Let’s talk about key performance indicators (KPIs). They can be great tools for evaluating campaign performance in today’s data-driven world, but KPIs can also be tricky. KPIs can’t give you answers if you don’t properly align them to your campaign objectives and can be misleading if you take disappointing metrics at face value without considering the big picture.
The work we’ve done with the premier off-price eCommerce portfolio company Rue Gilt Groupe (RGG) helps illustrate these points quite nicely. RGG partners with LiveIntent to advertise its Rue La La and Gilt brands. When readers click on RGG ads in email newsletters, they are directed to a landing page that asks visitors to create an account by providing an email address.
Mismatched campaign objectives and KPIs
When RGG first started working with LiveIntent, our job was to drive as many users as possible to sign up for an account. However, RGG wasn’t looking at the number of new accounts created to judge their campaign’s success. Instead, RGG was using a lower-funnel KPI to measure success: total purchase amount from new members. This led to a disconnect between the campaign goal that LiveIntent’s optimization algorithm was driving towards (account sign-ups) and the business goal that RGG was using to measure success (revenue generated from new member purchases).
To better understand how LiveIntent contributed to new member purchases, RGG requested reporting showing ad engagement across newsletters to learn which newsletters produced new members who created an account and made a purchase. Then, RGG would manually update their campaign to invest more budget in order to target the newsletters that yielded the most shoppers.
The approach worked but was manual and time-consuming. It also assumed that customer behavior was to open a newsletter, click on an ad, create an account, and immediately make a purchase- all in one fell swoop. The customer journey is more complicated than this – we get distracted, we’re spontaneous, and even if we are in the market for a new spring jacket, it may take a few reminders before we’re ready to pull the trigger.
A more agile approach
To help RGG refine how they were optimizing their campaign and measuring success, we proposed a new strategy: place a pixel on the checkout page and set the campaign optimization goal to CPA (where the “A” equals a visit to the checkout page). This ensured the campaign focused on finding customers who were more likely to purchase instead of focusing on customers who were more likely to create an account for casual browsing.
RGG could formulate a strong picture of their ideal customer by leveraging information like which pages the customers were visiting on the RGG site, which items they were adding to their carts, and the value of those items. The campaign Then Effectively reached and engaged consumers who exhibited similar behavior patterns, suggesting that they’d be more interested in the RGG brand and its products.
Another critical factor we haven’t yet touched on is attribution. In addition to aligning business KPIs with the proper optimization approach, it’s vital to measure the actions you’ll use to judge a campaign’s success. In RGG’s case, they have a sophisticated methodology for attributing conversions to their advertising campaigns, which makes it easy to see which new member purchases came from a campaign run by LiveIntent. After implementing the new strategy of adding a pixel to the checkout page, RGG could directly tie revenue generated from their email advertising campaigns.
A worthwhile tradeoff
The new strategy came with a hitch: the CPA for email sign-ups was 2x higher than it was prior to optimizing towards likely shoppers. However, RGG discovered that new members acquired with the updated strategy were twice as likely to make a purchase, offsetting the upfront email acquisition cost. RGG paid more for new member sign-ups than before but reached an audience more likely to purchase, therefore of higher-value, ultimately generating more revenue.
RGG exceeded its return on ad spend goals, doubling both its new member conversion rate and the average order value of new member purchases.
Due to the campaign’s success in driving purchases, RGG confidently increased its budget by 140% year-over-year to continue targeting high-value female shoppers while hitting their ROAS goals.
The key takeaways
Match your KPIs to your campaign goal. If you want to achieve lower-funnel outcomes, ensure your campaign measures lower-funnel engagement, such as adding items to a cart or purchasing a product. Keep your goal top of mind when creating messaging by defining a target audience, tagging an event as your optimization trigger, and creating your call-to-action.
Remember to consider the complete picture before deciding a campaign is a success. For instance, if RGG had pulled the campaign due to its high cost per email sign-up, the company would have missed out on the revenue from higher-value shoppers. By analyzing a campaign’s impact throughout the entire funnel, you can uncover insights to inform campaign optimization strategies.
Here’s a bonus lesson culled from RGG’s success: It’s essential to understand your audience and consider that your customers’ journey to purchase is going to be unique. Customers are people, after all. And people don’t usually click on an ad to immediately buy a product, even though that would certainly make marketers’ jobs easier!
Machine learning can help make sense of the zig-zags consumers take before they decide to buy a new spring jacket. Setting up your KPIs, measurement, and targeting will help you to best leverage optimization algorithms to find more people looking to spruce up their wardrobe for the warmer weather ahead.