As you start planning for the next year, your marketing team is likely setting company goals and targets. You are also likely evaluating successes and progress on goals you set for the year. Knowing which key performance indicators (KPIs) to track is crucial for determining how your goals are progressing and for measuring the success of the steps you are taking to achieve them. Marketing KPIs help you evaluate each campaign to see what worked and what didn't.
Read on to learn about why your marketing team should be tracking KPIs, which are the most important to track for marketing, and how you can use the results to elevate your business in 2022.
What Are Marketing KPIs?
Marketing KPIs are measurable statistics that tell you the success of your marketing campaign. These insights help you determine your marketing ROI. With this information, you can make decisions on how to tweak your messaging, adjust your marketing budget, where to run ads, and improve your marketing performance. KPIs are the primary metrics you use to measure how successfully you implement your marketing strategy.
KPIs are typically tracked per project. Since each marketing campaign and channel is usually tied to a different goal. For example, your content marketing efforts may not have the same goal as your email marketing campaign. It's important to individually measure each campaign's success.
How You Can Use Marketing KPIs
The top marketing KPIs help you better define your goals and develop strategies that put you on the road toward achieving them. For example, you might have set a marketing goal of achieving a 35% average open rate on all email announcements. The open rate would be the KPI that tells you if you've achieved this goal. If you haven't, then the KPI tells you what you need to adjust to better meet this goal in future campaigns.
Tracking KPIs helps you adjust and improve your marketing so that you can meet future goals and objectives.
What KPIs Should You Be Tracking?
Your primary KPIs will depend on your goals and what you consider to be important. You will track a variety of KPIs in marketing for each channel. You should track these top marketing KPIs to determine your content marketing success.
12 Marketing KPI Examples
Sales generate the revenue that keeps your business open, so it's important to measure sales growth and sales revenue. There are many sales KPIs you can track, including total sales by timeframe, sales by team member, sales by lead source, and revenue per sale, among others. If you have a sales team, you're likely already measuring KPIs tied to their lead and conversion rates.
If you don't have a sales team, use similar metrics to determine your sales growth. Most companies calculate sales on a monthly or quarterly basis. Measure sales by comparing timeframes—that are similar in both length and economic season—to determine whether sales have grown or declined.
This KPI helps you watch trends, such as times of the year when sales tend to grow or drop. You can also find out how customers proceed through your sales funnel. Tracking sales KPIs can help you create accurate business goals and realistic financial projections.
2. Number of Leads
Anytime you get contact information from a prospective client, you are generating a sales lead. You could be generating them through the contact form on your website, sales calls, social media messages, or other marketing channels.
Tracking your lead volume and your lead quality will show you which lead generation methods are most effective. Use this information to enhance the tools that aren't generating as many marketing qualified leads, or you can scrap the underperforming areas and focus your sales efforts on lead generation strategies that are working.
When tracking your lead volume, consider where the lead came from and how many leads were converted into sales.
3. Customer Acquisition Cost
Customer acquisition cost (CAC) refers to how much you spend to convert a lead into a paying customer. This metric can help you set your marketing and sales budgets, and it can help you find strategies to reduce the cost of customer acquisition.
Calculate your CAC by adding your marketing and sales costs and dividing it by the number of new customers you acquired in that time. It's easiest to calculate CAC using a specific duration of time, like a month or a quarter. For example, if you spent $3,000 on marketing and sales in one quarter and attracted 1,000 customers, your CAC is $3 per client.
4. Customer Lifetime Value
A customer's lifetime value (CLV) refers to the total profit a customer contributes to your business throughout their relationship with you. This number helps you assess how long it will take to recover the acquisition costs associated with each client.
It's impossible to accurately estimate the CLV of every client because some will spend more and some will spend less. For this reason, CLV is calculated with averages. You multiply the average value of the sale by the estimated number of transactions by the retention time.
For example, if your average sale value is $50, and you expect the average customer to shop with you 4 times a year for 6 years, their CLV would be $1,200.
5. Return on Investment
This metric, referred to as ROI, is one of the most commonly used tools to determine an ad campaign's success. It refers to the uptick in revenue experienced with each marketing or ad campaign. If you're spending $25 on a Facebook ad that results in $75 in sales, you've seen a 200% return on your investment.
ROI lets you know which of your campaigns are most profitable. You can analyze these campaigns to see what went well and to determine how you can duplicate this success in the future.
Digital Marketing KPIs
The KPIs discussed in the previous section help you determine how your marketing efforts are impacting your business as a whole. The remaining marketing KPIs are specific to digital marketing. You can calculate the marketing ROI associated with each ad campaign, but these digital marketing metrics give you a better picture of how your digital marketing strategy is working.
6. First Time Visitor
This digital marketing KPI measures how many users are clicking on your website for the first time. Your website analytics and metrics for each ad campaign can show you how people found your website and how engaged they were. You can see how long people spent on your site, which pages they viewed, bounce rate, and whether or not they bought something.
7. Brand Awareness
One of the primary goals of digital marketing is to build brand awareness. Digital marketing is a cost-effective way to generate word of mouth and improve your visibility. Tracking how people hear about you lets you know which of your digital marketing channels are most effective at driving traffic to your website or your business location.
You can measure brand awareness by tracking the channels that lead people to click on your website and by asking customers to tell you how they found you. Add a question in the checkout queue that asks how a client found your company.
8. Click-Through Rates
Click-through rates tell you how many people clicked on an ad to get to your website. Each time you run a digital campaign, you should be able to see information about your click-through rate. If you're sending out an email promotion or newsletter, some platforms let you see how many people opened the email, how many clicked through, and which parts of the email generated the most clicks.
9. Follower Growth
Social media marketing KPIs, including follower growth, help you measure the success of this important marketing tool in reaching your audience. When you're consistently posting quality content, you should see an uptick in followers. If you're not noticing a positive trend, consider what strategies you can use to improve your visibility. You might choose to focus only on your most successful social media platforms.
10. Social Media Engagement
Generating quality social media engagement helps you build your brand reputation. It also helps you manage relationships with your customers. Tracking social media KPIs helps you refine your strategy. You can analyze which posts get the most engagement to help you better understand the content that resonates with your target audience.
11. Referral Traffic
This metric could be the same as click-through rates, but it's focused on how users were referred to your site. Did they click on an organic social media post that you didn't pay for? Was it a Google ad? Were they referred to your site through a backlink on another company's website? Knowing how people are referred to your website helps you determine which of your marketing strategies are successful.
12. Email Open Rate
An email marketing KPI that's specific to your email marketing strategy is the open rate. Depending on your industry, email open rates typically range from 10% to 20%. If one of your goals is to improve your email campaign, start by segmenting your email recipient list into categories. Personalize messages for these categories and send separate messages to each group.
Use the same promotion or discount, but change the language based on your segments. Track your email open rate to see if this strategy worked. Higher email open rates allow for more potential customers to click through to your website.
How Are Marketing KPIs Set Up?
There are many KPIs you can collect. The KPIs you choose to focus on should be dictated by your marketing strategy. When creating your marketing strategy and goals for the new year, figure out which metrics will best help you measure your progress. Concentrate on these metrics.
Establish baseline data by looking through your historical numbers so you have a starting point from which to calculate your KPIs. Knowing how many people engaged with your social media posts isn't as helpful as knowing how much your engagement improved over the previous year. Having data to compare helps you see how your new social media strategies are performing.
After you've established goals and set your baseline data, tie your KPIs to different marketing activities you're using to achieve your goals. If one of your goals is to improve organic traffic to your website, you might have set a goal to improve your search engine optimization (SEO) strategies. As a result, you will likely spend much of the quarter improving keywords and creating content.
You can set individual KPIs for each task that you're doing to meet your overall goals. If you are planning on improving your SEO, you can set a KPI to measure your search position in different search engines. If your organic search results move from position 22 to 6, you'll know that you've successfully landed on the first page of results, but there is still room for improvement.
You can tie this task to your overall goal by measuring how much organic traffic came from Google and which keywords people used to find your website.
If you're still not sure where to start, check out this marketing KPIs template you can use to streamline the process for your own business.
Getting Started With Marketing KPIs
As a small business owner, you might be more focused on servicing existing customers than tracking KPIs and using them to refine your marketing. But doing so can help you create a marketing strategy that is more likely to be successful.
If you're not tracking KPIs, start by developing a marketing strategy for the next year. Include measurable and realistic goals that are tied to past performance. Set a time limit for implementing each goal. Make sure that your goals are specific and can be tracked. Instead of saying "increase sales" say "increase sales revenue by 35%." Being specific gives your employees a measurable target to reach.
After you set your content marketing goals, you can create strategies for achieving them. Then, determine which KPIs will give you the best information for measuring success. As you get more familiar with creating and measuring KPIs, you'll create better content marketing strategies for your business.