7 Steps to Meeting Ecommerce Marketing Objectives

ecommerce marketing laptops and legal pads feature

Can ecommerce marketing campaigns really fail by something as mundane as failing to set the right objectives? Yes, they can, and sadly enough, they often do.

Professional athletes cannot achieve a desired level of performance by simply starting to run and seeing how fast they can improve. Instead, they need to target times to beat and work backward to be successful. In the same way, ecommerce marketers need to unpack what drives success and apply their own build-backwards methodology.

A solid methodology of setting objectives in ecommerce marketing consists of seven steps. An efficient approach to setting objectives does not start with the front (“how many clicks do we need?”), but at the very end of the process.

You should start with identifying:

  • Your revenue growth goals
  • What breakeven look like when adding in marketing dollars
  • The lowest ROAS in order to achieve profitability

After setting financial objectives, you need to look at your channel mix to:

  • Take a blended approach; see which channels can produce the ROAS in order to hit your goals
  • Backtrack the ROAS into your marketing efforts
  • Figure out which channels can achieve your goals

At the end of this process, define the front “vanity metrics” that matter:

  • Define how many clicks you need to get, what an acceptable CPC looks like, etc.

If you skip any of these steps, you end up setting unrealistic objectives and/or making budgetary or channel decisions that cannot possibly achieve your goals.

Let’s translate the above methodology in an example.

  • Defining your revenue growth goal

Suzie sells blue widgets and made $4 million last year. She wants to grow her sales to $5 million this year.

  • Calculate your breakeven when adding in marketing dollars

Suzie’s margins are 50%, and to make $5 million in sales, she can spend $2.5 million in marketing.

  • Find out what the lowest ROAS is when paying for ads to come out profitable

At a 50% margin, the campaign will need to yield two times her marketing spend to break even. Let’s agree that three times the return of marketing spend is the minimum ROAS goal for profitability.

  • Take a blended approach to see which channels can produce ROAS in order to hit your goals

In Suzie’s marketing mix, paid media makes up 50% of her total revenues. Half of the $5 million goal equals total revenue of $2.5 million from paid media.

  • Backtrack ROAS into the marketing effort

A spend of $2.5 million at a minimum ROAS of 300% implies that she can spend about $833,000 annually on paid media.

  • Figure out which channels can achieve your goals

Suzie knows from experience that search engine advertising will help her achieve these goals.

  • Backtrack this into how many clicks you need to get, what an acceptable CPC is, etc.

A total spend of $833,000 over 12 months comes down to a monthly spend of $70,000. With that amount spent, Suzie needs to acquire at least $210,000 (300%) of additional revenue.

From historical data, Suzie knows that her conversion rate is about 2% and that her AOV (Average Order Value) is about $80. This means that she needs at least 2,625 transactions at an $80 AOV to make $210,000 in revenue. This implies 131,250 clicks. She now knows she needs to stay below a $0.53 cost per click in order for this campaign to be successful.

Setting ecommerce marketing objectives might seem like a daunting task, but it doesn’t have to be. You need to take the time to set out goals following these methodical steps. Failing to do so will leave you with unattainable goals or – just as bad – tactical choices that will never help you achieve your campaign objectives and hit performance targets.

Darwin Liu is CEO of X Agency