How much do you know about using and setting KPIs? This blog will explain everything you need to know about KPIs, including the best metrics to track that will see your marketing activities grow and produce actionable results.
What is a KPI?
A Key Performance Indicator or KPI provides targets for teams, a way for a business to gauge its progress and provide insights that allow for better business making decisions through evaluating performance against its set objectives. In short, a KPI is a measure of performance over a given length of time and for a specific objective.
KPIs can be used at a company level, departmental level, and individual level and are always linked to strategic goals. A KPI will indicate if a business is hitting its targets over a defined space of time. When applied to marketing, a KPI focuses on progress and performance is measured with specific projects and campaigns in mind.
How do you set KPIs?
Setting KPIs does not have to be an arduous task. We suggest having a long term KPI and then setting short term KPIs around achieving your goals.
The first thing your KPI needs to be is SMART:
- Specific Keep the KPI clear and concise and make sure it is written in plain English to remove any ambiguity
- Measurable A KPI always needs to have a measurable element, this can be a percentage or a simple number. Measurable can also ensure that you can measure the success of the KPI and provide evidence of this.
- Achievable A KPI needs to be a challenge but also achievable. If it is not achievable, then people will not work hard to achieve the KPI. If it is too simplistic, once the KPI is achieved, people may not continue to push to improve.
- Realistic A great KPI needs to be realistic. Similar to achievable, marketers need to be realistic with their goals
- Time-Bound A KPI needs an end date. For example, if your goal were to achieve a 5% click-through rate on emails, you would want to know by when this needs to be achieved.
Using the above example, for an e-mail marketing campaign, a KPI could be “achieve a click-through rate of 5%, (which is an increase of 1%) by the end of Q3.”
Further to SMART goals, KPIs need to include a numerical or quantitative value. This could be a single number or a percentage to show business growth. KPIs need to be practical in that they integrate with the wider business objectives.
Why are KPIs Important?
KPIs in marketing can help in many ways:
- At a business level, they help businesses to monitor the company’s longevity
- They give you a clear understanding of where you are going (these are linked to your marketing objectives)
- They provide measurable targets to help define how you will achieve your goals
- They help you to evaluate the results. For example, did you achieve your goals? Were the results achievable? What can you do better next time?
- Provide insights and help you to track growth and metrics
- They evaluate processes that are in place which enables businesses to identify where adjustments can be made
- Analyse patterns over time
- KPIs help to keep the businesses goals at the forefront of the minds of your workforce and provide accountability
Three Top Tips for Writing compelling KPIs
- Focus on a few key metrics rather than everything at once. If you have too many KPIs, there could be confusion and the KPIs could inadvertently contradict one another.
- Make sure departmental KPIs align with the wider business values, missions, and overall business KPIs
- Write clearly and concisely so there is no ambiguity
What are some Standard KPIs for Marketers?
While we cannot give you exact KPIs as they will vary from business to business, we can suggest some key metrics for marketers to track. Below are 6 KPIs for you to track:
Customer Acquisition Cost (CAC)
This is how much it costs to convert a lead into a customer. This measurement covers the total spent to gain a customer. You want the cost as low as possible, so you could look at your current CAC and aim to reduce it by a small margin. You need several things to calculate your CAC, including workforce, technology, and general overheads.
The end result of this KPI is that you could find out what areas are beneficial to CAC (for example social media marketing has a higher conversion rate than email marketing), which allows you as a marketer to proportion more spend on the avenues that produce a lower CAC.
Return on Ad Spend (ROAS)
This is more specific than ROI as you can directly attribute ad spend to purchase by tracking traffic from your ad to the website. This efficiency metric allows marketers to see how the ad campaigns are affecting the bottom line of business profits.
While follower growth can be seen as a vanity metric, given that followers do not necessarily equate to sales, it is still a good metric to look at in terms of brand awareness, with the added benefit of a specified target. This is an extremely easy metric to track, and this can apply to social media channels, email marketing and blog followers.
H3: Conversion Rate
This is the number of visitors who completed a desired action. There are many conversions you could track, such as:
- If someone filled out an online form
- A newsletter sign-up
- Purchasing of a product.
This KPI allows you to track your success rate at attracting leads and can show you where you are more successful (online or social media).
Social Media Engagement
There are so many actions to track on social media, from follower growth to likes, shares, mentions, comments and messages. Social media is a fantastic way for businesses to educate and inform their audience as well as give the company a more human feel. Social media channels are extremely impactful in building trust with the audience often offering a unique perspective of the workplace by using employees in the posts. Social media audiences can be their own small communities offering guides and how-to demonstrations.
If you want to assess whether your SEO efforts are paying off, organic traffic is the way to go. You could build KPIs around your search rankings for your web pages, or even backlinks. Google Analytics is a great tool for checking out your daily traffic, what pages they land on, the bounce rate, or even the average session duration
Now that you know all about using and setting marketing KPIs for your business, you are now ready to set realistic, time measured targets, as well as have accountability and begin to see positive changes within your business.