to your audiences’ wants and needs.
Rather than creating a product meant to appeal to everyone but doesn’t fulfil a real need, your team can create different ranges of the same product that target different benefits segments.
Higher conversion rates
Personalising your pitch to individual customers is powerful. It drives performance and creates better outcomes for your target customer. Companies that grow faster drive 40 per cent more revenue from personalisation than their slower-growing counterparts.
When sales reps understand your product’s benefits, talking to customers about them and demonstrating how the product solves particular pain points is much easier.
In short, benefits segmentation can lead to higher conversion rates and a better return on investment.
7 examples of benefits segmentation
Let’s take a look at seven examples of real-life benefits segmentation to improve your understanding:
Nectar
Mattress manufacturer Nectar does a great job segmenting their product range by customer benefits. That’s a good thing, given how many different things people want from their mattress.
It’s not just a case of targeting back sleepers vs. side sleepers; they focus on more specific benefits like support and cooling.
Take a look at the screenshot above. Nectar mentions the benefits of each mattress in multiple places, making it easy for customers to find the perfect mattress. If you care about value, for example, you might choose “The Nectar.” If pressure relief and cooling are important to you, you might pick the “Nectar Premier.”
24 Hour Fitness
A gym is a gym is a gym, right? Not when people use it to achieve different goals, it’s not. And that’s what 24 Hour Fitness exploits when they sell memberships to their audience.
As you can see from its sales page, 24 Hour Fitness targets the benefits that different customers get from their products:
Customers who just care about getting access to weights and treadmills for as cheap as possible can buy the Silver Membership.
But getting fit isn’t the only reason people go to the gym. That’s why 24 Hour Fitness targets its Gold Membership to those who want the “camaraderie” of studio classes led by “expert instructors.”
Finally, some people value being able to access any club, anywhere in the country. Consumers value flexibility greatly, so 24 Hour Fitness limits this perk to its top-tier membership.
Notion
Notion is an all-in-one productivity and note-taking app that aims to be the only productivity tool people and teams need. Trying to be everything to all people rarely works, however, which is why Notion cleverly tweaks its offering to appeal to the desires of different customer segments:
For price-conscious individuals, it provides a pared solution that doesn’t bloat the user experience with features or benefits these consumers don’t care about.
The Plus tier is the standard offering for teams who need a way to collaborate online. Still, there are two additional tiers for businesses that target specific benefits only certain teams need.
For teams that benefit from a longer history or additional functionality like a bulk export, Notion offers the Business tier at almost double the price of the standard Plus tier. Finally, the Enterprise tier for businesses requires much more advanced security features.
Apple
Apple is another example of a brand that designs and markets products to customers based on specific benefits.
Why doesn’t Apple just make one really good laptop? Because customers want different things from them. Some want the lightest or smallest laptop possible. Others need ones with higher processing power or larger screens.
One product can’t possibly deliver all those benefits. So, by understanding the precise reasons people need a laptop, Apple can create and market products around the benefits that are most likely to be sold.
Tesla
In the same way Apple understands that consumers need different things from their laptops, Tesla understands that consumers derive different benefits from their cars.
It’s why the company sells four cars (and now a truck) that cover various sizes, top speeds, price points and more.
Tesla even asks customers about the benefits they want from their car when helping them to choose a vehicle. By asking customers to pick how they will use their new vehicle, Tesla can ensure the car’s benefits match up to the consumers’ goals.
Dynamite Brands
Dynamite Brands is a multi-brand, community-based business that targets remote entrepreneurs around the globe. But even this heavily niched-down business still needs to create benefit segments to serve its audience better.
It’s why the company has built several different brands instead of trying to serve every customer under a single banner:
If you just want to meet other like-minded entrepreneurs, you can join the Dynamite Circle, for example. But DC Black might be a better choice if you care more about networking and growing your business.
It’s the same with the two recruiting brands. Dynamite Jobs targets companies that just want access to a large talent pool. Remote First Recruiting targets businesses that benefit from a more hands-on approach to hiring where a partner does the bulk of the work.
Garmin
Do you want your watch to tell the time or do you want it to do more? If you fall into the latter category, Garmin has designed dozens of watches that target various benefits.
Do you want a watch that tracks your fitness without looking ugly? Buy the Venu.
Want a watch designed for runners? Buy the Forerunner.
Do you need a watch that can keep pace with your outdoor lifestyle? Buy the Instinct.
Just like Apple, Garmin can’t possibly design a single watch that delivers all these benefits. Instead, each watch is carefully built for the target customer’s needs. Yes, it makes the target market smaller, but it makes the product more appealing to those who care about those benefits.
How to get started with benefits segmentation
According to Gartner, 63% of digital marketing leaders struggle with personalisation. Don’t be one of them. Here’s how you can improve your personalisation efforts using benefits segmentation.
Research and define benefits
The first step to getting started with benefit segmentation is understanding all the benefits customers get from your products.
You probably already know some of the benefits, but don’t underestimate the importance of customer research. Hold focus groups, survey customers and read customer reviews to discover what customers love about your products.
Create benefit-focused customer personas
Now you understand the benefits, it’s time to create customer personas that reflect them. Group consumers who like similar benefits and see if they have any other similarities.
Price-conscious consumers may be younger. Maybe people who care about performance have a certain type of job. The more you can do to flesh out what the average benefits-focused consumer looks like, the easier it will be to create campaigns.
Create campaigns focused on each benefit
Now, we get to the fun part. Make the benefit-focused customer personas you created in the last step the focus of your marketing campaigns going forward.
Don’t try to appeal to everyone. Just make your campaigns appeal to these people.
Go deeper with segmentation analytics
The quality of your benefit segmentation strategy hinges on the quality of your data. That’s why using a an accurate web analytics solution like Matomo to track how each segment behaves online using segmentation analytics is important.
This data can make your marketing campaigns more targeted and effective.
Benefits segmentation in practice
Let’s say you have an e-commerce website selling a wide range of household items, and you want to create a benefit segment for “Tech Enthusiasts” who are interested in the latest gadgets and cutting-edge technology. You want to track and analyse their behaviour separately to tailor marketing campaigns or website content specifically for this group.
- Identify characteristics: Determine key characteristics or behaviours that define the “Tech Enthusiasts” segment.
This might include frequent visits to product pages of the latest tech products, site searches that contain different tech product names, engaging with tech-specific content in emails or spending more time on technology-related blog posts.
One quick and surefire way to identify characteristics of a segment is to look historically at specific tech product purchases in your Matomo and work your way backwards to find out what steps a “Tech Enthusiast” takes before making a purchase. For instance, you might look at User Flows to discover this.
- Create segments in Matomo: Using Matomo’s segmentation features, you can create a segment that includes users exhibiting these characteristics. For instance:
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- Segment by page visits: Create a segment that includes users who visited tech product pages or spent time on tech blogs.
- Segment by event tracking: If you’ve set up event tracking for specific actions (like clicking on “New Tech” category buttons), create a segment based on these events.
- Combine conditions: Combine various conditions (e.g., pages visited, time spent, specific actions taken) to create a comprehensive segment that accurately represents “Tech Enthusiasts.”
- Track and analyse: Apply this segment to your analytics data in Matomo to track and analyse the behaviour of this group separately. Monitor metrics like their conversion rates, time spent on site or specific products they engage with.
- Tailor marketing: Use the insights from analysing this segment to tailor marketing strategies. This could involve creating targeted campaigns or customising website content to cater specifically to these users.
Remember, the key is to define criteria that accurately represent the segment you want to target, use Matomo’s segmentation tools to isolate this group, and effectively derive actionable insights to cater to their preferences or needs.
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Track your segmentation efforts
Benefits segmentation is a fantastic way to improve your marketing. It can help you deliver a better customer experience, improve your product offering and help your sales reps close more deals.
Segmenting your audience with an analytics platform lets you go even deeper. But doing so in a privacy-sensitive way can be difficult.
That’s why over 1 million websites choose Matomo as their web analytics solution. Matomo provides exceptional segmentation capabilities while remaining 100% accurate and compliant with global privacy laws.
Find out how Matomo’s insights can level up your marketing efforts with our 21-day free trial, no credit card required.
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What Is Incrementality & Why Is It Important in Marketing ?
26 mars 2024, par ErinImagine this: you just launched your latest campaign and it was a major success.
You blew last month’s results out of the water.
You combined a variety of tactics, channels and ad creatives to make it work.
Now, it’s time to build the next campaign.
The only issue?
You don’t know what made it successful or how much your recent efforts impacted the results.
You’ve been building your brand for years. You’ve built up a variety of marketing pillars that are working for you. So, how do you know how much of your campaign is from years of effort or a new tactic you just implemented?
The key is incrementality.
This is a way to properly attribute the right weight to your marketing tactics.
In this article, we break down what incrementality is in marketing, how it differs from traditional attribution and how you can calculate and track it to grow your business.
What is incrementality in marketing?
Incrementality in marketing is growth that can be directly credited to a marketing effort above and beyond the success of the branding.
It looks at how much a specific tactic positively impacted a campaign on top of overall branding and marketing strategies.
For example, this could be how much a specific tactic, campaign or channel helped increase conversions, email sign-ups or organic traffic.
The primary purpose of incrementally in marketing is to more accurately determine the impact a single marketing variable had on the success of a project.
It removes every other factor and isolates the specific method to help marketers double down on that strategy or move on to new tactics.
With Matomo, you can track conversions simply. With our last non-direct channel attribution system, you’ll be able to quickly see what channels are converting (and which aren’t) so you can gain insights into incrementality.
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How incrementality differs from attribution
In marketing and advertising, it’s crucial to understand what tactics and activities drive growth.
Incrementality and attribution help marketers and business owners understand what efforts impact their results.
But they’re not the same.
Here’s how they differ:
Incrementality explained
Incrementality measures how much a specific marketing campaign or activity drives additional sales or growth.
Simply put, it’s analysing the difference between having never implemented the campaign (or tactic or channel) in the first place versus the impact of the activity.
In other words, how much revenue would you have generated this month without campaign A?
And how much additional revenue did you generate directly due to campaign A?
The reality is that dozens of factors impact revenue and growth.
You aren’t just pouring your marketing into one specific channel or campaign at a time.
Chances are, you’ve got your hands on several marketing initiatives like SEO, PPC, organic social media, paid search, email marketing and more.
Beyond that, you’ve built a brand with a not-so-tangible impact on your recurring revenue.
So, the question is, if you took away your new campaign, would you still be generating the same amount of revenue?
And, if you add in that campaign, how much additional revenue and growth did it directly create?
That is incrementality. It’s how much a campaign went above and beyond to add new revenue that wouldn’t have been there otherwise.
So, how does attribution play into all of this?
Attribution explained
Attribution is simply the process of assigning credit for a conversion to a particular marketing touchpoint.
While incrementality is about narrowing down the overall revenue impact from a particular campaign, attribution seeks to point to a specific channel to attribute a sale.
For example, in any given marketing campaign, you have a few marketing tactics.
Let’s say you’re launching a limited-time product.
You might have:
- Paid ads via Facebook and Instagram
- A blog post sharing how the product works
- Organic social media posts on Instagram and TikTok
- Email waitlist campaign building excitement around the upcoming product
- SMS campaigns to share a limited-time discount
So, when the time comes for the sale launch, and you generate $30,000 in revenue, what channel gets the credit?
Do you give credit to the paid ads on Facebook? What about Instagram? They got people to follow you and got them on the email waitlist.
Do you give credit to email for reminding people of the upcoming sale? What about your social media posts that reminded people there?
Or do you credit your SMS campaign that shared a limited-time discount?
Which channel is responsible for the sale?
This is what attribution is all about.
It’s about giving credit where credit is due.
The reason you want to attribute credit? So you know what’s working and can double down your efforts on the high-impact marketing activities and channels.
Leveraging incrementality and attribution together
Incrementality and attribution aren’t competing methods of analysing what’s working.
They’re complementary to one another and go hand in hand.
You can (and should) use attribution and incrementality in your marketing to help understand what activities, campaigns and channels are making the biggest incremental impact on your business growth.
Why it’s important to measure incrementality
Incrementality is crucial to measure if you want to pour your time, money and effort into the right marketing channels and tactics.
Here are a few reasons why you need to measure incrementality if you want to be successful with your marketing and grow your business:
1. Accurate data
If you want to be an effective marketer, you need to be accurate.
You can’t blindly start marketing campaigns in hopes that you will sell many products or services.
That’s not how it works.
Sure, you’ll probably make some sales here and there. But to truly be effective with your work, you must measure your activities and channels correctly.
Incrementality helps you see how each channel, tactic or campaign made a difference in your marketing.
Matomo gives you 100% accurate data on your website activities. Unlike Google Analytics, we don’t use data sampling which limits how much data is analysed.
2. Helps you to best determine the right tactics for success
How can you plan your marketing strategy if you don’t know what’s working?
Think about it.
You’ll be blindly sailing the seas without a compass telling you where to go.
Measuring incrementality in your marketing tactics and channels helps you understand the best tactics.
It shows you what’s moving the needle (and what’s not).
Once you can see the most impactful tactics and channels, you can forge future campaigns that you know will work.
3. Allows you to get the most out of your marketing budget
Since incrementality sheds light on what’s moving your business forward, you can confidently implement your efforts on the right tactics and channels.
Guess what happens when you start doubling down on the most impactful activities?
You start increasing revenue, decreasing ad spend and getting a higher return on investment.
The result is that you will get more out of your marketing budget.
Not only will you boost revenue, but you’ll also be able to boost profit margins since you’re not wasting money on ineffective tactics.
4. Increase traffic
When you see what’s truly working in your business, you can figure out what channels and tactics you should be working.
Incrementality helps you understand not only what your best revenue tactics are but also what channels and campaigns are bringing in the most traffic.
When you can increase traffic, you can increase your overall marketing impact.
5. Increase revenue
Finally, with increased traffic, the inevitable result is more conversions.
More conversions mean more revenue.
Incrementality gives you a vision of the tactics and channels that are converting the best.
If you can see that your SMS campaigns are driving the best ROI, then you know that you’ll grow your revenue by pouring more into acquiring SMS leads.
By calculating incrementality regularly, you can rest assured that you’re only investing time and money into the most impactful activities in terms of revenue generation.
How to calculate and test incrementality in marketing
Now that you understand how incrementality works and why it’s important to calculate, the question is:
How do you calculate and conduct incrementality tests?
Given the ever-changing marketing landscape, it’s crucial to understand how to calculate and test incrementally in your business.
If you’re not sure how incrementality testing works, then follow these simple steps:
Your first step to get an incrementality measurement is to conduct what’s referred to as a “holdout test.”
It’s not a robust test, but it’s an easy way to get the ball rolling with incrementality.
Here’s how it works:
- Choose your target audience.
With Matomo’s segmentation feature, you can get pretty specific with your target audience, such as:
- Visitors from the UK
- Returning visitors
- Mobile users
- Visitors who clicked on a specific ad
- Split your audience into two groups:
- Control group (60% of the segment)
- Test group (40% of the segment)
- Target the control group with your marketing tactic (the simpler the tactic, the better).
- Target the test group with a different marketing tactic.
- Analyse the results. The difference between the control and test groups is the incremental lift in results. The new marketing tactic is either more effective or not.
- Repeat the test with a new control group (with an updated tactic) and a new test group (with a new tactic).
Matomo can help you analyse the results of your campaigns in our Goals feature. Set up business objectives so you can easily track different goals like conversions.
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Here’s an example of how this incrementality testing could look in real life.
Imagine a fitness retailer wants to start showing Facebook ads in their marketing mix.
The marketing manager decided to conduct a holdout test. If we match our example below with the steps above, this is how the holdout test might look.
- They choose people who’ve purchased free weights in the past as their target audience (see how that segmentation works?).
- They split this segment into a control group and a test group.
- For this test, they direct their regular marketing campaign to the control group (60% of the segment). The campaign includes promoting a 20% off sale on organic social media posts, email marketing, and SMS.
- They direct their regular marketing campaign plus Facebook ads to the test group (40% of the segment).
- They ran the campaign for three weeks with the goal for sale conversions and noticed:
- The control group had a 1.5% conversion rate.
- The test group (with Facebook ads) had a 2.1% conversion rate.
- In this scenario, they could see the group who saw the Facebook ads convert better.
- They created the following formula to measure the incremental lift of the Facebook ads:
- The control group had a 1.5% conversion rate.
- Here’s how the calculation works out: (2.1% – 1.5%) / 1.5% = 40%
The Facebook ads had a positive 40% incremental lift in conversions during the sale.
Incrementality testing isn’t a one-and-done process, though.
While this first test is a great sign for the marketing manager, it doesn’t mean they should immediately throw all their money into Facebook ads.
They should continue conducting tests to verify the initial test.
Use Matomo to track incrementality today
Incrementality can give you insights into exactly what’s working in your marketing (and what’s not) so you can design proven strategies to grow your business.
If you want more help tracking your marketing efforts, try Matomo today.
Our web analytics and behaviour analytics platform gives you firsthand data on your website visitors you can use to craft effective marketing strategies.
Matomo provides 100% accurate data. Unlike other major web analytics platforms, we don’t do data sampling. What you see is what’s really going on in your website. That way, you can make more informed decisions for better results.
At Matomo, we take privacy very seriously and include several advanced privacy protections to ensure you are in full control.
As a fully compliant web analytics solution, we’re fully compliant with some of the world’s strictest privacy regulations like GDPR. With Matomo, you get peace of mind knowing you can make data-driven decisions while also being compliant.
If you’re ready to launch a data-driven marketing strategy today and grow your business, get started with our 21-day free trial now. No credit card required.
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