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E-Commerce Tutorial Lesson 5 Page 4 by Kevin Hakman

— Keeping Track of Everything —

To track your customers, you need to assign each banner ad a specific code and use that code in the referring URL that links your site to the ad. The URL in the link looks like this:

http://www.ramforless.com/index.cfm?MC=WM001

To see an example of how this can be used to track customers, look here. If you click around, you'll see that the site keeps track of where you came from. That's because MC=WM001 is a media code set up specifically for inquiries that will come from this page. The media code is tracked throughout a customer's session on the site, and if the customer places an order, that code is attached to the order for later reporting. You can embed unique media codes just like this in banner advertisements and outbound email messages.

At ramforless.com, all of the information about customers, orders, and advertisements is stored in a single database designed to make it easy to report on different data that management wants to track.

"Cost of Sales" Report
Sources	Sales	Cost	Sales/$1 Cost	% of Sales
111111	2,176	1,000	2.18	45.96 %
222222	2,046	1,000	2.05	48.88 %
333333	3,160	1,000	3.16	31.65 %
444444	10,690	1,000	10.69	9.35 %
555555	3,150	1,000	3.15	31.75 %
WM001	2,934	1,000	2.93	34.08 %
direct	18,238	1,000	18.24	5.48 %

This report shows total sales for orders placed as a result of sources linked to specific media codes (111111, 222222, WM001, etc.). Note that "Cost" refers to the amount of money (in dollars) it takes to place a banner ad, email, etc. "Sales/$1 Cost" is the Sales number divided by the Cost. This tells you how much revenue was generated for each dollar invested in a specific venue with a specific advertisement. "% of Sales" is the inverse of the Sales/$1 Cost; essentially it's a summary of cost effectiveness expressed as a percentage.

So for every dollar earned in sales from ad "11111," 45.96 cents went toward the placement of the ad. If your cost of sales is 45.96 percent, you'll probably have a hard time staying in business. On the other hand, advertisement "44444" had a cost of sales of 9.35 percent of the revenue it generated. You can probably make a good profit continuing to advertise through that venue.

You can also track customers that come directly to the site without the help of any specific ad. In this example, the media code "direct" shows that word of mouth is still the best resource for generating low-cost sales.

But that doesn't mean you should abandon all advertising and rely solely on word of mouth to keep your online business thriving. One fatal flaw of using log files to track user activity is that they make no allowances for customers who follow an ad simply to learn about your products and then, after doing some comparison shopping, return to your site to make a purchase. The tracking system will report this scenario as an advertising failure and a word-of-mouth victory, and that's just not the case. When it comes to site promotion, things usually aren't all or nothing. Usually, the most cost-effective marketing for your site involves finding the right combination of a variety of advertising methods.

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