Are You Setting Your Marketing KPIs?
We came across this handy article by BI company Domo, “The 5 KPIs Every Marketer Should Be Looking At.”
As a huge proponent of data-driven marketing, MindEcology wholeheartedly supports the idea of setting key performance indicators, or KPIs, for every marketing initiative. We are echoing the article’s 5 KPIs here, while elaborating on each and giving you some tips on how to implement them:
1. Return on Marketing Investment
A marketing campaign’s ROI is essentially measuring the amount of money collected above and beyond recovering the investment that you made in the campaign. It is expressed as a percentage figure. A negative ROI means you actually collected less money than you spent. Obviously, a positive ROI is always the goal.
ROI is ultimately the most important KPI. However, it is not something you manage to directly. Rather, it is something you set and plan meticulously for at the outset of a campaign. Then, you use other management “levers” to hopefully attain or exceed.
2. End Action Rate
At MindEcology, we refer to this as a conversion rate. Some companies use the term conversion to refer specifically to a purchase. We call a purchase a hard conversion, while any other conversion action – such as filling out a web form, downloading a PDF, watching a video, or signing up for a newsletter – is referred to as a soft conversion. The minimum goal of any website initiative should be to drive soft conversions – if not hard conversions. This is an essential KPI for day-to-day campaign management because it allows you to see conversion rate changes based upon different actions you take in your marketing campaigns.
3. Social Engagement by Channel
This metric refers to the channel whereby most members of your audience engage with you. This could include your website, Facebook, LinkedIn, Twitter, or other media. This is important because it is essential to know where you are being seen and heard. High-engagement channels represent rich soil for you to cultivate more fans – and customers. This KPI is less important if you are not actively using social media.
4. Cost per Lead by Channel
You should always have a sense of cost per lead by marketing channel. The best way to do this, of course, is to collect hard data about your business and then do the match. You simply divide the number of leads (for a given period of time) into the cost for marketing via that channel. Your cost per lead will likely vary from e-mail campaigns to direct mail to TV to website. Still, higher cost per lead items may be more available to you, so you will likely choose to market across channels that have historically yielded various cost per lead figures. Note that TV, radio and newspaper-derived leads are particularly difficult to measure unless you are collecting offer codes or the like when taking phone or online orders.
Other related, useful KPIs to this one are cost per soft conversion and cost per hard conversion (i.e., cost per purchase).
5. Traffic by Source
This metric is simply indicating which traffic sources drive how many visitors to your website. Sources might, for example, include clicks from your e-blasts, e-newsletters, direct website visits, referral website visits from other websites, natural search visits, Facebook visits, etc.
In conclusion, the common thread that runs through each of these KPIs is: measure, measure, measure. If you are not currently measuring any of these KPIs, take baby steps. Choose one and figure out what it would take to get the hard data necessary to compute that particular KPI. Of course, the most value from KPIs comes from measuring changes in each metric over time. Another best practice is to start setting targets for each KPI and then figuring out how to meet or beat those targets. KPIs are at the heart of data-driven marketing.
Contact MindEcology to find out how we can help you establish, measure, and evaluate KPIs for your organization.