Erica Garcia Thomas, DBA
Measuring marketing success is essential for making data-driven decisions in businesses, nonprofits, and organizations. Key Performance Indicators (KPIs) help align customer and marketing goals with the overall business strategy. Gathering monthly, quarterly, and annual KPIs into a dashboard can provide clarity for stakeholders at various levels of the organization.
When teams have specific growth indicators to draw insight from, informing innovation and change in the broader organization or for a particular marketing campaign can be easier to complete because team members view the same objectives and data sets. For true insight, raw data must be paired with critical thinking and curiosity to spark discussions and ideas for improvement across organizations.
Let’s walk through the process of understanding and choosing your KPIs.
What are KPIs?
KPIs never stand alone in marketing; marketers choose them after understanding a company’s target audience, personas, goals, message, business plan, data, and promotion channels. KPIs are measurable values that indicate how healthy marketing strategies perform.
Are KPIs the same as metrics?
Metrics and Key Performance Indicators (KPIs) are different concepts in marketing, but they are related.
Marketing Metrics are quantitative measurements of various aspects of your efforts. There are many metrics marketers may track or keep a pulse on to see numeric results.
Marketing KPIs are strategic and specific metrics that measure progress toward achieving objectives. They can reveal strategic direction and serve as a source of truth for the company's performance.
In other words, all KPIs are metrics, but not all KPIs will be used for your organization because defined KPIs tie back to wider planning. As business leaders, we choose our KPIs when strategizing and connecting marketing strategies to overall business objectives. - Dr. Erica Garcia Thomas
Metrics track and measure various marketing activities and outcomes, such as website traffic, social media followers, email open rates, and conversion rates. They provide data and insights into the performance of your marketing efforts and help you understand how well you are doing in a particular area.
On the other hand, KPIs are carefully selected metrics aligned with your overall marketing objectives and business goals. They measure the success of your marketing strategies and campaigns in achieving specific outcomes or targets. KPIs are typically tied to strategic goals, such as increasing revenue, improving brand awareness, driving customer loyalty or engagement, or creating new leads for the top of the marketing funnel (TOFU).
The critical difference between metrics and KPIs is their strategic relevance and significance.
Metrics provide data and information on various marketing activities. At the same time, KPIs are specifically chosen to align with your marketing objectives and guide decision-making and performance evaluation. KPIs help marketers focus on the most critical metrics directly linked to their marketing goals. They are typically used to measure progress and make data-driven decisions to optimize marketing strategies.
Choosing the right KPIs
Choosing the right KPIs for your marketing strategy can be overwhelming, with many options available. Having a step-by-step process to help you select the most relevant and practical KPIs for your marketing initiatives is helpful.
1. Marketing Objectives
The first step in choosing the right KPIs is clearly defining your objectives. What do you want to achieve with your marketing efforts? Are you aiming to increase brand awareness, generate leads, drive website traffic, or boost sales? Your marketing objectives will serve as a roadmap for selecting the appropriate KPIs that align with your goals. We recommend writing these goals down and keeping them nearby because as you dig into the details of a strategy, you quickly get distracted from the overall goal you align with.
2. Identify Your Target Audience
Understanding your target audience is crucial in selecting the right KPIs. Who are you trying to reach with your marketing strategies? What are their preferences, behaviors, and needs? By understanding your target audience, you can identify the most relevant KPIs to measure your marketing campaign's success.
3. Align KPIs
Different marketing channels require different KPIs. For example, if you are running a social media campaign, your KPIs may include engagement metrics such as likes, shares, and comments. On the other hand, if you are running an email marketing campaign, your KPIs may consist of open rates, click-through rates, and conversion rates. Ensure that your chosen KPIs align with the specific marketing channels you are utilizing.
4. Make KPIs SMART
SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. Your KPIs should be clear, specific, and measurable to track progress. Make sure your objectives are achievable and realistic considering your resources (this is huge in nonprofit work!), relevant to your marketing objectives and time-bound with a set deadline. SMART KPIs provide a framework for effectively measuring and evaluating your marketing performance. HubSpot offers a template for setting SMART goals that we recommend for a better understanding of the SMART concept.
5. Leading and Lagging Indicators
Leading indicators are KPIs that provide insights into future performance while lagging indicators measure past performance. Both indicators are essential to assess the effectiveness of your marketing strategies. For example, website traffic (leading indicator) can provide insights into the potential success of a marketing campaign, while conversion rate (lagging indicator) can measure the actual outcome of the campaign. Balancing leading and lagging indicators is vital for a holistic view of your marketing performance.
6. Keep it Simple
While it may be tempting to track hundreds of KPIs, it's essential to keep it simple and focus on the most relevant ones. Following too many KPIs can lead to confusion and feeling overwhelmed. Identify the KPIs that align with your marketing objectives and provide meaningful insights. You can start with overall revenue and return on investment, customer acquisition, ROAS, lead conversions (MQL and SQL), cost per lead, content marketing ROI, growth over time, etc.
7. Review and Adjust
Once you have selected your KPIs, it's essential to review and adjust them as routinely needed (We recommend every six months to a year). Marketing strategies and goals may change over time, and it's crucial to ensure that your KPIs remain relevant and aligned with your current objectives. Regular reviews and adjustments allow you to stay agile and make data-driven decisions.
Selecting the right KPIs for your strategy is critical in measuring your marketing performance and achieving your business goals.
Like a compass guiding a ship through uncharted waters, selecting the right KPIs steers your marketing strategy toward success, navigating the currents of data, objectives, and audience dynamics.
The best Key Performance Indicators (KPIs) for digital marketing can vary depending on your specific marketing objectives, target audience, and marketing channels. A good starting place is to collect metrics on your product, price, location, and promotion (the four P’s of marketing). We recommend viewing metrics in multiple timeframes and perspectives.
Remember to explore various time segments too! What looks impressive in a single month may look different when you compare the entire quarter. Reviewing quarter over quarter and year over year will show you a long-term view of the numbers.
Examples of choosing KPIs
Choosing KPIs for a business can be complex, considering factors like revenue models, strategy, team goals, and resources. First, I look at revenue streams and ways to increase returns or save time. A good marketing team has a great leader, a positive culture, clear objectives, and KPIs to track progress and accountability. Picking specific KPIs for a quarter in time (Q1, Q2, Q3, Q4) is unique to each team leader and their business objectives. We invite you to contact us to see our beginner list of KPIs to get your brainstorming going, but remember, ultimately, choosing the right KPIs is up to you, and you can do it! We're cheering you on.
What are examples of KPIs specific to marketing?
Website Traffic: This KPI measures the number of visitors to your website. It can provide insights into the effectiveness of your digital marketing efforts in driving traffic to your website. We like to look at past performance and make a stretch goal for monthly and quarterly traffic growth. Remember to look at unique site visitors, too. Once you find out where people are coming from (traffic sources), you’ll want to invest in where they spend time on your site and where you need to optimize further. Google Analytics is an exceptional tool for understanding website traffic.
Conversion Rate: This KPI measures the percentage of website visitors who take a desired action, such as purchasing, filling out a form, or subscribing to a newsletter. It indicates the effectiveness of your website in converting visitors into customers or leads. Your marketing funnel will have macro and micro conversions that you can calculate.
Click-through Rate (CTR): This KPI measures the percentage of people who clicked on a specific link or ad out of the total number of people who saw it. It's commonly used in email marketing, display advertising, and pay-per-click (PPC) campaigns to evaluate the effectiveness of your ads or email campaigns in generating clicks.
Cost per Acquisition (CPA): This KPI measures the cost of acquiring a new customer or lead. It's calculated by dividing the total cost of your marketing efforts by the number of customers or leads developed. It helps you assess the efficiency of your marketing campaigns in terms of cost-effectiveness.
Return on Ad Spend (ROAS): This KPI measures the revenue generated from your advertising efforts compared to their cost. It's commonly used in paid advertising campaigns to evaluate the profitability and effectiveness of your ad campaigns.
Social Media Engagement: This KPI measures the level of engagement (likes, comments, shares, etc.) your content receives on social media platforms. It helps you evaluate the effectiveness of your social media efforts in building brand awareness, engaging with your audience, and driving social interactions. You don’t need to be on every social media channel, but you do need to be on the channels your target audience is handing out.
Email Open Rate: This KPI measures the percentage of people who opened your emails out of the total number of emails sent. It's commonly used in email marketing to assess the effectiveness of your email subject lines, content, and targeting.
Customer Lifetime Value (CLTV): This KPI measures the predicted revenue a customer will generate throughout their relationship with your business. It helps you assess your customers' long-term value and the effectiveness of your customer retention strategies.
Website Engagement Metrics: This includes metrics such as time on site, bounce rate, and pages per session that provide insights into how engaged visitors are on your website. These metrics help you assess the effectiveness of your website in retaining visitors and providing a positive user experience.
Brand Mentions and Sentiment: This KPI measures the number of times your brand is mentioned online, positively or negatively. It helps you evaluate brand sentiment, reputation, and overall brand awareness in the digital space.
Remember, the most effective KPIs for your digital marketing efforts will depend on your specific goals, target audience, and marketing channels.
Informed business decisions involve clear values, transparency across the organization, a thriving culture, and the right key performance indicators (KPIs) with winning growth strategies and shared accountability for success. -Dr. Erica Garcia Thomas
It's vital to select KPIs that align with your marketing objectives, ensure they are measurable, and provide meaningful insights to guide your decision-making and optimize your digital marketing strategies and budgets.
When planning your KPIs, consider a mix of prescriptive and predictive analytics. Every company, initiative, and cause may have custom KPIs designated for success, so choosing the right ones is vital to your strategic success and data-driven plan. Contact us to provide more guidance on your KPIs.