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21 top marketing KPIs and why they matter (Video) 0

Posted on April 07, 2019 by Rob Petersen

Top Marketing KPIs

Top Marketing KPIs (Key Performance Indicators) are the metrics that matter for any company that wants to know and improve progress to a desired goal.

No company should begin this journey without a road map to stay on track as the video explains. KPIs are the GPS for any marketing plan.


But the number of possible marketing KPIs can be bewildering. So the choice of the right ones are a critical factor to make the right decisions.

Here are 21 top marketing KPIs and why they matter for your company’s business success.

Desired Goal KPIs:

  • PROFITS: Are revenues minus expenses. Profits are the most important financial metric because a company can’t secure financing from a bank, attract investors, fund its operations, grow business and stay in business with turning a profit.
  • SALES (VS. REVENUE): Are the products and services a company sells. Revenue is the money received by the company from its varied activities.  Sometimes, they are the same. When different, since every company’s success depends on the products they sell, sales are a better indicator of a company’s current vitality.
  • SALES MARGIN: Is the amount of profit generated from a sale for a product or service. By analyzing sales margins, you identify which products are the most (and least) profitable.

Customer Value KPIs:

  • CUSTOMER LIFETIME VALUE (CLV): Is a prediction of profit attributed to the entire future relationship with a customer.  It is the monetary value of the customer relationship. It is an important metric because it represents an upper limit on spending to acquire new customers. It is also an essential element for calculating payback of marketing investments.
  • ANNUAL CUSTOMER VALUE (ACV): Is the term used to describe annualized earnings. ACV takes into account either a first-time subscription fee or first-time offer that may effect short-term results. But it is not as important as CLV for business planning.
  • COST PER ACQUISITION (CPA): Is the cost it takes to acquire a customer. CPA is a key metric for any marketing department because you don’t want to spend more money to convert a customer than they’re worth.

Customer Actions KPIs

  • CONVERSION: Is the point at which a recipient of a marketing message performs a desired action. It means someone has responded to your call-to-action.
  • CONVERSION RATE: Is the percentage of users who take a desired action. Since there has to be a base against which to divide the actions, it is most often a visit desired web destination like a website, landing page or social media page.
  • MICRO AND MACRO CONVERSIONS: A micro conversion is a small step on the path of a visitor towards your primary conversion goal (usually called a macro conversion). For most websites, the macro conversions are either making a purchase, giving a donation or providing a lead. Because conversions are critical marketing KPIs and the customer journey usually takes a number of steps to get to the desired goal, micro and macro conversion are an important sub-set of conversions.
  • QUALITY LEADS: Is a lead that can convert into an actual sale of your product or service. Because marketing plans often produce leads but the quality of the leads is debatable, especially with sales people, the conversions steps a lead has to take to be a quality lead is worth scoring for marketing KPIs.
  • TRANSACTIONS: Are the numbers of sales of a product or service over a certain time period. Transactions are created for every order that results in an exchange of money. 
  • AVERAGE ORDER VALUE (AOV): Tracks the average dollar amount spent each time a customer places an order on a website or mobile app. To calculate your company’s average order value, simply divide total revenue by the number of orders.

Marketing Tactics KPIs

  • WEBSITE VISITS: Are individual visitors who arrives at your website and proceeds to browse. A visit counts all visitors, no matter how many times the same visitor may have been to your site. A “unique visit” refers to a person who visits a site at least once within the reporting period. Each visitor to the site is only counted once during the reporting period.
  • VISITS BY CHANNEL: Visits come from a finite number of channels – Organic Search, Paid Search, Direct, Referral, Social and Email. Since you are applying resources and money to drive website visits from these channels, it is important to track visits by channel to determine how your resources and funds are best invested.
  • BOUNCE RATE: Represents the percentage of visitors who enter the site and then leave rather than continuing to view other pages within the same site. Bounce Rate is thought to be a measure of a website’s relevance to its visitors.
  • KEYWORD SEARCH ENGINE RESULTS PAGES (SERP): Is the list of results that a search engine returns in response to a specific word or phrase query. Web designers and site owners use search engine optimization (SEO) methods to make their sites and pages appear at or near the top of a SERP.
  • LINKS (OR REFERRALS): Provide a simple means of identifying and measuring other websites that list your website on their site and are sending visitors your way.
  • COST-PER-CLICK (CPC): If you buy Paid Search, Digital Ads, Social Media Ads, Sponsorships or Influencers, Cost-Per-Clicks is the one metric that puts them on equal footing by showing the price you pay for each click. 
  • CLICK-THROUGH RATE (CTR): Is a ratio or percent showing how often people who see your ad end up clicking on it. CTR is an indicator of ad relevance to viewers.
  • EMAIL LIST SIZE: People who sign up to receive your emails or newsletters express a higher level of interest in your business. If you are taking the time and care to grow your email list so it represents quality contacts, the number of people on this list are a business asset worth monitoring.
  • SOCIAL MEDIA FOLLOWERS: Studies show people who follow your company on social media sites are more likely to continue using your products and services as well as recommending them to others. So the size of your social media followings on sites like Facebook, LinkedIn, Instagram, Twitter and YouTube are also worth tracking.

Peter Drucker said the “purpose of a business is to create and keep a customer.” If you consider these marketing KPIs, you’ll have a much better chance of succeeding. Do these seem like the top marketing KPIs to you? Do you need held determining the right KPI scorecard for your business?

marketing kpis

What is the difference between a metric and KPI? (Video) 0

Posted on May 07, 2018 by Rob Petersen

A metric is a standard of measurement. A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching targets.

What’s the difference? A KPI is a “metric that matters.” It relates directly to the business’s objective or goal to help keep the strategy on track. Because a KPI is a metric that matters, a KPI is a metric that is tied to a target.

The video above explains the difference and offers examples.

Anivash Kaushik, Digital Marketing Evangelist at Google, says a key performance indicator (KPI) is a metric that helps you understand how you are doing against your objectives. Here’s how other experts define the difference between a metric and a KPI.

How do you chose KPIs. Look for the key metrics that:

  1. Relate to your business objective
  2. Provide context by being tracked over time
  3. Are based on legitimate data
  4. Are easy to understand
  5. Create meaning
  6. Can be acted upon
  7. Do it with the key stakeholders who are accountable

The video was created by Rutgers Business School Executive Education. I have had the privilege of serving on their MBA Faculty for 8 years. The Rutgers Business School is ranked #3 in the nation in MBA employment.

Rutgers Business School Executive Education offers Mini-MBA’s in Digital Marketing and Social Media Marketing. They occur offline in a week-long curriculum in an open classroom. Or online over 10 weeks at a pace that accounts for an executive’s busy work schedule. Digital Marketing is ranked among the Top 30 Best Value certificate programs.

Both consist of the same 10 modules that include: Digital and social strategy development, search engine optimization, paid search, content marketing, mobile marketing, video marketing, customer experience and measurement and ROI.

Either is going to up your game in fastest growing marketing channels, help advance your career or assist you in your own reinvention.

Does this video explain the difference between a metric and a KPI to you? Is your organization ready to put to use the KPIs that keep your business strategy on track?

 

 

Top 10 marketing KPIs every business needs to know 0

Posted on September 25, 2017 by Rob Petersen

KPIs (Key Performance Indicators) are measurable values that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching targets.  KPIs are the actionable scorecard that keeps business strategy on track.

Here’s a brief, video explanation on KPIs from Erica Olsen at On Strategy.

According to Peter Drucker, marketing and innovation are the two chief functions of any business. Marketing is the distinguishing, unique function of the business. The aim of marketing is to know the customer so well the product or service fits him and sells itself.

What are the right KPIs to evaluate marketing effectiveness. Here are 10 marketing KPIs every business needs to know.

1. REVENUE OR PROFITS: In most cases, KPIs are designed to follow the money. If your a sales driven company, booked revenue is the monetary metric that determines the business’ vitality and health. Profit is perhaps the most important monetary metric. Profit is revenue after all the expenses related to the manufacture, production and selling of products. Profits go to owners, shareholder or are reinvested in the company.  Marketing KPIs have to ladder up to either  revenue or profits to show their impact on the business and its ability to grow.

Marketing KPIs - Profits

2. CUSTOMER VALUE:Understanding customer value is by far the most important thing you can do to identify ways to grow your business. If you understand the value of your customers you can: 1) Determine which customers to invest in, 2) Identify new customers and markets to target, 3) Agree which product and service lines should be offered and 3) Change pricing and promote to extract more value. Customer Lifetime Value (CLV) is the metric that defines customer value. It can be an intimidating calculation to some. It has a defined formula and is a marketing KPI that is definitely worth knowing.

Marketing KPIs - customer lifetime value

3. COST PER ACQUISITION (CPA): With the knowledge of the value of a customer, the next marketing KPIs is how much does it cost to acquire a customer. Cost Per Acquisition or Cost Per Action is a primary metric for any marketing initiative. It is the cost for a visitor, prospect or lead to take a desired action or conversion. It is one of the key drivers in determining the impact of marketing.

Marketing KPIs - CPA

4. NEW AND RETURNING VISITORS:  If you’ve never compared the data for your new and returning website visitors, I suggest taking a stab at it. Reviewing the statistics about the different types of visitors to your site can help you answer questions like: 1) Are my visitors engaged? 2) Do my visitors keep coming back to me (my website) for more information? The primary place where new vs. returning visitors can be found is the Google Analytics of your website. Knowing the numbers and the ratio give you the primary information you need to know about growth possibilities for your business and where they are most likely to come from.

Marketing KPIs - New vs Returning Visitors

5. TRAFFIC SOURCES:  In Web analytics, including Google Analytics, traffic sources is a report that provides an overview of the different kinds of sources that send traffic to your web site. They include:

6. MARKETING QUALIFIED LEADS (MQL); A marketing qualified lead (MQL) is a prospect already in your lead-tracking system, who has expressed interest in buying your product and passes a set of lead qualifications in order to progress further down the funnel. Marketing qualified lead definitions are typically used by B2B companies to identify a stage in the buyer’s journey. For example, in order to become a marketing qualified lead a prospective customer may have to have a certain number of employees in their company, be in a certain vertical or industry, or have a certain revenue.

Marketing KPIs - Marketing Qualified Leads

7. CONVERSION RATE: The conversion rate is the percentage of users who take a desired action. The archetypical example of conversion rate is the percentage of website visitors who buy something on the site. Conversion rate optimization is important because it allows you to lower your customer acquisition costs by getting more value from the visitors and users you already have. By optimizing your conversion rate you can increase revenue per visitor, acquire more customers, and grow your business.

Marketing KPIs - Conversion Rate

8. RESPONSE TIME: The length of time it takes for a person in the system to react to a given stimulus or event. In any service business, response time plays a significant role in retaining customers.

Marketing KPIs - Response Time

9. AVERAGE ORDER VALUE: Average Order Value (AOV) is an ecommerce metric that measures the average total of every order placed with a merchant over a defined period of time. AOV is one of the most important metrics for online stores to be aware of, driving key business decisions such as advertising spend, store layout, and product pricing. Even though average order value is primarily used in ecommerce, it is a KPI worth knowing for any business.

Marketing KPIs - Average Order Value

RETURN ON MARKETING INVESTMENT (ROMI): Marketing ROI is one of the terms most commonly used to describe marketing success, sometimes referred to as the holy grail of marketing KPIs. The definition of the ROI calculation must be consistent with the financial definition to maintain credibility with finance. The formula in its simplest form is below.

Does your business measure these Marketing KPIs? Does your business need help figuring them out?

 

8 surprisingly simple steps to calculate ROI 0

Posted on March 20, 2017 by Rob Petersen

roi

ROI (Return on Investment) is the basis from which informed investment decisions are made.

The ROI formula only requires two numbers; the cost of your venture and the return made from that venture. But there are inputs that go into each. For many, this is where the simple gets complicated. But it doesn’t have to be?

Here are 8 surprisingly simple steps to calculate ROI.

STEP #1: START WITH A BASELINE

roi baseline

Return from a new venture has to first take into account what occurred before. So you have to establish a baseline. In our experience, there are only three baseline scenarios. In Scenario #1,  the venture is just beginning so there is no baseline. There is a clean slate. In Scenario #2, the new venture is trying to change just one area of a company’s operations (e.g. digital, call center, human resources). The baseline in this case is the return in this area from prior period. In scenario #3, the venture involves a change or transformation in the company that likely to impact a number of areas. For example, a business generates revenue through a sales force, call center and website. They are investing in digital operations by upgrading the website, building a mobile app and improving the online selling infrastructure so they can spend less in other areas. In this instance, the baseline is the amount the website generates currently based on a total percent of the company’s operations.

STEP #2: DECIDE IF RETURN IS REVENUE OR PROFITS

roi profit or revenue

Be clear at the outset how you will measure the return in dollars. Is it revenue (sales) or profits? The latter in many cases is the most desirable measure. But it is harder to understand and control. For example, a company produces a food product. Profits requires a knowledge of the cost of goods, shipping and retail allowances. These are often hard to know now and harder to predict in the future. Because revenue has more factor within a company’s control, it is generally easier to forecast. While some insist profits is the way to go, in our experience, revenue is also is a good indication of success and basis for decision making.

STEP #3: DETERMINE THE TIME FRAME

ROI time frame

Before you can determine the return, you have to know how long it is going to take. In most cases, the time frame for ROI is between one and two years. This is due to: 1) Functional activities like the time it takes to create and build new assets (e.g. website, data center and buying infrastructure) and 2) customer uptake for awareness, consideration, trial and repeat purchases. To help understand customer uptake, it helps to know the buying frequency and Annual Customer Value (ACV).

STEP #4: DECIDE INPUTS FOR THE RETURN

roi return

The return is a prediction or forecast of what will occur by the end of the time frame. Use real company data, not norms or averages, unless you want normative or average results. Basics that are usually included in returns are how many new vs repeat customers are expected? What is their Annual Customer Value? If there is a digital component, what are visits and conversions rates to the website? If a company transformation is expected, operating costs in other areas that will decline as new capability are built can be a factor. There can be a few to many input. Confidence in the data means reliability in the return.

STEP #5: IDENTIFY THE INVESTMENTS

roi investments

In some cases, this is self-evident. But not always. Let’s say a major investment in infrastructure is occurring that will take a couple of years but the ROI time frame is one year. The investment is based on cash flow and what is spent in that year.

STEP #6: CALCULATE THE ROI

roi calculation

The ROI formula is: Return – Investment/Investment X 100%. The ROI is expressed as a percent. That’s it. Here is the formula and a sample calculation.

STEP #7: GUIDE WITH KPIs

roi & kpis

An ROI is a forecast of a result to occur in the future, a scorecard of key metrics is developed to keep ROI on track. These are Key Performance Indicators or KPIs.  A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. To keep the ROI on track, KPIs are an actionable scorecard. Variables that figure into the return like returning customers, new customers, annual customer value and conversion rate might also be KPIs. Here is what a KPI scorecard looks like for a new digital marketing venture.

STEP #8: ALIGN WITH DESIRED GOALS

roi & goals

ROI is key to evaluating how realistic is the business objective and financial goals for a company. In the ROI calculation above of 238%, the company is expecting a return of $2.38 for every dollar invested. The company has to decide how if realistic this is. It is if the company has the commitment and deliver on their plan and measure success. It probably isn’t if they don’t. But now they have a basis for evaluation. Otherwise, the company is just guessing.

Do these steps to calculate ROI sound simple and sensible to you? Do you need help figuring out ROI at your company?

7 KPI dashboards that are scorecards to success 0

Posted on December 06, 2015 by Rob Petersen

 

 

KPI Dashboard Executive

Key Performance Indicators (KPI) are measurable values that demonstrate how effectively a company is achieving key business objectives.

Organizations use KPIs to evaluate their success at reaching targeted goals. KPI dashboards are actionable scorecards to keep the business strategy on track.

Good KPI dashboards:

  • Relate to the business objective
  • Give a snapshot of the entire business
  • Are a finite number of metrics that all have targets relating to the business objective
  • Present the opportunity for further segmentation on a key metric
  • Deliver insights
  • Present business recommendations
  • Inspire action

What are examples? Here are 7 KPI dashboards that are scorecards to success.

MARKETING ROI

KPI Dashboards Marketing ROI

Return on Investment is one of the most sought after goals for any company. This dashboard from Klipfolio is a great example of marketing accountability to deliver new revenue and new customers through a new marketing campaign. It’s simple, clear and transparent. It gives an up to the minute snapshot of the key metrics that impact this business objective.

SALES

KPI Dashboards Sales

Sales are one of the objectives that KPI dashboards are often built around. This KPI dashboard from Find Examples does an excellent job of demonstrating the actionable nature of a KPI dashboard. By just looking at it, any sales or management team is able to see if the company is on track to deliver its objective; what tactics and working and who are the most likely opportunities. If the company in this example acts regularly on these results, it’s easy to see how much more likely they are to be successful.

NON-PROFIT

KPI Dashboards Non-Profit

This dashboard is for the Indianapolis Museum of Art from Avinash Kaushik. It provides not only a complete snapshot but shows the importance text can provide in a KPI dashboard. In this example, the metrics that are most important to the successful operation and growth of the museum are listed. But there is also the opportunity to provides comments, insights and recommendations through the text box. So the dashboard is a living tool that promotes action.

RESTAURANT BUSINESS

KPI Dashboards Restaurant Business

60% of restaurants fail in the first year according to Cornell University. It seems like the hospitality industry would benefit from KPI dashboards like this one that gives a great snapshot of sales, customer acquisition, cost of goods, menus, key stores and competitors’ pricing at a glance. This is a comprehensive look at a highly competitive industry.

WEBSITE

KPI Dashboards Website

This dashboard of a website’s performance gives all the vital data, a full analysis with trends, insights and recommendation. It provides great perspective while clearly presenting a point of view for improving performance.

GLOBAL PRODUCTS

KPI Dashboards Global Products

A company that has products available globally with different business performances in different parts of the world has specific global goals. Success involves market development, product mix or whether or not customers buy online or offline. This dashboard from Sharepoint gives executives a perspective and uses traffic lights as icons to highlight products doing well or needing attention.

C-SUITE KPI DASHBOARD

KPI Dashboards Executive

A clear picture of the data doesn’t mean there needs to be a lot of it. But enough to clearly make your point. You also have to tell people what to do with the data. This dashboard for Avinash Kaushik, Digital Marketing Evangelist at Google, is made for C-Suite presentations. It takes the key data findings and, in a text box, presents the insights, actions and financial implications. It’s complete, concise and delivers on one of most important criteria for creating KPIs – taking action.

Do these examples help explain the value of KPI dashboards? Do you see one that is relevant to your business? Does your company need help creating KPI dashboards for your business?

 

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