In business, in general, one must always start out with the end goal, the objective, in mind.
And that’s not enough. Once this final goal has been established, intermediate stages need to be imagined and identified, those that will mark the pace of the journey, and, above all, those that can constitute the ideal moments to calibrate the trajectory. This applies at every level.
It applies to a company’s overall revenue and turnover goals. It applies if a cost and waste reduction program is being put on track. It applies to any restructuring of dynamics or team. And, of course, it also applies to any individual marketing campaign.
In short, it is a modus operandi that must apply at all stages of a company’s life. On this, there is no doubt or uncertainty.
Having made this clear, however, it’s crucial to pause and reflect on a decisive point: setting a goal or milestones, a path is utterly useless if one is not able to measure results with breadth and precision, to evaluate progress carefully, to keep track of what is working and what’s not. To measure is to know. And knowing is the only possible way to course-correct, or accelerate the pace.
Here, in a nutshell, is the absolute and central importance of the marketing KPIs (Key Performance Indicators) we have decided to focus on in this post.
Marketing KPIs – what they are, what they’re for
Let’s start with some basic definitions: KPIs are metrics and indicators that are used to measure performance as objectively as possible.
In the specific case of marketing departments, measurement can be about return on investment, the effectiveness of campaigns, the ability to attract the attention of new customers, the ability to generate leads or conversions; and then, even more deeply, you can investigate levels of engagement and satisfaction, retention rates, the overall quality of the Customer Experience, and how this data changes when subsets of targets are taken into account.
Let’s get even more specific. To bring the meaning of marketing KPIs into clear focus, we can trace a three-step path. At the base are so-called “indicators“: simple measurements with a shallow level of “depth.” For example, for a video-marketing campaign, an indicator could be the number of people who watched a video, the total duration of those views, the channels where they occurred, and so on.
We’re talking about information with a very wide range, and not calibrated in a context that makes it critical, operational, strictly functional to the goals a company sets with its marketing strategies.
There is then an intermediate step: that of “performance indicators“, which are more specific and circumstantial, and bring us to marketing KPIs.
Key Performance Indicators, finally, constitute the subset of information that is most important and critical to a company’s marketing compartments (or to an individual campaign).
What is the most functional way to establish KPIs?
Let’s make one thing clear right away: there is no universal rule. It all depends on the type of company, the type of campaign, the target audience, and the peculiar goals you set.
However, before providing you with a list of some particularly popular and important types of marketing KPIs, we want to highlight some common characteristics that underlie an effective and intelligent choice.
The best marketing KPIs must therefore be:
- simple
- specific
- attainable
- realistic
- timely
- resilient
Pay attention to this additional element as well: marketing KPIs existed and were set even before the Digital Transformation, of course.
But with the digital shift, the change has not only been in quantitative terms, but also in qualitative terms. It’s not just a question of the breadth and accuracy of the data collected, but also because of the speed with which KPIs change.
For example, a 2021 study by Salesforce (a difficult and, therefore, significant year) showed that as many as 78% of companies changed their metrics from the previous year (source: salesforce.com).
Marketing KPIs – some significant examples
And here we are with a quick roundup of the most important and significant marketing KPIs; it almost goes without saying that this is a very narrow choice:
1) CAC (Customer Acquisition Cost).
CAC is the cost incurred by a company to win a customer. A rather broad and general indicator, but one that is certainly indispensable. It is calculated by dividing marketing and communication investments by the number of customers acquired in a given time interval.
2) CLV (Customer Lifetime Value).
Here, we get into a deeper metric, which should always be considered in close relation to CAC.
CLV, in a nutshell, is the value of a customer to a company over the lifetime of their relationship. We’re talking about a very decisive indicator, because increasing the CLV of one’s existing customer base is the main way to increase turnover and revenue.
Just consider this figure, to get an idea: for a company, it costs 6 to 7 times more to win a new customer than to retain one (source: inc.com).
3) ROI (Return on Investment).
Here, we’re in the realm of one of the most cited and central marketing KPIs. Quite simply, the gain from a given marketing action is related to how much is invested. Please note: the best way to set this metric is through the integration of CAC and CLV.
4) Reach.
After some very broad marketing KPIs, we come to some much more specific indicators. Reach is the audience reached by a marketing campaign. In short, it’s the number of unique people who view a piece of content.
5) Impression.
Here, instead, the number of views of a piece of content is counted, not the number of unique visitors.
6) Bounce rate.
A KPI that is certainly familiar to web marketers (with a focus on SEO) is this one: the bounce rate measures the number of users who abandon a site or page within a few seconds, without taking any action.
Bounce rate is also an important indicator also for email marketing (in this case, we talk about the non-delivery rate).
7) Open rate and click rate.
These are two crucial metrics for the email marketing field. They measure the open rate of a sent newsletter and the rate of clicks made by recipients.
8) CTR, Conversion Rate, LAC.
We have already mentioned the clicks made by the recipients of an email marketing campaign; more generally, the CTR (Click Through Rate) measures the rate of clicks on the total number of impressions of a piece of content. So, this indicator has much in common with the Conversion Rate, which instead gives a measure of the number of users who complete the path to a call to action.
Even more specific is LAC (Lead Acquisition Cost), which focuses on the moment when the visitor becomes a so-called “lead”, and is thus added to the list of contacts.
9) Website analytics.
Again, there are many types of metrics in this area. The most important ones?
Number of visits, the number of unique visitors, the average time of a visit, the average time spent on a page (an indicator that is highly rewarded by search engines). It also includes a whole host of other increasingly specific metrics.
10) Social media KPIs.
The field of social media, as you can guess, is vast. And it’s impossible to summarize all the valuable indicators for social marketing.
Certainly, however, you cannot limit yourself to the number of fans or followers. It’s essential to keep track of the number and type of reactions, comments, and mentions. Engagement Rate aims to keep all of this together, measuring the number of interactions linked to a piece of content in relation to the number of followers on a page.
The AER (Average Engagement Rate), on the other hand, calculates the engagement generated by the entire page, obtaining the average Engagement Rate value among all content.
11) Churn rate.
Clearly this list could go on and on. But let’s conclude with the big bogeyman among marketing KPIs: the churn rate, which measures customer churn.
There’s no better way to keep the bogeyman at bay than to learn how to measure its characteristics and size.
In conclusion – two mistakes to avoid
Rather than ending up in a very cold list, let’s conclude this post by identifying two rather common mistakes to avoid when it comes to identifying the right marketing KPIs.
The first is to always measure only what you have already measured in the past. Today’s market ecosystem is more fluid and unpredictable than ever before. Everything changes rapidly. So, even the “maps” have to adapt and change rapidly. A key KPI today may not be one tomorrow.
The second is, don’t limit yourself to measurement. What emerges from metrics, in fact, becomes completely useless if it’s not communicated within the company in the most effective way. And here comes the issue of so-called data visualization, that is, the best strategies for presenting the raw data in graphical form: a form that helps to read this information, to make it understandable without excessive time and energy. And thus, ultimately, to make this data meaningful.