What makes your company’s marketing strategies successful? How can you measure the performance of your business’ marketing activities? Are your marketing strategies effectively growing your business? Do you understand the reasons why your company is or is not doing well against its competitors? Understanding what is and what isn’t working in your marketing efforts is revealed in your marketing’s Key Performance Indicators (KPIs). Achieving your KPIs should be an imperative part of your business’ growth strategy. KPIs are a crucial part of all business-making decisions and are key to tracking your marketing efforts to see how well your strategy serving your business objectives.
To get started, technology tools offer marketers a range of options to help track their progress towards these metrics. While businesses have more access to data than ever before, understanding what information matters most to your business can be difficult. Marketers need to create a robust KPI strategy that helps them pinpoint what is helping their company succeed and what is holding it back.
Set your KPIs
The most instinctive way to measure your marketing is through your Return on Investment (ROI). This involves tracking metrics that feed into your revenues and profits. Depending on your business goals, some metrics might be more important than the financial returns. However, if you are looking to produce bottom line results for clients, your marketing strategy will need to make a profit. This will shape the key metrics that you focus on.
Trackable metrics can fall into two categories:
Vanity KPIs
These are quantitative metrics such as the number of followers, visitors, subscribers, impressions, and likes. Vanity KPIs are numbers and statistics that may look good on paper, but in reality don’t usually translate into tangible results that can improve your business and sales.
Actionable KPIs
Even if you have high figures for impressions, reach, followers, and likes, this does not necessarily equate to quality. The metrics you should be looking for are actionable. This means that they lead towards a decision and help increase your ROI. For example, cart transactions, referral traffic, and conversion rates are highly actionable and generate results.
The main KPIs can be grouped into four categories:
Recommended KPIs to track
There are a whole host of different metrics you can track, but when it comes to generating a return on your investment, your metrics need to feed into the decision-making process. Here are a few recommended KPIs you should be focusing on:
Customer Lifetime Value (CLV): The average sales amount for each acquired customer over a month, a quarter, a year, three years, five years, or even longer. The timeframe depends on your product or service.
Cost Per Lead (CPL): How many enquiries are generated versus the cost of your campaign. For example, if you spend $3000/month, and in that month, you receive 20 enquiries through an AdWords campaign, then $3000/20 = $150/lead
Cost Per Acquisition (CPA): Out of all leads generated, the CPA is the percentage that made a purchase. This metric tells you how much it costs for you to acquire a sale.
Website Engagement: Tracking and measuring your website engagement is an important contributor to improving your ROI. If your website is optimized for the best user experience, then it will drive people to convert or act on your page.
The total number of visits
The No. of Unique Visitors versus the No. of Returning Visitors: This helps you identify if a campaign is generating new opportunities and gaining reach. It also tells you about the relevance of your information.
Time Spent on Site and Pages: This helps you identify user experience journeys and issues. It can also help you identify if your campaigns are targeting the right audience. For example, if people spend very little time on your page, you might have to refine your ads to re-target a different audience who might be more relevant to your brand and product.
Bounce Rate: This is the percentage of people who visit one page on your site and leave. For example, if you have a very high bounce rate, your page might not be getting quality traffic and you may want to investigate your SEO optimization.
Traffic Sources: Understanding where your traffic is coming from is key to optimizing your digital strategy to reap the best returns and generate quality leads. You can find visitors from several sources:
Organic: Visitors that discovery you by searching a specific set of keywords
Direct: Visitors that directly type your URL into their browser
Referral: Visitors that have clicked your URL from another website
Social Media: Visitors that come through your social media channels
Mobile Device Tracking: Everyone today has a smartphone. This means knowing your mobile metrics can mean the difference between a positive ROI and losing money on your campaign. Consider these four things when tracking your mobile metrics:
What percentage of your traffic is mobile?
Which devices and browsers do they use?
Where are your visitors coming from?
What kind of content are your visitors looking at on your page?
Best practices for a strong Digital Marketing ROI
After gathering the data on your results, how can you package it to your clients, investors, or boss to show them the value you have generated from your marketing strategy?
Connect performance data with your business results
Your marketing value to an organization should not be based on vanity metrics such as the number of Facebook likes. To show that you have generated value, you must link the data and analytics you’ve gathered with the business outcomes they have contributed to. These results could include increasing revenue via customer acquisition and growth.
Goals are different to KPIs
Goals are the outcomes you want to achieve, which are your overall business objectives. For example, your organization’s goal could be to grow your revenue and expand your business. On the other hand, KPIs are the key metrics you track to gauge your progress towards that goal.
To illustrate, if you want to increase your following over the course of a year to 40,000 subscribers, your goal would be to reach 40,000. To reach this, you might run a campaign to help you gain 4,000 new subscribers. Your KPI would be the number of subscribers you progressively gain through campaigns to help you reach your end objective.
Leading versus lagging metrics
Lagging metrics: These metrics come after the marketing campaign is completed. They are long-term results and could include metrics such as revenue garnered by marketing activities, closed business, lead volume, and lead conversions.
Leading metrics: These metrics help to predict a business outcome and are usually more difficult to measure than lagging metrics. Leading metrics are considered your business drivers, as they serve as a marker of progress towards your KPIs. They can include website traffic, social media engagement, or key form conversions. These metrics should be optimized regularly to help you reach your goals.
Persuade your stakeholders which metrics have the most value
Convincing your marketing organization to become more revenue-driven may require a shift in marketing culture and could warrant a top-down change. While vanity metrics are easy to collect and are readily available, it can be hard to convince your team to switch to actionable KPIs. However, in the long run, securing future marketing budgets from your CEO, CFO, and leadership will be much easier once they understand how their investments translates into profit. Work to highlight your digital marketing ROI metrics to reflect your organization the value your marketing team is contributing to the overall business.
To learn more about what key metrics you should be focusing on, get in touch with our marketing experts at [email]
