From Facebook impressions and Instagram followers to e-newsletter click-through-rates and website bounce rates, marketing is more data-centric than ever. These marketing metrics help business owners determine sales projections, brand awareness and overall profitability.
Metric is a buzzword that is used to tell if that strategy or plan you have executed has achieved its targeted outcomes. Metrics are ordinary units of measurement that focus on user performance. This information can analyze the success or failure of marketing strategies.
What are the best marketing KPIs for your business?
What are marketing KPIs?
KPIs are Key Predictive Indicators because they should be indicative of the future of your business, not your past. They refer to metrics or calculations that are in line with your company’s specific goals.
Marketing KPIs gauge how successful or unsuccessful the marketing plans are in reaching these specific objectives. Targeted KPIs define your company’s next course of action, set the company’s direction and identify what needs to be done in order to achieve the targeted goals.
Which type of marketing KPIs matter most?
The marketing KPIs that your company needs to measure vary depending on the industry. They also take into account specific goals of the company and sub-departments.
Extensive tracking and analysis of marketing KPIs boil down to one, ultimate goal: more profit for the company.
The 4 Pillars of Business Strategy will help determine which KPIs matter most to your business. Each bullet is linked to a YouTube video for further information:
Once you’ve determined which Pillar you need to focus on, develop KPIs that relate to that Pillar. For example, marketing KPIs apply to the Customer Acquisition & Sales Pillar. For KPIs to work, they need to be unambiguous, specific and well-defined.
Most importantly, these indicators have to be communicated well throughout the entire business. Every staff member should clearly understand how the company’s business goals align with marketing objectives, such as:
- Reduction of customer acquisition cost
- Improvement of profit margins
- Improve cash flow
- Amplify customer satisfaction and brand loyalty
As an example, KPIs for the first Pillar (Customer Acquisition & Sales) for a marketing agency might include:
- Net Promoter Score (NPS) → How likely are your clients to refer you to their family and friends?
- Client profitability → Which clients are profitable (or not), and which ones are most profitable?
- Revenue per employee → This is a great indicator of the ROI of your agency’s headcount.
- Lifetime customer value (LCV) → How much is each customer worth, on average, once on-boarded?
- Leads per channel or campaign → Where are your new clients coming from? Where do you want them to come from?
- Bounce rate → An indicator of how much of your content each website visitor is consuming.
How are marketing KPIs developed?
The most qualified people to develop KPIs are members of the executive team.
It’s important to emphasize that KPIs vary for different businesses and they are highly dependent on company objectives. Additionally, these marketing metrics change due to different challenges, demands and opportunities that pop up over time.
When developing marketing KPIs, these questions will guide you through the process:
- What is the desired result? If you have trouble with this question, consider your gut feeling (“I think it should be this …”).
- Why does this particular result matter? Check out industry benchmarks to help put this question into perspective. Data from the industry you operate reveal where your competitors are. It adds context around what “good” looks like. Also, consider historical measures. How have you done previously and has it lead to the desired result?
- Who is responsible for these results?
- What are the steps needed to achieve these results? Take into account vanity metrics or a goal you think would be nice to achieve. For instance, “the first million in sales” or an example 50,000 yearly Quora views.
- How can you influence the results?
Marketing KPIs have to be well-defined and quantifiable — meaning: they can be easily measured. Some common marketing KPIs include:
Cost Per Lead
How much does it cost to acquire a customer through your marketing efforts? This marketing KPI is ideal for the first Pillar of Business Strategy, Customer Acquisition & Sales.
Calculate relevant costs:
- Technology and software
- Marketing distribution
Customer Lifetime Value
When it comes to profitability, it’s often more affordable to keep the customers you have or to achieve a higher financial commitment from current customers than acquiring new customers.
According to Impact, calculate the customer lifetime value with this formula: (Average sale per customer) x (Average number of times a customer buys per year) x (Average retention time in months or years for a typical customer)
Website Traffic to Website Lead Ratio
With more than 4 billion mobile phone users in the world, the website should be a business’ primary sales machine, actively generating qualified leads. This digital marketing KPI refers to the number of web visitors who become leads.
If you have any experience with Google Analytics, the industry standard for measuring website traffic, then you know the amount of data can be overwhelming. At the same time, website traffic tells you the type of people visiting your site and how you can reach them with future marketing. Some metrics to consider include:
- Sessions: A group of interactions one user takes (browsing pages, downloading ebooks, purchasing) within a given timeframe of your website
- Users: The number of people visiting your website
- Page views: A visit to a page on your website. If the visitor reloads the page, this counts as an additional page view.
- Pages per session: The average number of pages people view during a session; more pages per session indicates that users are more engaged
- Average session duration: The total duration of all sessions in seconds divided by the number of sessions. Individual session duration is calculated differently depending on whether there are engagement hits on the last page of a session.
- Bounce rate: A bounce rate is a single-page session on your site. These single-page sessions typically last 0 seconds. A high bounce rate means that users are only viewing one page of your website, instead of hanging around and checking out the rest of your content.
Social Media Reach and Engagement
When developing social media KPIs, think growth. Track the number of followers on Twitter, LinkedIn, Instagram or Facebook. Track engagement (the number of likes, shares or comments to a post) help determine lead conversions
How are marketing KPIs measured?
With marketing KPIs in place, you can readily see which areas of your marketing are the most successful. Identifying and tracking KPIs will allow you to replicate this level of success in other departments. On the flip side, marketing KPIs will show you which areas of marketing need improvement. With this information, you can focus on what really matters for your business — maximizing your earning potential.
Effective marketing KPIs are always specific and measurable. “Increasing sales,” for instance, is too general of a target. If the objectives are too broad, you will have a difficult time measuring them — which adds even more costs to your marketing budget (time is money).
Marketing KPIs often need to be categorized so that they are easily tracked and evaluated — increasing the chances of reaching target objectives. Once a specific and measurable KPI is established, the next step is to develop an attainable timeframe.
Need help developing marketing KPIs that account for your bottom line?
Marketing KPIs are beneficial in fine tuning and enhancing company practices, standards, and procedures in order to achieve higher revenue. Once established, marketing KPIs allow you to follow a trajectory for success.
Many businesses struggle with developing effective marketing KPIs. Enter Chris Hervochon’s Wayfinder, a KPI development process that looks at the whole picture.