Key Performance Indicators or "KPIs" form an important part of the data that companies need to explain how they're progressing towards their marketing and business goals. However, many people today feel unsure about what a KPI might be in the marketing world.
In basic terms, a key performance indicator is simply a measurable component that can be used to demonstrate the efficiency with which a company achieves their business objectives. Organizations use KPIs in their marketing campaigns to determine whether they're spending their budget in the right areas.
Whether your performance improvement goals are related to inbound marketing, sales, or any aspect of business for that matter, choosing the proper key performance indicators (KPIs) to focus on is the first step towards measurable improvement.
As they say, what gets measured gets improved. If you can quantify your current performance you can then begin to measure how things are improving, or diminishing, over a period of time.
But how do you choose the right KPIs to focus on for your business? Below are a number of things to take into consideration:
KEYS TO A HEALTHY COLLECTION OF KPIS
You won’t just be choosing one KPI to determine a strategy as a success or failure. Quality over quantity though. Choose metrics and KPIs that are clearly attached to a written out objective or target. You want objective data and ideally, a forecast for what you expect the data to be as well as where you want the numbers to go in the future.
Link every KPI you choose to an action. For example, revenues as a KPI is tied to the action of a sale. If a KPI’s focused on page visits, the action is then to provoke a customer click on a page whether that click’s coming through social media, email, SEO, or elsewhere. Alongside action-oriented KPIs, stick with a regular schedule of reports and reviews.
FOCUS ON GOOD BUSINESS, NOT WEBSITE TRAFFIC
As entrepreneurs, we like to know we’re doing good. We want our strategies to work. Unfortunately, this oftentimes leans to some looking at KPIs targeting upwards in an effort to find the good in the bad. This is completely the wrong approach.
The correct approach with KPIs is to focus on what actually matters – customers and healthy business. If you’re excited about website traffic numbers, page views, or visitor rates, if this isn’t achieving concrete sales or revenues, or are hitting on an objective directly, they count for nothing.
ELIMINATE VANITY METRICS
Vanity KPIs are those which don’t tell you a lot about the achievement of your objectives. As mentioned, page views and impressions are vanity. Even though we want those numbers up, rightfully so, they shouldn’t be at the center of a campaign.
You don’t keep yourself in business through page views – you do it through sales. Conversions aren’t vanity KPIs. Look at sales. When they get low, you can then dig into other KPIs or data measurements to find out why. You may see a problem on your website, in your link, in emails,or in your social media, or elsewhere.
CONVERSION RATES CAN DIFFER
Some digital marketing campaigns have conversion rates which aren’t focused on sales or revenues, but rather maybe they want to increase followers on social media, up their email subscriber list, or increase visibility on their website. Before you dig into your KPIs, know what your conversion is going to be. It can virtually be anything, from clicks on a page to a sign-up or like. How are you framing campaigns – you can have multiple conversion rates, of course. Know everything you’re chasing by identifying conversions.
KPI HELP TO BETTER UNDERSTAND CUSTOMERS
You may think you know your customers but, do you really – check your KPIs and analytics. Throughout the data you collect, you can oftentimes tell where traffic is coming from, what marketing channels are working, where you’re losing customers, and you can find out what they’re doing or not doing. Just like we’ve mentioned, the more information you have, opportunities suddenly may present an effort to monitor short-term and long-term performance.
Do not wait until the end of the campaign to check your KPIs. Check them routinely throughout. This gives you the chance to make a change or make informed decisions on a strategy while you still can. There are short-term goals and long-term goals
to achieve, in an average digital campaign. Key performance indicators allows you to adjust targets and achieve targets in intelligent form, with strategies that are well-funded.
CHOOSE MORE THAN ‘REVENUES’
KPIs aren’t just about going straight to revenues or sales, either. Whether you’re generating massive sales or they’re way low, do you know why your revenues are the way they are – you should.
KPIs and data analytics in digital marketing give a lot of insight into customer behaviour and revenues
. Use these numbers. You may find opportunities to lower cost of customer acquisition, increase customer retention rates or re-purchasing, increase average customer sale value, and more. Those opportunities do exist, even if your website’s doing absurdly well! Where you find opportunities like this all starts with getting into all the numbers on KPIs and analytics.
WHERE TO INVEST YOUR MONEY WITH KPIS
The simple guide to smart spending in digital marketing
is to spend on channels with the highest ROI. It’s a big mistake to channel strategies that focus on channels that aren’t going to satisfy objectives. Sometimes, it takes KPIs to know what channels are working and which aren’t.
There’s also something to be said for the mutual support between channels in guiding a sale. A consumer passing through your sales funnel may touch upon 2 channels or more. This presents an argument that one may want to be careful about where they’re cutting funding. Subsequently, you’ll want to pay close attention to your metrics, ensuring you’re not cutting down a channel, or approach that could be supported despite being an under-performing channel.
The best idea wins the day – that’s the democratic way, essentially, and KPIs produce numbers you can’t argue with. After choosing your KPIs, recognize they’re objectives in measuring
a strategy’s success. Until a campaign’s launched, all the arguments in the world can be had around what’s right and wrong. The numbers will tell you straight what works or doesn’t.
Let’s say, for example, you’ve launched a campaign and it isn’t working. Don’t be prideful in continuing on a path that’s only going to lead to your disappointment. If your KPIs are communicating what you’ve planned isn’t working, maneuver and pivot to something new. Regardless of what your brand is, what you’re selling, and what the objective is, chances are, there’s a way to make it work. KPIs are your guide. Use them regularly and follow the numbers.
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