Knowing how to use market data effectively will enable you to reach your goals and grow your company. Here is our short guide to understanding the metrics.
If you’ve ever asked yourself why your campaigns aren’t as effective as they could be but you’re reading this not knowing your company’s metrics then you’ve found the answer to your problems. Metrics hold the key to understanding all aspects of your campaign, and once you’ve grasped them, you can begin to control them.
What if I were to tell you that every element of your business which is measurable is also mangeable? Understanding this will enable you unprecedented freedoms with regards to achieving your goals. So what are metrics and how can they be utilised effectively?
The 5 most important metrics for any affiliate:
Earnings Per Click
- The Earnings Per Click (EPC) rate enables you to see what other affiliates are earning through a program. When trying to decide about new campaigns to launch, the EPC rate gives you a good idea of what you kind of returns you can expect.
Click Through Rate
- The clickthrough rate (CTR) its used to determine the percentage of visitors to your site who actually click on the your provided links. This allows you to accurately gauge how successful an ad is by the number of leads it generates.
Commission Rate
The commission rate is the percentage of the profit which a merchant gives you for leading them to their product. Commission rates will differ depending on the merchant and the product being sold but affiliates can sometimes make as much as 50% commission.
Conversion Rate
The Conversion Rate (CR) metric enables you to see how many clicks have become leads or how many leads have been converted, depending on the program you are taking part in. The CR is determined by the number of people who used your site to either sign up or make a purchase.
Average Order Value (AOV)
- The Average Order Value (AOV) does exactly what it says on the tin. It is the total value of all of your orders divided by the total number of orders. Once you have this figure you can use it to evaluate your total sales targets.
Once you have these metrics you can begin to use them to improve your business. Let’s take a look at an example to see how to use metrics effectively.
Imagine you have a blog with roughly 5000 unique visitors a month on average. On your site you are offering a new weight loss supplement for which the advertiser is paying you 25% commission for every item sold as a result of your link. Alongside this, your metrics are as follows:
Average Order Value (AOV) = $40 Earnings Per Click (EPC) = $100 Clickthrough Rate (CTR) = 10% Commission Rate (Com) = 25% Conversion Rate (CR) = 20% Unique Visitors (UV) = 500
With these figures we can begin to look at things in more detail. Here are a some of the key equations you can do to determine the strength of your ad campaign.
Sales: UV x CR = Sales or 500 x 20% = 1000 sales
Total Customer Spend: Sales x AOV = Total Customer Spend or 1000 x 40 = $40,000
Earnings: = Total Customer Spend x Commission = Earnings or $40,000 x 25% = $10,000
Traffic: UV x CTR = Click Throughs or 5000 x 10% = 500 Click Throughs formula:
EPC: Earnings / Traffic = EPC or $10,000/500 = $20 EPC
Once you have all of these metrics, you will be able to see far more clearly how your campaign is doing and be able to focus more accurately on the areas that need improving. For information on tools you can use to help you to more efficiently evaluate your metrics, read our Brief Guide to Tracking Systems