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Have you any idea what makes your company’s marketing efforts a success? Clues why your company is not performing? Why is your company doing well? Why is it not doing well?
Well, if you are not monitoring your marketing efforts, there is no way you will know if they are working or not, and that is where Key Performance Indicators, or KPIs, come into play! Using KPIs you can track and measure metrics that matter for your business growth.
Before digital marketing was introduced, a business could establish how a typical campaign was faring based on the number of new customers acquired and store visitors. However, the results rarely presented a precise calculation. But with the right KPIs, you determine your weak points and perform the much-needed improvements in your strategies for better results.
That said, here are a few things to know first before choosing and tracking your digital marketing KPI.
What is Digital Marketing KPIs?
KPIs are metrics or quantifiable measures used to assess the performance of a business’s marketing objectives. These metrics can be related to various aspects of your business ranging from sales to employee performance.
Digital marketing KPIs go hand in hand with your company’s digital marketing strategies regardless of whether it is lead generation, sales growth, brand awareness, or SEO strategy. Examples of these metrics include data on engagement rate, conversion rate, total revenue, sales revenue, website traffic, page conversion, SERP, and marketing qualified leads (MQL), among others. Any measurable value in your marketing strategy, one that is also actionable, constitutes a KPI.
KPIs come from Google Ads, Google Analytics, social media, and lead conversion tool, or even from your sales team.
Why Track Your Business’s KPIs?
In a marketing campaign, tracking your KPIs is the only way to know what is working and what is not. For example, if you make a profit from a particular campaign, but you cannot tell what generated that profit, that is, from which part of your strategy, then you will never know where you need to improve and where you should invest more. Your website traffic, for instance, could be driving all your qualified leads and your marketing team is busy dumping cash on unnecessary channels.
Thankfully, with today’s technology, you can track almost everything. Platforms such as Google Analytics and a ton of other third-party tools can help you determine the exact source of your revenue and or where your customers come from, your cost per lead, and how much acquiring a customer cost. They also enable you to know the marketing efforts that work best for your business. And with this knowledge, you can discard the marketing strategies that do not bring any value to your business and focus on the profitable ones.
How Do You Choose the Right KPIs to Track?
KPIs are not universal for every type of business. There is no one size fits all and the metrics that work for you will not necessarily work for another type of campaign or company. They are largely dependent on the set goals and as such, you need to look at your objectives and work from there. For example, if your lead tracking is done entirely through social media or newsletters, there is no need for face-to-face or phone call KPI monitoring.
However, keep in mind that regardless of the metrics you are looking to track, make sure that they meet the SMART criteria. That is, they must be:
- Specific
- Measurable
- Achievable
- Relevant
- Timely
In a nutshell, the KPIs you monitor should provide a specific result that you, as a marketer, can measure, identify when it is achieved, is relevant to your objectives, has a deadline or a timeframe applied to it.
Should You Track Everything?
While it is easy to track most KPIs using your website traffic, third-party metrics, or organic search, to name a few, it is also possible to track things that do not bring value to your business wasting your valuable time and resources.
Therefore, when choosing which KPIs to track, first determine the value it is going to give you. Will it give you any useful insights that will help your business improve? If it is something that you cannot act on or affect, then it is a vanity metric and is not worth monitoring.
For example, tracking Facebook likes or retweets and engagement on Twitter when you are not currently doing any social media campaign with a focus on getting more followers or increasing engagement is unnecessary. It is not an effective KPI.
The Most Important Digital Marketing KPIs
As already mentioned, the KPIs you should be monitoring largely depend on the nature of your business – your goals and the channels you are targeting. However, several KPIs apply to many companies. The most important ones are discussed below.
1. Unique Website Visitors
Having a website is the most important aspect of digital marketing, and the unique website visitors are a valuable metric that determines whether you will generate revenue or not. Unique website visitors refer to the number of distinct individuals that visit a page or multiple pages on your website each time.
Unique visitors as a metric help you know the actual size of your audience. Also, if a user visits your website three times a day, and you have an ad on the website, it means that he or she will see the ad three times, and this is particularly ideal for companies that sell ad impressions.
Consequently, unique website visitors also help you understand your customer’s behaviour. For example, if a user keeps coming back to your website, it means the content on your web pages is relevant to them. If they do not come back, it means something is lacking, and this gives you a chance to rethink your strategies to provide them with useful content that captures their interest and translate that into future customers.
2. Cost Per Lead [CPL]
CPL is a marketing metric used in lead generation to determine how much each lead costs your business. Simply put, it tells you the cost of bringing in a lead from your marketing efforts. Leads help you know which user or contact is a potential customer. It is usually the first step into establishing how your digital marketing is performing beyond simple reach from easy metrics such as the unique website visitors.
Cost per lead helps you fathom where your awareness efforts in marketing are most important. They inform you whether your campaigns are cost-effective or not in generating leads. They guide you on how much budget you require to acquire a specific set of leads for your business. Since leads are the starting point of your business’s sales, benchmarking and improving your cost per lead is a significant metric for improving your overall marketing efforts.
3. Conversion Rate [CR]
In marketing, a conversion occurs when a customer completes a specific activity such as subscribing to your newsletter or buying your product. It can also be any action that meets a goal your business has. Conversion Rate, on the other hand, is a measure of how frequently a customer completes a certain set goal.
Conversion rate is an important metric that tells you if your marketing efforts are on track. They inform you of how effective your strategies are in terms of achieving the set goal. A higher Conversion Rate means more likelihood of people converting after seeing or encountering a piece of your content.
A higher CR also means reduced costs in terms of customer acquisition, which is a great way of saving you money. Consequently, the more the conversion, the better your website gets in Google rankings. Thus, if you want to make a big difference on your bottom line, make small but worthy changes to your website. Use Google Optimize with Google Analytics to test the different elements of your website to boost your revenue without necessarily inflating your costs.
4. Lifetime Value [LTV]
Lifetime Value (or Customer Lifetime Value) refers to a metric used to measure the total amount of revenue you can expect from a particular customer for the entire period of their doing business with you.
A higher LTV is an indication that your business is doing good. It often signals a profit, and it guides you on how valuable different customers are to your business, which in turn helps you know where to allocate more resources. For example, you can determine the LTV of customers acquired through email or campaign ads and thereafter decide on the budget allocation for different marketing strategies.
5. Return on Investment [ROI]
ROI refers to the amount of profit your business will earn from the amount of money spent on a particular investment or activity such as a marketing campaign. As a digital marketing metric, ROI helps you understand whether your business is profitable or not. It shows the activities – as well as the expenditure connected with them – that are creating profits and those that are not.
It is, therefore, a useful tool for planning marketing budgets. And while it is impossible to capture the total amount spent on marketing activity, say an ad campaign, it is important to utilize a consistent measure to ensure that your ROI is comparable across the other digital marketing activities.
6. Cost Per Thousand [CPM]
Cost Per Thousand is used to measure the amount of money spent on each set of a thousand impressions. In other words, CPM is the cost per 1,000 views of a particular ad and is registered every time a customer clicks on the ad and loads it from a web page. CPM is different from pay-per-performance-based models where you pay depending on a specific activity such as clicks or sign-ups. With CPM, you are only paying for advertisement space. How the ad performs does not affect the cost, and, therefore, it is a good metric to use for ad campaigns.
CPM is an important tool that helps you determine the cost-effectiveness of different marketing strategies where the goal is to reach as many people as possible. One with the lowest value is the most efficient because it will only cost your business a few bucks to reach 1,000 customers.
7. Click-Through Rate [CTR]
Click-Through Rate is another digital marketing metric that measures the number of clicks a particular content receives over the number of impressions it has. Simply defined, it is the percentage of users that click on a campaign after seeing it.
CTR is usually the simplest form of engagement rate since the only engagement being counted is one that matters the most, and that is clicks on a link. This metric tells you whether your website’s content is interesting enough to garner people’s attention and leading to them clicking on the link and being redirected to the website.
In Google Ads, CTR increases your Quality Score every time a user clicks on an ad, and when this happens, your ads are ranked at the top, which has other benefits such as more conversions and increased traffic.
8. Bounce Rate
Bounce rate, in a nutshell, refers to the number of people who visit your website and exit it right away without carrying out any meaningful action. If the bounce rate on your website is high, it is an indication that there are flaws in your digital marketing strategies and it could be poor targeting, irrelevant traffic sources, weak landing pages, among others.
A user visiting and leaving your website also means they did not find what they were looking for, and the best way to ensure they spend some time on it is by analyzing your content and establishing what they are searching for. This way, you will create relevant content that will attract them.
9. Cost Per Acquisition (CPA)
Cost per acquisition (CPA) is almost all about revenue. It is a data analytic metric that kicks in once a contact becomes a paying customer. CPA gives you an idea of how much you will spend to get a customer to open his wallet.
Compared to the cost per click (CPC) metric, CPA is way more vital to ignore. CPC is ideal for paid campaigns, but what do you do when your CTRs in your pay-per-click campaign are up from the previous campaigns, but your CPC is low? Then when you track your revenue, you realize that you have only acquired five or six paying customers.
This means that your whole marketing spends on that channel added almost nothing to your bottom line. Your campaign metrics will look amazing, but your CPA will remain astronomical. As such, always measure the cost of acquisition to keep the big picture in focus.
10. Customer Retention
Customer retention refers to the ability of a business to retain customers. As a metric, higher customer retention tells you that the value they are getting is greater than what they can find anywhere else. In short, it means they are highly satisfied.
This metric is significant as it measures the value communicated and delivered throughout your business. When you keep a customer, you will achieve a higher CLV, and when this happens, the value of the acquired customer is increased allowing you to spend more to find that one customer that is right for your business.
Shifting your focus to customer retention is an efficient way of digital marketing since you are selling to customers who have already expressed an interest in your product or service. These customers have already engaged with your brand, making it easy to capitalize on their experiences with your business.
That said, those are not the only KPIs your business should be tracking. Depending on where your business is on the digital marketing spectrum, you may or may not want to include these metrics in your analytics but doing so will guide you on where you need to invest more, better understand the strategies that are effective or not, and more efficient channels. Of course, there is a litany of other KPIs including social media engagement, organic search, quality score, among others, that you can include based on the nature of your marketing objectives. Nonetheless, all these metrics help you make rapid adjustments that guarantee a steady stream of leads and valuable customers.