What is a KPI?
First of all, what is a KPI in marketing? A key performance indicator (KPI), is a measurable value you can use to track how effective your online marketing strategy is.
It’s a specific number tied to the objectives of your marketing strategy, one that can be consistently tracked over time to measure the success (or lack thereof) of many different aspects of your sales and marketing.
Unlike marketing metrics, KPIs track and measure specific aspects of progress in a campaign, whether it’s web traffic, social media or keyword ranking. It can be easy to confuse marketing metrics and KPIs but understanding how they’re different is the key to using them effectively. Simply put, every KPI is a metric, but not every metric is a KPI. KPIs are directly tied to progress, and can be used to make decisions strategically. Metrics are more of the “business as usual” numbers you definitely should be tracking too.
A good example to help clarify is website traffic. The amount of inbound traffic on your page in a month is a marketing metric. The increase, tied to a specific number, in website traffic during a campaign is a marketing KPI.
Why Are KPIs in Marketing Important?
Marketing KPIs matter because they help you define:
- Your goals and objectives.
- Your path to achieving these goals.
- How successfully you achieved your goals
- What you can change next time around to see greater success.
Key performance indicators are integral in creating successful strategic marketing campaigns, and measuring results across time periods.
What exactly you should be tracking depends on your business and your marketing strategy, but some of the most relevant KPIs to track include:
Number of Conversions
A conversion is when a customer or user performs a desired action. In digital marketing there are many options for conversions, including when a user:
- Makes a purchase
- Clicks a link
- Opens an email
- Signs up for a newsletter
- Follows on social media
- Or performs any other desired action that is part of your marketing strategy.
Knowing your conversions is great for understanding overall traffic numbers, but it’s conversion rate where you can really start to measure the success of your digital marketing. Your conversion rate is the number of conversions divided by the total number of visitors to your site. What percentage of visitors are acting the way you want them to? Conversion rate is an excellent way of understanding the user experience or customer journey on your website and social media.
Formula: Conversions/Views = Conversion Rate
Cost per Conversion
Once you have the above key performance indicators you can work on your cost per conversion. How much of your budget are you spending to get the desired conversion? What is the cost per lead and is it worth it? This a key performance indicator to track because, while many of these metrics can seem nebulous or vague, tying your marketing KPIs to a dollar amount is a very clear way to measure the “real world” success of your marketing investment.
Marketing revenue attribution
Similar to cost per conversion, marketing revenue attribution is another KPI that measures your return on marketing investment. Except where the above measures how much you’ve spent, marketing revenue attribution measures how much you bring in.
How much sales revenue has your digital marketing campaign brought in? And how much of your total sales revenue is tied to your content marketing?
More than just the total number of leads you’ve closed, this KPI ties the success of your marketing campaign to your revenue gains.
This one is a simple, but absolutely necessary performance indicator. How many new customers are you bringing in? And if you’ve tracked the above KPIs, you’ll be able to see the rate of success of your marketing efforts.
Customer acquisition cost
Customer acquisition cost calculates the total amount of money spent to gain a new customer. When measuring the cost of customer make sure to include all the costs associated with a lead becoming a customer, including your marketing budget, technology budget, employee salaries, or any other overhead.
Tracking your search ranking on search engine results pages (SERPs) is integral to understanding how visible you are to the public. Perform a Google search on your own business, or any keywords associated with it, and see where you rank.
Tracking web traffic is absolutely necessary for measuring your success. Where is your traffic coming from? Is it organic traffic, referral traffic, social shares? What’s the exit rate or bounce rate on your pages? What are your top landing pages? Landing page conversions? Clickthrough rate? Spending some quality time with Google analytics is well worth the effort in understanding the success of your marketing strategy.
The Most Relevant KPIs for Your Marketing Strategy
Determining which KPIs you as a marketer should be measuring depends on your business and your marketing strategy. But in order to improve your marketing campaign you need a way of measuring your progress. These KPI examples are essential in defining your strategy and will help you to improve your marketing and better measure your success.
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