Achieving your business goals is faster and easier if you formulate them properly. In marketing, a clear commentary on key indicators - KPIs - helps to refine the strategy and use only those tools that really bring results.
In the article, we suggest what to pay attention to when setting marketing KPIs, present the main indicators and their formulas, and share three mistakes that should be avoided.
KPIs (Key Performance Indicators) are efficiency and effectiveness indicators that help the company implement its promotional strategy. Using KPIs, marketers analyze data, adjust plans and ongoing marketing activities, and decide how to improve their marketing strategy.
Without properly selected KPIs, all that remains is raw data without context - but for marketers it is important not only to obtain information, but also to properly analyze and use it to strengthen the brand and create a pool of new insights for product development.
KPIs help companies and departments:
- Adaptation of the marking strategy,
- Assessment of work results and the degree of achievement of goals,
- Analysis of the effectiveness of advertising channels,
- Forecasting marketing budgets,
- Finding bottlenecks and problematic processes,
- Setting the correct priorities,
- Increasing employee motivation.
What are KPIs in marketing?
Strategic
Metrics relevant to the company as a whole - for example, to assess the company's profitability or market share.
Analytical
It allows you to assess the company's development and compare indicators over periods. This may be sales volume, revenue or receivable volume.
Operating
They help monitor key indicators in real time, respond to changes and prevent deviations from the norm. For example, weekly sales, daily website traffic, or click-through rate for contextual ads.
How to set KPIs
Using KPIs, you can correct plans and current activities. The team will be able to analyze the collected data and make the most effective decisions based on it. But before you choose key indicators and set goals, ask yourself:
— What exactly do you want to achieve?
— How will you determine that you have achieved your goal?
— Is your goal really achievable?
— Does the goal correspond to the overall direction of the business?
— When do you plan to achieve your goal and what are the key stages?
— How will tracking this metric benefit the marketing team and the company as a whole?
— Will monitoring this metric increase or decrease the effectiveness of future campaigns?
— Will you be able to calculate the ROMI of the campaign and will it allow you to get more funds?
— Will this data help develop and improve marketing strategies?
You can use this step-by-step plan to break down the process of setting key metrics into steps and simplify the task:
1. Select key indicators and collect them in one table
To do this, review your company's strategic goals, write down the goal, determine what data you need to achieve that goal, and select the appropriate metrics.
2. Identify problem areas
It may be low conversion, a high number of rejections or a high cost of acquiring one customer.
3. Create specific tasks with a limited deadline
State the problem clearly to help develop a solution plan. For example, “reduce failure rate to 20% within six months.”
4. Make a list of the stages of each task and assign contractors
For example, to reduce the cost of acquiring one customer, you need to evaluate your current advertising channels, eliminate ineffective and expensive ones, and direct the freed up resources and efforts towards what will really bring results.
5. Measure and adjust as tasks are completed
8 key indicators in marketing
ROMI (return on marketing investment)
Return on Investment ROI shows profitability and cost recovery. If the ROMI is positive, the marketing campaign has paid off and delivered more than the investment.
This metric tells you where to allocate your marketing budget to achieve better results and helps you track which strategies have been most profitable in the past.
CAC (customer acquisition cost)
It takes into account all costs of acquiring a new customer. This includes all the costs you incur in converting a prospect into a buyer - from traffic channel costs to general company expenses such as salaries and software and application fees.
When calculating, select numbers for a specific period of time - a month, quarter or year. The CAC score will help you more effectively allocate your marketing budget to specific areas in future campaigns and set deadlines and expectations more accurately.
LCR (Lead Close Rate)
It helps you see how your sales pipeline is performing, which marketing campaigns have the highest ROI, and understand what percentage of leads are converting into actual customers.
Track the average conversion rate for each marketing channel to determine which one attracts the most targeted customers. LCR will also help you decide which marketing activities to prioritize and which to reconsider to improve your conversion rates in the future.
LTV (lifetime value)
The indicator shows how much the company can earn from the customer during his cooperation with the brand. Understanding LTV helps reduce product churn, improve service quality, and create a reasonable startup budget to attract new audiences.
This calculation will show you the average based on your data. To improve customer retention and brand promotion, LTV can be considered in conjunction with other numbers such as demographics and geography.
CTR (click-through rate)
A rate that shows how often people click on your ad or freely post product information after viewing it. The CTR value can tell you how effective your keywords and ads are.
CTR rates vary slightly depending on the advertising channel. For example, ads displayed in the Google search engine based on a user's query have a higher CTR than other tools. A good CTR of contextual advertising in a search engine is considered to be 5-10%.
Bounce rate
A rate that reflects the number of website visitors who leave the site shortly after opening it and take no action.
PPV (pages per visit)
The number of pages an average user views in one visit. Using this indicator, you can measure user interest in the content on your pages. The more interesting the content, the more time the reader will spend on it and go from one page to another.
If your PPV is low, it may indicate navigation or site performance issues, optimization, or unclear content.
There is no formula for this metric - the data can be viewed in any statistics tool you use on your site.
CR (conversion rate)
Conversion rate is the percentage of the total number of visitors who completed a target action. This may be submitting a form, application, ordering a call back, making a purchase or adding a product to the cart. The metric shows the percentage of targeted traffic received through targeted activities and shows the effectiveness of the promotion channel and traffic source.
Typical mistakes when setting KPIs
Wrong choice of metrics
Don't focus on all the data that seems important to you. It is better to use only those that facilitate data analysis and reporting.
Unclear wording
“Increase sales” and “reduce advertising costs” sound too vague. A good KPI is a clear and specific goal, with details and numbers written down. For example: "Increase new website visitors by 15% in six months."
Employee involvement only at the stage of implementing metrics
If you plan to create a new pool of key indicators, it is better to introduce the team gradually. This will make it easier for employees to understand their role in implementing these KPIs, and their motivation and proactiveness in achieving these metrics will increase.
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