So how do you solve these problems? Like a lot of things, you need to start at the end. Start by focusing on the sales and marketing goals for your Web site. Once defined, use these goals to identify the key performance indicators (KPIs) and optimization metrics you need to improve performance. To do this, make sure you have defined what you are trying to accomplish with your Web site and how it fits into your sales and marketing efforts.

If you aren’t sure, I’ll give you a hint; there are probably three reasons you built that Web site: 1) to increase your revenue, 2) to cut your costs or, 3) for either branding or legal compliance. You may have built the site for some other reason, but almost everything boils down to one or more of those three reasons.

Keep in mind that your Web site is performing a lot of different roles for different aspects of your business: PR, IR, recruiting and customer support, just to name a few. Each of those functions, and the teams supporting them, will have their own KPIs. Some of these will overlap with yours, but keep them separate so that each team can accurately map them back to their individual goals.

A common mistake is to have too many KPIs. The exact number will vary, but typically you want between three and seven. If you find yourself with too many KPIs, you may be including optimization metrics within your KPIs. These are the metrics that you influence, such as making changes to the Web site , your offers or your online advertising, in order to impact your KPIs.

For example, if “number of qualified leads” is your KPI, let’s say your goal is to get 35 qualified leads per week. What do you do if you find you are only getting 22 qualified leads per week?

Is your lead-to-qualified-lead conversion rate too low? Is your visitor-to-lead conversion rate to low? Is your number of visitors too low? Is your cost per lead so low that you can’t drive enough volume of leads? Any of these is possible. If you are only looking at the KPI, it’s hard to tell what step in the lead flow to adjust or what adjustments to try. By focusing on the optimization metrics, such as the conversion rates, the visitor numbers and the cost per lead, you can get close enough to details to decide where to focus and what adjustments to try.

Once you have defined your KPIs, you need to set your goals and establish your baseline. Without goals or a current trend to give them context, KPIs are really just random numbers with no relationship to what you want them to be or what they have been in the past.

Defining the goals for your KPIs requires working backwards from your overall business goals. Hopefully you have defined goals for things like revenue, numbers of new customers, revenue per transaction, etc. If so, work backwards from those using basic assumptions about conversion rates to determine objectives for your KPIs.

For example, to determine your goals for number of visits, start with your revenue goal:

Visits per Month Goal = [ (Revenue Goal / average sale per customer) / Conversion rate ] / 12

12,121 = [ ($10,000,000 / $2,750) / 2.5% ] / 12

To hit your one million dollar annual revenue goal, you need to hit 12,121 visitors per month, assuming you average a 2.5% conversion rate and $2,750 revenue per sale.

The question now is how well does this goal match the performance of your current marketing campaigns and sales efforts? If you are hitting 15,000 visitors per month, you are well on track to reach your goals; if you are only hitting 9,000 visitors, you are behind and need to adjust your marketing campaigns. All of this, of course, assumes your conversion rate and revenue per transaction assumptions are holding true.

To determine this, you need to establish a baseline, which depends on the length of time you have been collecting data. If possible, look back over the last 4 months. If you don’t have that much data, look back over the last five weeks to ensure that you allow for any monthly cycles that exist for you business. If your business is highly seasonal, look back at the previous year to understand your baseline. If you don’t have historical data, you can either do without it and assume you are on track, or wait five weeks to get a decent baseline. However, assuming you are on track will help you maintain your project momentum. I recommend moving forward, then circling back after a few weeks to establish your baseline.

With your baseline established, start tracking your KPI performance against your goals. For reporting to other parts of your company, a monthly or semi monthly reporting period typically makes sense. You, on the other hand, should monitor performance on a weekly, or in many cases, a daily basis. This is where investing the time to establish your baseline and goals will pay off. With these in place, all you need to check each day is that you are within a reasonable variance versus your typical performance and that you are track to hit your goals.

Now that you know where you stand and how you are doing against your goals, you can get down to business and start to optimize online marketing efforts to improve performance.

Optimizing:
To truly be successful in online lead generation campaigns, you should optimize based on the bottom of your sales funnel, whether that is a sale, filling out a lead form or requesting a proposal. To do so, you must be able to track the source of each qualified opportunity to determine which campaign brought them to you.

This is easier said than done. In many cases different tools offer overlapping data sets, which vary drastically in terms of scope and quality and may only work if they are set up “just so.” This duplication also allows for a number of scenarios in which different tools report different data, creating a lot of potential for confusion.

The other problem is that despite the huge arsenal of tools you may have, no one solution offers the end-to-end view that you need to optimize your campaigns based on success at bottom of the sales funnel. The tools from search engines, email vendors and affiliates focus on getting people to your Web site or at best completing an action, like filling out a lead form. Web analytics applications focus on what visitors did on the site and where they came from, but these tools don’t tell you what happened offline. CRM and SFA tools provide great insight into what happened to those leads after they were submitted, but lack the details about lead source that you need to optimize campaigns.

What you need is some e-duct tape to patch together your CRM and marketing data to give you the end-to-end, top-to-bottom view that you need to optimize campaigns.

To make all of this happen, you need to add five key pieces of data to your CRM system:
1. Lead channel: email, search engine, affiliate, banner/display ad, social site, partner
2. Referring URL: the URL the visitor came from
3. Search Engine: the specific search engine that was used to reach your site
4. Search phrase: the exact term or phrase the visitor searched for to reach you
5. Ad code: the tracking code for the ad that brought someone to your site

There are many additional data points that can be added, each of which will allow you to conduct more granular analysis, but I recommend starting with these and adding others once you really have the need for more data.

This data must be in your CRM system so that you can segment the most recent wins and leads that have been qualified.

By optimizing for performance at the bottom of your sales funnel you can stretch your ad dollars farther while increasing the number of qualified leads. In the short term, you may actually experience a decrease the number of overall leads as you stop the programs that are driving poor quality leads. Be it a frightening concept, this is good. It allows your sales team to focus on the better quality leads and allows you to fully fund the programs that are working. You might even have budget left over to experiment with new programs.

So where do you get all of this data? There are almost as many sources of data as there are types of data. The right blend for you will be a matter of preference, usability and what helps you to easily manage and optimize campaigns.

In 2008, as larger portions of advertising budgets shift to online, we’ll need to consistently improve measurement and performance. Indeed, digital marketers are already under pressure to bolster business intelligence capabilities in unprecedented ways.

This article provides a ‘top 10’ list of best practices for digital advertising reporting and measurement. Advertisers need to find ways to better track, analyze, and predict online consumer behavior, and use business and marketing intelligence tools effectively to help find the most attractive prospects and customers. This list offers a blueprint for ensuring a successful measurement strategy that will maximize return on media investment and improve overall campaign performance.

STEP 1—Select a data collection and warehousing approach

First, you’ll need a marketing data warehouse. Figure out where you want this reporting and measurement data warehouse to reside. This warehouse should store all historical media, website, and customer data to better understand consumer behavior and optimize future marketing campaigns. Three possible data warehousing choices include:

1. Agency. Ask your agency to warehouse marketing and customer data. Some firms have created proprietary reporting and marketing measurement systems. These platforms allow for more flexible marketing data management, but lock the advertiser into a specific approach. And, if you’re an advertiser with multiple agencies, it may not be ideal to have one company managing all of the data.

2. In-House. Warehouse the data inside your company. This requires advertisers to handle and manipulate large volumes of data through the use of appropriate software, hardware, and talent (people). Consideration should be based on initial start-up costs, time-to-market, cost-of-ownership, and long-term strategic corporate goals.

3. Third-Party Provider. Use a third-party partner to collect, manage, and report marketing data on your behalf. A select few partner providers automate or offshore components of clients’ analytics reporting needs. Too many agencies or in-house marketing departments have highly skilled (and highly paid) in-house or agency personnel spending valuable time creating reports that could either be automated or offshored by a third party.

STEP 2—Define Key Performance Indicators (KPI)

The first step of your marketing campaign is to define your business and campaign goals based on identifiable business benefit and need. When creating goals, you will want to take a top-down approach. A top-down approach starts with the business decisions that need to be made and then works its way down into the data needed to support these decisions. In order to take a top down approach you MUST involve the actual business users who will be reading these dashboards, as these are the only people who can determine the relevancy of specific business data to their decision making process.

STEP 3—Determine marketing or campaign success criteria and overall goals

Once your business and campaign goals are defined, the next step is to assign your transparent or universal KPIs, to each campaign. These key metrics will allow you to evaluate campaign performance. If available, integrate historical campaign data and metrics into the mix to better understand performance over time. Whenever possible, try to quantify or monetized these goals to understand the impact on the business.

STEP 4—Establish attribution management and tracking

During the definition phase, it’s important to build the proper campaign attributes framework. You will want to collect detailed information from the stakeholders related to target audience, creative, messaging, placement, media publisher and requirements related to reporting. With each stakeholder group, take the following steps:

Identify used data sources; validate availability and how to extract from each source
Define measurement and what business rules are applied to source data
Answer what are the key metrics & KPIs of each element
Identify how are they inter-related/rolled up from operational to strategic

Be sure to implement proper tracking codes on your site and various media channels. Proper tracking code management and pre-campaign testing will ensure issues are resolved prior to going live with the actual campaign

STEP 5—Employ visual marketing scorecards and dashboards

Again, the key to the dashboard development is buy-in from stakeholders and focusing on the key KPIs. All too often stakeholders get bogged down in the details. Dashboards and scorecards turn into unruly and overwhelming sets of un-actionable data. Figure out what data really matters and focus on these key KPIs. General examples of the key questions marketing dashboards should answer include:

-Quantifying the business impact of marketing investment
-Identifying which media channels perform best
-Determine which channels generate the most customer interest or engagement
-Evaluate which channels generate the most customer sales
-Identifying and reproducing complex multi-channel customer acquisition routes
-Contrasting multiple channel’s performance while campaigns are still underway

Dashboards are meant to evolve; your business goals and business aspects change the way in which measurement occurs – hence your dashboard, or marketing intelligence solution, needs to be flexible and allow for the process of evolution