When it comes to marketing and advertising, there's one thing that all business owners want to avoid: marketing campaign that consistently lose money. Sure, investing large amounts of money in a marketing campaign may give you good results, but how can you determine which marketing channels work best and which end up being a financial disaster?

Answering this question is critical to the success of your business. You'll know where to direct your marketing budgets, you'll understand what works best for your company how you can engage your customers. By tracking the right marketing KPIs (Key Performance Indicators), you will know how to adapt and diversify your marketing strategies, reduce the cost-per-acquisition, and attract a larger following for your product or services.

Where does your traffic come from?

Traffic is the backbone of all online businesses, from small blogs and personal websites, to giant e-commerce platforms and media outlets. Traffic is what every webmaster wants, it's the main factor that creates sales, promotes your brand and lays the foundation for your business as whole. Simply put, if you don't get enough traffic, you and your company are invisible, and your products will not even reach the public.

There are a lot of ways to get traffic, both free and paid, and a complex marketing campaign should include both sources. Typically, once you order a complete marketing campaign, you will start seeing traffic to your website in a few days, coming from a multitude of channels. What you need to know, however, is exactly where the traffic is coming from and how can it be engaged and ultimately, motivated to become paying customers.

Looking into your traffic sources will help you understand how each type of traffic source works and who is the best target for your business. Are users coming from Facebook staying longer? Why are Pinterest leads staying only 1 second on your website? Why is organic traffic so engaged compared to other sources? By carefully analyzing the traffic sources, you can find answers to most of these questions. For instance, referral paths can become intricate and hard to understand, but they tell you which are the most popular tweets that sent you traffic, who are the best influencers for your business and which content converts better.

Using Google Analytics can help you a lot to identify every referral and track how effective your marketing campaign is. Similarly, there are other tools, such as Campalyst Tweet Lockup Plugin, who are specialized for certain social media platforms, in this case, for twitter. This app will tell you precisely which are the strongest brand advocates and social media influencers in your niche. You can use similar tracking strategies for your Pinterest or Facebook users, you will soon see that the traffic coming from them have a completely different behavior.

Another traffic source to focus on are social voting networks. Similarly to social media platforms, these networks can give you tons of referrals, but you will need to understand how they behave, what they want and how to engage them. For instance, Reddit, Digg and StumbleUpon referrals can easily be tracked on Google Analytics, giving an outlook on their behaviors.

Know where your sales are coming from and set goals

Knowing exactly where your traffic is coming from vs. how much you spend is critical, especially when it comes to turning that traffic into sales. Your website may be getting 100,000 visitors each day, but how many of them become clients and spend money? You'll need to carefully assess how many customers are becoming clients by each traffic source. Tracking the referrals is essential, you will be able to focus on already successful traffic sources, abandon the poor sources and find new social media influencers who can expand your outreach.

One of the most important goals for your company should be to determine how much revenue your inbound marketing campaign has brought your company and try to reduce the cost-per-acquisition. Let's see some ways to use referral tracking as a tool to help you get sales from your marketing campaign. These are some goals you should focus on:

Be location specific

Try to get rid of no sale areas in your marketing campaign. Good referral tracking tools will give you plenty of data regarding the geo-location of your traffic. Some online marketing experts are advocates of city level targeting, as it is highly specific and can attract local customers. Of course, for nation-wide businesses, you should focus on the whole country as a traffic source.

Stop running bad ads

You should immediately stop a bad marketing campaign before it gets even worse. A bad add can be anything from a poorly designed banner, to running an ad on a poorly made mobile version of your website. They both spell disaster and will cost a lot in the long run.

Fix tracking issues as soon as possible

You should always track your traffic and sales. Check what users are doing on your website and how can they become more engaged and turned into profitable clients for your business.

Find the best social media influencers for your niche

It goes without saying that having a powerful social media influencer by your side goes a long way. The traffic is easily tracked, you will see exactly what works and what doesn't and you can budget your campaign accordingly.

Target and retarget your previous customers

Return customers are the best. You know what they want, what they already bought and what they might need in the future. They also leave good reviews and are a gold mine for a good online marketer. Also, focus on users who abandoned their shopping cart and offer them exclusive deals.

Referral tracking may seem, at least for beginners, a scary and little understood concept. However, tracking your traffic, sales and how they work together can prove highly beneficial to your business. Just by following some simple steps, you can reduce your cost-per-acquisition factor, expand your business and create better marketing campaigns in the future.