It makes sense that you can’t improve what you can’t measure, which is why key performance indicators (KPIs) exist. These critical metrics tell you not only how your marketing is performing but, more importantly, how it can improve.
The problem is that there are many possible KPIs you could measure depending on your goals and even on individual teams. Brand awareness? Customer lifetime value (CLV)? Organic click-through rate? How do you know which KPIs to measure, and what is the best way to do it?
We considered how to measure social media KPIs specifically in another article, but here we’ll look at the bigger picture of choosing the right range of KPIs for your marketing.
What exactly are KPIs?
KPIs track marketing performance in different categories against its key objectives or strategic goals. KPIs don’t exist in isolation, but affect each other in multiple ways. For this reason, it makes sense to assess KPIs in relation to associated measures to get a bigger picture. For example, you could measure website visitors alongside social media followers to spot any correlations.
The insights and benefits provided by KPIs include:
Increased efficiency by identifying specific goals to achieve.
Tracking the success of campaigns, projects and processes
Better decision-making by clarifying paths and destinations.
Aligned goals so that different departments understand the bigger picture.
More informed budgeting based on clear knowledge of what works (and how).
Different kinds of KPI
Not all KPIs are equal, and nor do they measure the same kinds of things. For example, there are organizational or operational KPIs. The first tell you about the structure and function of your company (e.g. how many employees you have), while operational KPIs show how the company does business (e.g how many people bought from the website in July).
There are also two basic KPI functions. Leading KPIs make predictions about the future (e.g. an increase in employees may predict an increase in revenue). Lagging KPIs, meanwhile, look back at accumulated results, for example monthly revenue or social media likes. These lagging indicators can show useful trends.
KPIs also vary according to the stage of your brand’s development. A new brand may be more focused on building an audience or awareness of its products and might have KPIs concerning page views or number of social media followers. A more established brand might be more focused on increasing revenue with specific marketing KPIs around conversions.
Some people use “metrics” and “KPIs” to mean the same thing, but there is an important difference. Metrics are essentially anything that can be measured, while KPIs are defined measures assigned to specific performance areas leading to the brand’s success. For example, revenue is a metric,while return on investment may take revenue into account as part of its KPI.
How to use KPIs
Though better marketing performance is the general reason to use KPIs, it helps to consider exactly what you want to measure and why. Some reasons could be:
Monitor brand health – It’s good to see specific numbers to be sure where you stand.
Measure progress – You need to know how near (or far) away your targets are.
Adjust goals – KPIs will tell you if past marketing goals are still relevant or need updating
Identify problems – A high website bounce rate, for example, could show slow loading times.
Discover patterns – Increases and decreases may become apparent over time, or suddenly appear
How to choose your KPIs
It all starts with knowing your goals. What do you want to achieve? It’s a good idea to choose a small number of goals – for example, 3-5 over a 12-month period. These goals must be also quantifiable. You can’t say, “We want more success!” What is success and how do you measure it?
A specific goal would be to increase website visits by 20% in the coming year. The KPIs in this case might include the sources of web traffic sources, click-through rates on promotions, shares on social platforms, and bounce rates (to see where you are potentially losing customers). If a particular blog post has a high bounce rate, you can assess why.
Effective KPIs tend to be relevant to your particular brand goals. They must also be:
Understandable – You can share relative percentages on social media impression rates, engagement and reach, but what does this actually mean in terms of what to do about it?
Flexible – The numbers should consider both short-term and long-term marketing goals and be capable of change if necessary.
Timely – The only good data is current data. Trends are important, but conditions change daily, weekly and monthly.
Actionable – The metrics are useless if you can’t act on them to make better choices.
Quantitative/qualitative – Aim for a mix of both hard data, for example monthly revenue, and also something like customer feedback for a more balanced picture of the business.
Errors to avoid
Maybe you’ve been monitoring your brand’s KPIs for a long time, but this can lead to complacency if you haven’t considered new and different KPIs. For example, a retailer with physical stores may measure numbers of daily customers in-store, but an increase of social media users could suggest a potential growth area in eCommerce.
Brands sometimes measure the KPIs that are easiest to monitor but which may not offer any actionable insights or feed into long- and short-term strategic goals. They look good on a graph, perhaps, but nobody needs to look at it.
Vanity metrics are also potentially dangerous. You might have great success with clicks or downloads connected to a promotional offer, but those numbers are not useful if they don’t lead to paying customers and the growth of your brand.
Too many KPIs can be worse than not enough. Yes, you can measure absolutely everything happening in your company, but processing this vast amount of data and turning it into a simple, actionable message is a lot of work, potentially without benefits. It’s better to focus on a few key elements.
Stale data is no use to you. Your KPIs need to be regularly monitored so that you always have the most up-to-date data, as well as the longer-term numbers that allow you to spot year-on-year trends.
Taking all of this into account, let’s say your marketing team wants to establish a KPI on growth. You might look at search engine results ranking for a blog and set the KPI as the number of top keyword rankings. That’s great, but do these keywords relate to the overall marketing goals or generate actual leads? Organic traffic might be a better KPI.
Specific marketing KPIs to choose
After you’ve considered the criteria for good marketing KPIs, it’s time to decide which ones are most important for your brand. Here is a quick guide to some you might choose:
General marketing KPIs
Customer lifetime value (CLV): How much revenue a customer generates during their connection with the brand.
Customer acquisition cost (CAC): How much it costs your brand to acquire a new customer (e.g. via ads, calls etc)
Return on investment (ROI): The profit you generate in relation to the costs incurred (for example, the CAC)
Conversion rate: The percentage of leads that turn into paying customers.
Search Engine Optimization (SEO) KPIs
Search traffic: This could include total visits, unique visitors, organic traffic, website visitors, traffic sources, page views per session, top pages, and various other KPIs
Keyword rankings: Your most valuable keywords and phrases over time.
Backlinks: How many other sites link to yours (and how they affect your rankings and traffic).
Domain and page authority: The level of importance search engines give your website’s content.
Bounce rate: When a visitor lands on your website or landing page but immediately leaves.
Social Media KPIs
Likes, comments, and shares: A measure of how much exposure you’re getting.
Follower growth rate: You need a steady stream of new followers to generate new leads and customers. This KPI will measure growth rate over a specific period.
Traffic: A similar measure to SEO, including visits, unique visitors, traffic sources etc.
Conversions: As a result of customers’ interaction with social media
Paid search marketing KPIs
Cost-per-click (CPC): As with CAC, this is an essential measure for calculating your ROI.
Click-through rate (CTR): How many people are responding to your ads by clicking on links.
Quality score: Assigned by ad networks based, for example, on CTR.
Email Marketing KPIs
Signup rate: The percentage of website visitors who sign up to your email list to receive a newsletter, case study, white paper or promotions.
Open rate: How many people on the email list open the messages you send ( a measure of your subject line effectiveness)
Click-through rate: As with paid search, this measures how many people click on the links in your emails.
Bounce rate: How many emails return automatically to you because, for example, the address is wrong.
Unsubscribes: How many people on your list choose not to receive further emails.
Manage your KPI data well
Many brands use Excel spreadsheets to store and track KPI data, but this can create multiple problems with version control and human input errors. The more data there is, the more complex spreadsheets become for storage and presentation of results.
The best solution is to create customizable KPI dashboards that allow you to process results in a clear and actionable way, often automated, for multiple internal or external audiences. The whole point of KPIs is that the data helps by being accurate and understandable.
Bucksense specializes in identifying, gathering and processing KPI data into clear, actionable messages to drive your growth and steer your strategy. We’d be delighted to talk!