Marketing made easy – 12 acronyms explained
As with many industries, there’s a lot of jargon involved in marketing and you shouldn’t need to be a marketing consultant to understand them. What makes matters even more confusing is that many of the terms are often abbreviated into TLA’s (three letter acronyms – see what we did). So, to help make your life easier, we’ve gone through all of the commonly used jargon and outlined exactly what it all means and why it is important to understand each term.
So, let’s get started.
SEO (Search Engine Optimisation)
SEO is the process involved in improving your organic ranking within search engines. With Google being the most popular search engine, a lot of SEO is focused on their specific algorithms. The world of SEO if ever evolving and so the methods of improving your organic search ranking need to be continually refined to provide the best results.
Why you need to know it: Knowing how to effectively optimise your site for search engines is crucial in getting more traffic to your website. Statistically, websites that appear on the first page of organic results within Google receive significantly more traffic, while appearing on the third page or below will see minimal web users enter your site through organic results.
CAUTION! What to look out for: The past decade has seen a countless number of agencies and freelancers who claim to specialise in SEO. While many have the technical knowledge, the ever-evolving nature of SEO and the competitive environment of getting into the top few results of Google means that many small businesses haven’t seen the return they were promised by these “specialists”. If you’re planning on outsourcing your SEO then you need to know how you’ll be helped and what activities will be conducted to get the results you require.
PPC or CPC (Pay Per Click or Cost Per Click)
“Pay per click” and “Cost per click” are essentially the same thing –a paid form of digital advertising which charges you when someone clicks on an ad. The most popular form of PPC ads are those often seen within search engines. While it can take months to generate results from your organic SEO efforts, PPC provides more immediate results. PPC ads are those which appear at the top and bottom of a Google results page with a small “AD” icon next to them. While it’s paid advertising, you’re only charged when your ad is clicked and a visitor lands on your website. As a result, a PPC strategy goes well beyond simply getting the paid ad to appear on Google as the landing page and website needs to be fully optimised to have as many of those clicks onto your website lead to conversions as possible.
Why you need to know it: Similar to SEO, having a strong PPC strategy can also help to generate a greater deal of traffic to your website. It makes for an ideal short-term solution to gain traction and people visiting your site while you wait for your organic search efforts to pay off.
CAUTION! What to look out for: It’s not all about having your ad appear on Google! You need to make sure you also track the visitors that click on your ad to see if they are actually browsing/purchasing on your site. If the majority are leaving the site just as soon as they enter you won’t see a return on your spend. A high bounce rate from PPC ads will often indicate a poor keyword strategy or landing pages.
ROI (Return on Investment)
Here’s one which isn’t related strictly to marketing, however should certainly be kept in mind when considering the outlay on your marketing activity. Your return on investment (ROI) looks at the revenue you generate in relation to what is spent – and we’re firm believers that your marketing activity should generate a positive ROI.
Why you need to know it: Understanding what ROI is and ensuring your marketing activity is geared towards generating a positive figure is important as it’ll help to ensure that the money you are investing in your marketing is actually worthwhile.
CAUTION! What to look out for: If you plan on outsourcing your marketing then be sure you have a clear understanding on how to measure ROI. There are a whole host of marketing agencies around desperate to sell you their services so it’s crucial (and also reassuring) for yourself to know you can monitor their effectiveness.
[Avoid these 5 classic ROI pitfalls]
CTR (Click Through Rate)
The click through rate refers to the number of clicks on a specific link (whether that be in an email or any other form of ad) divided by the number of impressions that particular link acquired. So in layman’s terms it’s how many times a link was clicked in relation to the number of times it was seen. The average CTR varies depending on the medium, for example for keyword search specific ads the average CTR is just under 2% while for display ads it’s around 0.35%.
Why you need to know it: Knowing your CTR helps you to establish how effective some of your digital campaigns are. A high CTR rate will tend to indicate that the link in question is working fine and attracting the necessary attention.
CTA (Call to Action)
Your call to action (CTA) is your business’ way of prompting customers to perform a particular action. A couple of common CTAs are “order now” or “shop now” buttons which are frequently seen on websites and email campaigns. Another form of CTAs are offers like “buy one get one free” which are ideal for print media such as brochures and flyers.
Why you need to know it: Understanding what a CTA is can help to not only give your marketing activity a purpose but also increase its effectiveness. As we’ve mentioned above, the core purpose of your marketing activity should be to generate a return on investment, and in many cases an effective CTA will play a large part in achieving this as it can encourage customers to act upon the message you communicate with them.
CMS (Content Management System)
A content management system is the increasingly popular tool used to create and edit digital content. WordPress is one of the most popular platforms, with it being accountable for over 25% of websites around the world which stretch from household names such as Sony Music and Disney to a countless number of small businesses. This is in part due to its intuitive nature and the fact that once a website has been developed, you can edit it with relative ease as and when they please.
Why you need to know it: If you’re at a stage where you’re looking to create a website or having a new one redesigned then you’ll want to be fully aware of all of the options available to you. Having a site created using a CMS system such as WordPress will work in your favour moving forward as it’ll be far easier to edit copy and general content yourself.
CRM (Customer Relationship Management) Systems
CRM systems play a huge role in business these days. They’re incredibly effective in helping businesses to segment their customers as they allow you to collect and record data such as the initial point of contact, purchase history, buying behaviour and contact information. With this data, your company can then communicate relevant information to each segment, making interaction more meaningful and effective.
Why you need to know it: having a CRM system in place can help you to manage your sales pipeline more effectively. This can help you not only engage with new customers, but also re-engage existing or dormant customers and get them back in touch with your business. In fact, data suggests that CRM systems help to increase customer retention by as much as 27%.
CRO (Conversion Rate Optimisation)
CRO focuses on improving the number of leads you turn into actual paying clients. The manner in which this is done will be dependent on the set up of your business and your sales process. CRO will often require you to look at your entire sales process in order to establish where things can be improved.
Why you need to know it: Many small businesses can get caught up in wanting to continuously generate more leads. While on the surface this may seem like a practical solution, as theoretically more leads should in turn increase sales, it isn’t necessarily an efficient approach. If you track your conversion rate and see it’s way lower than where it should be then you should be looking to why the conversion of leads is so poor. Only once this has been optimised should you knuckle down and focus on increasing the quantity of leads.
CAUTION! What to look out for: The average conversion can vary across different industries and also among different sales channels. Therefore be sure to do some research to establish where you stand within your industry. Alongside this, consider looking at the conversion rate for different channels in isolation. You might find that your website is converting well while enquiries coming through phone aren’t. This will better help you establish where the problems lie and how things can be improved.
CPE (Cost per Enquiry)
Your cost per enquiry helps you to establish how much you’re paying for every enquiry you generate. Make sure you don’t take this figure in isolation as a measure of how well you’re doing. As mentioned above you also need to consider your conversion rate. A low cost per enquiries figure will certainly point towards you doing something right in terms of your lead generation, however you also need to make sure that these leads are being converted into sales.
Why you need to know it: measuring and tracking your CPE can help you spend much smarter. If you see your CPE spiralling out of control then you can instantly look at why the money your ploughing in to generating leads is failing to do its job. This will give you a chance to haul back your spend, reduce potential losses, and allow you to reassess where things need improving.
CPA (Cost per Acquisition)
Cost per acquisition is an important term to not only understand but also measure. It’s one of the key values that can help to determine how much should be invested in your marketing. The CPA looks at how much it costs for you to gain an actual paying customer. Identifying this figure will require you to know the number of new customers over a specified period of time along with how much you’ve spent on your marketing (by looking at how many clients you want to gain and multiplying it by your CPA).
Why you need to know it: Knowing you CPA will help you to establish how much, on average, you should spend on your marketing, thus helping to set a realistic marketing budget for the year. Since your marketing activity should generate a positive ROI, you want to ensure that your CPA is lower than the average lifetime value (ALV) of your customer (ALV discussed further below) otherwise this will affect your ROI (just checking whether you have been listening).
ACV (Average Client Value)
Your ACV is calculated by looking at how much customers spend over a given period of time (usually 1 year) and then dividing it by the total number of unique customers within said time frame. While this might not indicate how much each customer has spent, it’s a handy figure to have when trying to forecast sales targets for the future.
Why you need to know it: Your ACV will prove to be a handy figure when trying to establish how many customers you’ll need to reach a sales target. E.g. if you’re wanting to increase your sales by £100,000 for the following year and you know your ACV is £100, then you can estimate that you’ll need around 1,000 customers to reach that target.
LCV (Lifetime Client Value)
LCV shouldn’t be mistaken for the ACV. Where the ACV looks at the average value of customers over a given period of time, the LCV looks at how much their worth to you for the entire time they buy from you. This is important as it takes into account repeat custom over a longer period of time (e.g. years) which is important within certain industries where the product is bought or the service is used infrequently.
Why you need to know it: From a marketing point of view it’s useful to know the overall value of your customers as it can play a part in helping to establish just how much you should spend on acquiring them and setting your marketing budget. Remember, your CPA shouldn’t exceed your LCV.
Final words
So, there you have a handful of acronyms which touch a number of different elements within marketing, and hopefully this blog will have you feeling a little more comfortable when marketing jargon gets thrown your way.
If you think we’ve missed any acronyms then feel free to let us know and we’ll follow up with another blog covering more terms.
Ian Kirk
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