What is a KPI (Key Performance Indicator) in marketing?
What is a KPI (Key Performance Indicator) in marketing?
Hello there my name is Martin Henley, this is the what the series and in this, episode number 11, I’m answering the question what is a key performance indicator in marketing?
What is going to happen?
In answering the question what is a key performance indicator there are six things we’ll be sharing with you. We are going to the Oxford English Dictionary for a definition; we’re going to give you a more marketing focussed definition; we’re going to think about the most important key performance indicators; we’re going to think about the key performance indicators that you should be tracking; where you get those numbers and when you should be tracking your key performance indicators let’s go Ricky.
Did we find a definition of key preference indicator?
If we are going to understand what a key performance indicator is we’re going to need a definition of key performance indicators and we found one at the Oxford English Dictionary. They tell us that “a key performance indicator is a quantifiable measure used to evaluate the success of an organisation or employee in meeting objectives for performance.”
In business they use key performance indicators across departments, they will use KPI’s in production, they’ll use KPI’s in HR, they use KPI’s in accounts – successful businesses use key performance indicators to measure their success across their organisation.
Can we get a more marketing focused definition of key performance indicator?
What we are interested in is a more marketing focus definition of a key performance indicator so we are going to need a definition of a marketing KPI. We found one at Impact Brand and Design, what they tell us is that a marketing key performance indicator is “a specific numerical marketing metric that organisations track in order to measure progress towards a defined goal in marketing.” This is a great definition of key performance indicator for two reasons.
Firstly they’re telling us a key performance indicator is specific and its numerical. Numbers do not lie, this is why we are interested here in something that is quantifiable.
The second thing that I like about this key performance indicator definition is that they are telling us that we need to track these numbers, because these numbers will change over time. As long as the numbers are going in the right direction we know that our marketing is going in the right direction. We know our overall goal in marketing is to find win and keep customers profitably so a marketing key performance indicator is any of the many numbers that inform us if we are on track to achieve that overall goal.
What are the most important marketing key performance indicators?
That brings us then to point number three which is the question what are the most important marketing metrics? We also took these examples of the most important marketing key performance indictors from Impact Brand and Design, so not necessarily what I think are the most important marketing metrics, but these seem to be commonly perceived to be the most important marketing metrics so we should have a look at them.
They tell us that sales revenue is an important marketing metric, it absolutely is but there is an issue with sales revenue in that very rarely will clients or bosses let you know exactly how many sales are going on so if you want to know you need to make sure that you are being demanding of this information. Impact Brand and Design tell us that cost per lead is one of the most important marketing key performance indicators; inbound return on investment – I don’t know why they are specifying inbound here; traffic to lead ratio – how many of the people that come to your website actually convert into leads; lead to cost ratio – what does it cost you to generate those leads and landing page conversion rates; organic traffic traffic to your website social; media traffic against conversions and mobile traffic against conversions.
I’m not saying that these aren’t important key performance indicators but the issue I have with these metrics is that none of these key performance indicators stand alone. The questions for me become; what are you doing to generate traffic to your website? what are you doing to convert people once they are on your pages? what are you doing to generate the sales revenue? For me, behind these important marketing metrics, behind these important marketing key performance indicators, are a whole raft of other key performance indicators which inform how well we’re doing in each of these areas.
I am happy to agree that these are important marketing key performance indicators but there are other key performance indicators behind these key performance indicators that inform these key performance indicators, keyword cramming – sue me Google 🙂
For me, if you are doing any kind of marketing then you need to be tracking everything that you do especially in 2020. You might remember poor old John Wanamaker from yesterday’s video, he was wasting half of his advertising budget because he wasn’t tracking how effective it was. The thing in 2020 is that we do digital marketing, we will be defining digital marketing in a future video, we are busy with websites, pay-per-click advertising, search engine optimisation, Facebook, YouTube and email – behind all of these marketing opportunities there are numbers.
If for example if you are busy with pay-per-click advertising you will want to know how many campaigns are running; where you are ranking for those campaigns; how many impressions you’re achieving; how many clicks you’re achieving; your click conversion rate; the traffic that ends up on your website. Behind each of every digital marketing initiative there are seven or eight numbers that will tell you how well you are doing in each of those campaigns.
My argument here is that whilst Impact Brand and Design’s offering are great KPI’s, important KPI’s, they don’t stand alone. You should be tracking the performance of every single campaign that you run. If you have more than one Facebook page then you should be tracking each of those Facebook pages so you can see how successful they are.
Where to find your marketing key performance indicators.
Okay so you’re saying yes, I want to see these numbers, I want to see if I am making progress but I don’t know where to find them but don’t worry we are still good because I can help you.
If you are running a website then you will plug Google Analytics into your website and it will tell you how many visitors you have, where they come from, how long they stay on your pages, how many of those convert. We’ve spoken about PPC and AdWords already. If you are engaging in SEO you want to be tracking the number of keywords that you might be ranking for, which keywords you’re ranking for and where they are ranking, how many are ranking in first position how many are ranking on the first page and how many links you’re building.
Behind your website you have Google Analytics, behind your PPC campaigns you have Adwords, behind your SEO you have Search Console, behind Facebook you have Facebook Insights, similar for YouTube, similar for your email campaigns – all of these systems are presenting the numbers for you.
What’s important is that you understand that digital marketing is like driving a car, these numbers are like the dashboard on your car. Your car dashboard tells you how fast you’re going, how much petrol you’ve got, how much oil you have. The question now is would you really get in and drive your car if you didn’t have those numbers in front of you. Well everyone I know drives their advertising campaigns, their marketing campaigns, without looking at those actual numbers.
All of these systems present these numbers to you, all you need to do is collect them regularly and track them so you can see if your campaigns are going in the right direction.
When should you be tracking your key performance indicators?
Which brings us then to point number six which is when do you track your KPIs? I would argue that you should be tracking your KPIs already, if you’re not you need to start now and you need to do this regularly. Depending on how much is going on in your business and how much time you have to invest you might do this daily, you might do this weekly, you might do this monthly. Its important that you track your marketing key performance indicators at regular intervals so you are tracking like for like. It’s no good tracking one week against a month, or one quarter against a year, because you’re going to get different results.
However regularly you decide to track your marketing key performance indicators you need to make sure that you are sitting down and getting this done either weekly, monthly or yearly if there really isn’t very much going on in your business. You need to track your marketing key performance indicators regularly.
If you are still with us well done, I’m here sweating like a dog to bring you this information but now you know exactly what a marketing key performance indicator; you know how key performance indicators relate to marketing; you know which are the most important marketing key performance indicators; you know that there are key performance indicators behind every one of your campaigns; you know where to get those numbers and you know when you should be looking at your key performance indicators.
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We are done here Ricky
Martin’s original content is based on his very current experience of running effective marketing initiatives for his customers and the feedback from Effective Marketing’s successful and popular marketing workshops.
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