How do you really truly determine whether or not your business is a success?
Whenever you launch a new product, roll out a new marketing campaign, or experiment with a new sales approach, you want to know as soon as possible whether or not things are working. In order to do so you generally track certain metrics and numbers that shed a light on the performance of the project. These numbers or KPIs (key performance indicators) are quantifiable measurements of the success rate.
Most digital marketers are quite familiar with KPIs and understand why they are so important. But a major struggle that many teams have is knowing which ones actually matter.
According to Track Maven’s report on digital marketing, nearly half of all teams stated that their most difficult challenge was aligning KPIs with their greatest challenge. 42% struggled to define which KPIs to track and 33% found it difficult to analyze the data they were tracking.
When it comes to KPIs, a one-size-fits-all approach is not going to cut it for every single project and campaign. It is pointless to only follow the same set of KPIs and expect the numbers to actually prove the success rate of all marketing efforts.
Some KPIs will be totally irrelevant for one project but a critical component for others. Plus having too many or too few KPIs that have been tracked could actually give you a skewed view of the results. So, it is important for you to narrow down your indicators to only the most important and relevant ones.
- Ask yourself the most important questions
Remember learning proofs back in high school geometry class? One rather confusing (at the time) rule that you may remember is the fact that all squares are rectangles but not all rectangles are squares. Well, in digital marketing, all KPIs are metrics but not every metric is a KPI. Some metrics are simply more important than others – but it is very dependent on the situation and objectives that your company is setting.
In order to find your specific KPIs you must start with some basic but important questions that will lay the groundwork.
First: How does this project or strategy influence revenue?
It’s all about the money – revenue rates are almost always going to be included in your KPIs. But not everything that you need to track will have a direct or obvious influence on sales. For instance, say that your company is setting up a booth at a business expo and giving away free merch with your brand name and logo. The point here is not to make any sales, but instead to boost brand awareness and hopefully generate some viable leads.
When it comes to measuring event marketing ROI, you will need to think about the metrics related to this ultimate goal – such as the number of items handed out, number of people that spoke to a sales rep, and the number of leads that were created by exchanging contact information.
Second: What are reasonable goals based on the maturity of your market and the capabilities of your business?
This is often where many marketing and sales teams trip up. They either set the bar too high or too low, and they base their end goals on what they think marks success. There is no excuse for shooting in the dark in these cases.
Take a look at your current internal data to see what your results are now, as well as the highest and lowest the numbers have ever been. You should also do some external research on your competitor’s numbers (if possible) as well as generalized studies on the averages of other companies with similar budgets and market shares. This will help you define what a reasonable yet still challenging goal should be.
- Connect leading indicators
Setting KPIs is a lot like using a GPS: first off, you need to know where you want to end up. So, let’s start with the end by defining where you want to be and what your actual quantifiable goals are that can be measured.
Obviously, these will change from objective to objective. Sometimes, your main priority will be to increase conversions or generate more leads; other times, it may be more focused on boosting website traffic or improving retention rates. But you need to be incredibly clear and specific with the exact metrics that you want to see improved.
Say for instance that your company is launching a new personalized trigger-based emailing strategy to better nurture leads. Ultimately, the main metric that you will want to see change is the number of leads coming in, right?
But there are other related KPIs that you need to know, too. For example:
- How many of those leads actually converted?
- Did the sales cycle slow down or speed up?
- Did these trigger emails help to reduce cart abandonment?
- Did converted leads spend more or less on each purchase?
- Did the profit margin from these converted leads increase or decrease?
See how these KPIs would also be important to track in order to get a full view of the results of this kind of strategy? The KPIs you need to track are the ones that have a link to ultimate goals.
Say that you want to track keyword traffic. Just because a specific keyword is driving in high numbers does not mean that it is necessarily successful. High traffic with low conversions is not optimal; instead, you should be tracking converting traffic, new versus return, organic versus paid, and so on to give you a true 360-degree picture of what’s going on.
- Set channel-specific KPIs
Again, KPI tracking is not a one-size-fits-all approach. Your KPIs need to change depending on which channels you are utilizing, such as social media, email marketing, PPC, referral, email, and so on.
Now, there are some KPIs that do pretty much apply to all channels. According to the Track Maven report we referred to earlier, nearly 91% of marketers agreed that engagement metrics were necessary to track to evaluate the success of any strategy. Consumption, audience growth, and sales and leads numbers also topped the list.
You also need to be aware of how various metrics will change, depending on the channel. For influencer campaigns on social media, you may want to measure metrics like views or engagement and interactions (likes, shares, comments). However, with on-site content such as blog posts, KPIs like time spent per post, percentage of content that was consumed, and impact on conversion rates are more relevant.
- Find where SMART goals fit in the RACE model
You’re probably familiar with the SMART goal acronym: specific, measurable, attainable, relevant, and time-based. It is important that every single KPI you choose fits into all of these categories – otherwise they are a waste of time, energy, and resources, and could lead to confusion or inaccuracies.
Once you have these KPI goals set, you should ensure that they fit into the RACE model. RACE stands for Reach, Act, Convert, and Engage. Each of these words represents a phase of the buyer’s journey as well. If your goal is to reach a wider audience, then you are focusing at the top of the funnel i.e., the exploration and discovery phase. So, in addition to meeting the SMART criteria, each KPI should also have a specific place in the RACE framework.
Ready to get started?
Defining KPIs is a very important first step for any marketing, sales, or general business initiative – but it is unfortunately often overlooked. The key here is to understand your business, your audience, and your true goals. The ideal way to go about setting and achieving KPIs is:
- Identify the area where you want to measure performance.
- Describe strategic questions to which you need answers.
- Identify your data needs and know your intended results.
- Establish a benchmark against which to measure performance. Set thresholds, milestones, and targets.
- Compare current performance with the benchmark.
- Review results and tweak strategy.
Before you set any new goals or implement a new strategy or campaign, really take the time to consider whether or not you know what you should be looking for, and how you define success or failure. This will lay the foundation to success in achieving your objectives.