I guarantee you that close to 90% of small businesses out there set up their websites without any goals in mind. The 10% that did identify their goals are ahead of the pack.
My marketing philosophy is simple and effective, yet rarely followed by SEM practitioners.
Strategy Drives Tactics. Goals Drive Performance.
It is not the other way around. Tactics do not strategy and performance does not drive goals. It is very important that you are serious about your goals, and then you align your strategy and tactics to reach them. SEM is not much different from any other successful business venture or marketing program – you need goals!
You should essentially have two major sets of goals:
1) traffic goals, and
2) conversions goals
Note that it is not an either-or situation, and you need both working in tandem to maximize your return on investment (ROI). Let’s start with you traffic goals.
Traffic Goals
Website traffic refers to the number of your website visits. To me, traffic refers to the overall number of visits, but I have seen some people only count unique visitors, aka “uniques.”
When you look at your website analytics tool (such as Google Analytics), you will see that the visits are coming from many different sources: Direct Traffic (when somebody types your domain URL directly into the browser), Referring Sites (such as Facebook). Search Engines (organic traffic) and Paid Search (SEM).
You should be realistic with your goals based on the competitiveness of your industry and your budget. For small businesses or new websites, I always suggest to start with 100 site visits a day as a realistic traffic goal. Once you reach a solid 100 visits a day, aim for 500, then a 1,000 as you grow bigger. The goal is to always grow your site visits and you want to see an upward trend on your charts.
1) traffic goals, and
2) conversions goals
Note that it is not an either-or situation, and you need both working in tandem to maximize your return on investment (ROI). Let’s start with you traffic goals.
Traffic Goals
Website traffic refers to the number of your website visits. To me, traffic refers to the overall number of visits, but I have seen some people only count unique visitors, aka “uniques.”
When you look at your website analytics tool (such as Google Analytics), you will see that the visits are coming from many different sources: Direct Traffic (when somebody types your domain URL directly into the browser), Referring Sites (such as Facebook). Search Engines (organic traffic) and Paid Search (SEM).
You should be realistic with your goals based on the competitiveness of your industry and your budget. For small businesses or new websites, I always suggest to start with 100 site visits a day as a realistic traffic goal. Once you reach a solid 100 visits a day, aim for 500, then a 1,000 as you grow bigger. The goal is to always grow your site visits and you want to see an upward trend on your charts.
Here is my take on your website traffic goal when running SEM campaigns:
Your SEM traffic goal is the optimal number of clicks you acquire that will maximize your conversions at an acceptable cost.
Take a movement and read it again. And again.
If you really get the statement above, you will be doing search engine marketing better than most of the folks out there. It is a simple principle, but again rarely followed.
For example, if you sell books online at an average of $10 a book, and you need to make at least $4 profit on each book sale to make money, then you should grow your traffic to a point at which you are no longer making an acceptable ROI (of course as long as you have the inventory to satisfy the demand). That is, before you reach the point of diminishing returns.
Just understand that the volume of clicks is always positively correlated to cost (in other words, if you want to buy more relevant clicks you need to pay more per click). And as your cost go up, your ROI will go down. As you manage your SEM campaigns, you will learn that there are great performing keywords with very low volume that are cheap (low CPC), and that there are also more competitive keywords that cost more to buy, but represent great opportunity. The game is played in the area (in gray on the chart below) where it is profitable for you and you should always maximize this opportunity until you are reaching the point of diminishing returns.
Your SEM traffic goal is the optimal number of clicks you acquire that will maximize your conversions at an acceptable cost.
Take a movement and read it again. And again.
If you really get the statement above, you will be doing search engine marketing better than most of the folks out there. It is a simple principle, but again rarely followed.
For example, if you sell books online at an average of $10 a book, and you need to make at least $4 profit on each book sale to make money, then you should grow your traffic to a point at which you are no longer making an acceptable ROI (of course as long as you have the inventory to satisfy the demand). That is, before you reach the point of diminishing returns.
Just understand that the volume of clicks is always positively correlated to cost (in other words, if you want to buy more relevant clicks you need to pay more per click). And as your cost go up, your ROI will go down. As you manage your SEM campaigns, you will learn that there are great performing keywords with very low volume that are cheap (low CPC), and that there are also more competitive keywords that cost more to buy, but represent great opportunity. The game is played in the area (in gray on the chart below) where it is profitable for you and you should always maximize this opportunity until you are reaching the point of diminishing returns.
I know I am introducing this concept before walking you through SEM 101 but, for now, just bear with me so that you get the general concept behind the goal setting. It is pure Economics 101 and you don’t need to be an SEM guru to understand it.
It is not that you need to draw these charts after you started your SEM campaign. You shouldn’t. I will walk you through the couple reports you need at some point (when I look at the reports some of the agencies are sending to their clients I want to scream – we will talk about the difference between data and insights in this blog). For now, I am just trying to illustrate a basic concept behind every single search engine marketing campaign. If you understand it and apply it, you will be able to make much better judgments about the performance of your SEM campaigns.
Many of the clients I consulted for where missing out on huge opportunities to get more orders or leads, because they couldn’t identify their point of diminishing returns. They thought they are doing ok, but in fact they were just harvesting the low hanging fruit, without ever realizing that they could double or triple their business.
Or, I hear something like: “My SEM budget is $3K a month. My ROI is $10! I am happy. SEM is great.” Great to hear, but after I learn that your acceptable ROI is $3 and you spend marketing dollars elsewhere at a loss, I want to scream. Why are you leaving business on the table for your competitors to steal from? Why aren’t you buying more clicks and getting more conversions until you reach the point of diminishing returns? You can probably spend $10K a month and triple your sales with an acceptable ROI. There is also a question of margins, but that is something you need to decide when you set your ROI goal.
Once you start buying keywords, you will soon figure out at what level of spend you will reach the point of diminishing returns and you will be able to establish your goals.
Conversion Goals
Conversions refer to the actions you want your website visitors to perform after they land on your website. You always want to “convert’ your website visitors into customers, sales, leads, donors, or brand enthusiasts.
If there is one thing that I want you to take away from reading this post is that you need to have conversion goals on your website. If, for whatever reason, you resist tracking conversions on your site, you would only waste your time and money doing SEM. Thes concepts I am sharing here will work for you only when you measure what is happening on your website so that you can identify what is working and what is not.
You need to, first, identify the conversions, and, second, make sure you are tracking them.
Let’s start with identifying your website conversions. Depending on your business model, you may have just one desired action on your site (such as a sale), or you may have many. I have seen people setting up a lot of conversions, and it was a distraction, so I recommend focusing on 1-3.
Depending on what you do, common site conversions are:
1) Orders / Sales
2) Business Leads
3) Subscriptions
4) Social Media Engagements
5) Store Locator Checks
Most businesses either sell or generate leads online, so you will most likely fall into the first two categories. If you don’t sell online and you want to generate traffic for your offline store, you should track how many of your website visitors look up your store(s) location. With the growth of social media, it is also wise to track how many Facebook likes or YouTube video views you have generated.
I will talk more about how to track and measure conversions in the next section of this chapter. For now, let’s focus on setting up your conversion goals.
Your SEM conversion goal is the optimal number of conversions that will maximize your business at an acceptable cost.
You should see a link between clicks and conversations now. Clicks are to generate conversions, and conversions are to generate business. If you optimize well and buy the right keywords, there will always be a positive correlation between clicks and conversions (i.e. more clicks will results in more conversions…until you reach the point of diminishing returns)
Things are starting to make sense?
Conversion Goals
Conversions refer to the actions you want your website visitors to perform after they land on your website. You always want to “convert’ your website visitors into customers, sales, leads, donors, or brand enthusiasts.
If there is one thing that I want you to take away from reading this post is that you need to have conversion goals on your website. If, for whatever reason, you resist tracking conversions on your site, you would only waste your time and money doing SEM. Thes concepts I am sharing here will work for you only when you measure what is happening on your website so that you can identify what is working and what is not.
You need to, first, identify the conversions, and, second, make sure you are tracking them.
Let’s start with identifying your website conversions. Depending on your business model, you may have just one desired action on your site (such as a sale), or you may have many. I have seen people setting up a lot of conversions, and it was a distraction, so I recommend focusing on 1-3.
Depending on what you do, common site conversions are:
1) Orders / Sales
2) Business Leads
3) Subscriptions
4) Social Media Engagements
5) Store Locator Checks
Most businesses either sell or generate leads online, so you will most likely fall into the first two categories. If you don’t sell online and you want to generate traffic for your offline store, you should track how many of your website visitors look up your store(s) location. With the growth of social media, it is also wise to track how many Facebook likes or YouTube video views you have generated.
I will talk more about how to track and measure conversions in the next section of this chapter. For now, let’s focus on setting up your conversion goals.
Your SEM conversion goal is the optimal number of conversions that will maximize your business at an acceptable cost.
You should see a link between clicks and conversations now. Clicks are to generate conversions, and conversions are to generate business. If you optimize well and buy the right keywords, there will always be a positive correlation between clicks and conversions (i.e. more clicks will results in more conversions…until you reach the point of diminishing returns)
Things are starting to make sense?
The relationship between conversions and cost is the same as the relationship between clicks and cost (we just discussed that clicks lead to conversions). That said, we can apply the same principle to conversions that we applied to website traffic– we just need to replace clicks with conversions.
Unless you have limited product inventory, or provide services but can only handle limited number of clients, you should aim for as many conversions as you can get at an acceptable cost you – i.e. until you reach a point of diminishing returns.
It is not about the volume (you always want as much as you can get, right?) as it is about how much the conversations will actually cost you. If you sell books for $10 and need at least $4 profit, you will not pay more per conversion than $6, right? If you do, you will be selling your books at a loss. There is always that CPA (cost per action) beyond which it will no longer be profitable to you to do business.
That is why your conversion goal is determined by your acceptable Cost-per-Action (CPA), which is how much you are willing to pay per conversion (conversion is used interchangeably with action – but it is always Cost-per-Action, and never Cost-per-Conversion, because it would be confused with Cost-per-Click, aka CPC). The lower the CPA the more profitable you are, but you need to set your goal, which is the cut-off point beyond which it would not be profitable for you to acquire more leads or orders.
If your goal is to generate business leads, you need to do some calculations to figure out your closing rate – i.e. turning your leads into clients. Let’s say that you close your SEM leads at 10% rate and you get your leads at $30 CPA; then, it will cost you around $300 to acquire a client. Figure out how much you charge on average for your service and set a cut-off point for your acceptable cost to acquire a new client.
With downloads or Facebook likes, you really measure site engagement but if your goal is to acquire Facebook fans, than just figure out how much you are willing to pay for a FB like.
In my next post, I will be talking about how to effectively track conversions on your website.
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