Essential Key Performance Indicators for Marketing
Elevate your business with a metrics-driven approach to growth. Unlock the marketing key performance indicators that matter most and boost ROI.
May 16, 2023
Introduction
You’re a marketing director for a big brand, and you’ve just finished a major campaign. You’re feeling pretty good about the results, but the leadership team wants numbers. How many sales qualified leads did you generate? What was the engagement rate by marketing channel? What is the cost per lead? Suddenly, you find yourself digging through spreadsheets and reports, trying to make sense of all the data.
It’s a frustrating experience that many businesses can relate to—the struggle to track marketing efforts.
But what if there was a better way? What if you knew exactly which metrics to track so you could easily measure the return on investment of your marketing strategy?
That’s where key performance indicators (KPIs) come in. KPIs are specific, measurable metrics that help you track progress towards your business goals. By focusing on the right KPIs, you can get a better understanding of how your marketing is performing and identify areas of improvement.
For small business owners, KPIs can be especially valuable. Small businesses don’t have the big budget many corporations do, so they can’t afford to waste time on marketing that doesn’t work. By tracking KPIs like website traffic, conversion rates, and lead-to-customer ratio, you can make better decisions about where to invest your time and money and improve your marketing.
Each key performance indicator services a purpose. So, it’s important to choose metrics that are relevant to your business. For example, if your goal is to increase brand awareness, you might track metrics like social media engagement and website traffic. But if you want to control customer acquisition cost, you’ll want to focus on conversion rates and customer lifetime value.
Marketing directors and business owners have a lot of responsibility. You need all the help you can get. By using KPIs to track marketing results, you can take some of the guesswork out of the job. You’ll also understand what’s working, what’s not, and the actionable steps you need to make to drive growth.
In this post, you’ll learn more about which marketing KPIs to track for your business.
What Are Marketing KPIs?
Key performance indicators help you determine the performance of a goal-oriented activity. But in the marketing world, brands use them to gauge the past, present, and expected future performance of growth strategies and campaigns.
KPIs help you set goals, create budgets, and reduce marketing costs. For example, certain metrics help companies reduce marketing expenses. Others help measure channel-specific marketing activity. Tracking these numbers is also useful when evaluating digital marketing vendors. Brands can even use KPIs to assess the company’s culture and customer experience.
The challenge is knowing which metrics to use for each goal.
Here are some examples of marketing metrics and goals associated with each:
- Web traffic behavior (such as form submissions and pages viewed): Companies might use these metrics to determine traffic to marketing leads ratio. They could also use these numbers to figure out how to increase organic search traffic and digital marketing ROI.
- Leads to sales conversion rate: This might help a sales team improve shorten the buying cycle.
- Customer lifetime value: This metric shows companies how much revenue they can expect from one customer. Reviewing and improving the customer service process impacts this metric.
- Customer acquisition cost (CAC): A crucial KPI that tells brands how much it must invest to get each new customer. It’s virtually impossible to set a reliable marketing budget without this KPI.
Each marketing KPI should support a brand’s big-picture growth goals. For example, more website landing page conversions may be a big-picture goal. But teams could use organic traffic analytics and other website conversion metrics to create KPIs that help the marketing team evaluate how well the landing page is performing and how to improve it.
Why You Need to Track Marketing KPIs
As I wrote in the section above, marketing KPIs are a way to measure how well a brand’s growth strategy and specific marketing tactics are working. But there are many other reasons to track them. For example, KPIs also provide insight that will enable the sales and marketing team to improve:
- The website’s keyword strategy and content marketing
- Website performance on search engines
- The customer experience for marketing channels
- A digital marketing strategy
- Customer retention rate and customer satisfaction scores
- Inbound marketing strategy
Most business development managers, sales teams, and marketing directors think of KPIs as they relate to company revenue goals. But KPIs should also measure every factor that impacts growth. For example, KPIs can help a marketing team track:
- Performance of digital marketing vendors
- Value of qualified leads
- Social media engagement
- Effectiveness of an SEO strategy
- Website traffic behavior
These KPIs help a business stay on top of its marketing performance. As a result, it’s possible to make smaller adjustments that have a bigger impact over time.
Marketers should start by setting clear Objectives and Key Results. Then, they can create KPIs before launching marketing and advertising campaigns.
Before we go any further, let’s examine how to set the right marketing KPIs using Objectives and Key Results.
Key Performance Indicators vs. Objectives and Key Results
There’s often some confusion around OKRs and KPIs and how they relate to each other. So, before we move on, it’s essential to understand the difference between a key performance indicator (KPI) and objectives and key results (OKR).
An objective is usually associated with a broad growth goal. A key result is a smaller goal that supports the effort to achieve the broader objective.
KPIs can be categorized as key results. But they can also help you assess marketing campaigns.
Here’s a simple example:
Let’s assume your company wants to increase revenue by $100,000 over the next quarter. To do that, you might need to get 50 new customers within that time period.
The revenue goal of $100,000 is an objective.
The key result needed to achieve the goal is 50 new customers.
Now, let’s say you launch an email marketing campaign to get the 50 new customers. You should establish KPIs for the campaign. With these metrics in place, you can adjust and improve the campaign.
A KPI for the email marketing campaign might be the number of leads generated. For example, suppose the lead conversion rate (also a KPI) is 20 percent. That means you must get 250 leads over the next 90 days to hit the objective of $100,000 in revenue (250 leads x 20% conversion rate = 50 new customers).
To optimize ROI on this campaign, your marketing team could focus on improving the lead conversion rate. You can use other KPIs that measure email conversion activity (such as email click-to-open rate) to improve email responses. Improving responses such as open rate and conversions will help you reduce expenses associated with the email campaign.
Many companies aren’t sure how to develop a structure for OKRs and KPIs. That’s why they struggle to optimize performance. Following this framework for OKRs and KPIs will make the process easier.
Types of Key Performance Indicators
In this section, we’ll focus on four categories of KPIs for marketing. Each one serves a unique purpose. When used together, they provide a well-rounded assessment of your growth marketing strategy.
KPIs fall into one of the following categories:
Leading KPI: These numbers provide insight into future performance. These come into play when creating the marketing budget or forecasting sales projections.
Lagging KPI: Data that confirms what has already happened. But lagging KPIs reveal why a marketing activity may have been a success or failure.
Quantitative KPI: As the name suggests, a quantitative KPI is number-driven and used to evaluate progress.
Qualitative KPI: These KPIs are sometimes intangible and based on opinion or educated guesses.
You’ll need to use a combination of KPI types to optimize campaigns.
Leading and Lagging Indicators
Lagging indicators provide feedback related to past performance. Units sold over the last 30 days is an example.
Others are:
- Gross or net revenue
- Percentage of revenue collected
Most business owners and companies track lagging indicators. But these don’t help an organization prepare for what may lie ahead. You also need data that sheds light on trends, opportunities, or potential performance issues that could occur in the future.
Examples of leading KPIs are:
- Customer retention rate
- Percentage of revenue growth
- Percentage of new user trials
Leading and lagging indicators will be more reliable if you’ve been tracking them for a long period of time. That’s why you should get these KPIs in place as soon as possible.
Digital Marketing KPIs
Several KPIs should be used to measure performance of digital marketing campaigns. Here are some examples:
Conversion rate: This metric tracks specific potential customer actions, such as website downloads, ad responses, or purchases.
Reach/Impressions: Usually related to paid advertising; recorded each time an ad is shown on a search result page or another site.
Return on Advertising Spent (ROAS): Revenue generated compared with the amount spent on advertising
Click-through Rate (CTR): Most often used in paid advertising; refers to the ratio of users who click on a link compared to the number of total users who view the page or ad.
Cost-per-Click (CPC): The average dollar amount needed to convert one user response to paid advertising.
Cost-per-Lead (CPL) and Cost-per-Customer-Acquisition (CPA): Some of the most important marketing KPIs; used to determine the average cost of acquiring each lead, conversion, or customer. These numbers are directly related to optimizing marketing expenses.
You must use detailed metrics for marketing campaigns to make adjustments at each stage of the customer’s path to purchase.
As a simple example, I’ll use the typical marketing funnel model (illustrated below) and KPIs for each.
First, we’ll launch a paid search ad campaign to generate awareness and leads. Impressions, click-through rate, and cost-per-click (see above) would help us determine how well our awareness campaign performs. We could optimize each of these to improve ROI on the ad campaign itself.
Of course, we’ll also need an engagement (consideration) campaign to generate sales. For this campaign, sales conversion rate and cost-per-acquisition would show us the percentage of people that responded to our campaign and the cost of each prospective customer.
Again, this example oversimplifies the process. But it illustrates the structure of KPIs and how each enables a brand to measure the return on marketing investment.
Conversion Rate Optimization Consulting: Get More with Less
Increase ROI on PPC ads, websites, and other digital marketing tactics with conversion rate optimization consulting services from The Brand Auditors.
How to Define Key Performance Indicators for Your Business
KPIs won’t be valuable unless they align with the right objectives.
To simplify the process, here are some questions that will help you develop marketing KPIs:
Why are you tracking a specific metric? Start by clarifying the goal of marketing campaigns and create KPIs that align with those goals.
Is each KPI clearly defined? Vague or broad KPIs (such as “more leads and sales revenue”) won’t help you improve a growth strategy. Instead, develop KPIs that are clear and concise. If you can’t use them to make improvements, you should probably avoid using them at all.
How will you use the information you get from each KPI? Once you have KPI data in-hand, you must know how to use it. For example, it’s helpful to know what percentage of visitors click on your website’s call-to-action. But how will you use that metric to increase response rates?
Is the KPI accurate? Believe it or not, one of the most common problems our brand audit clients have with KPIs is accuracy.
Data that isn’t measured properly will skew results. Many companies aren’t sure how to set accurate KPIs because they don’t have a baseline from which to begin. That’s why it’s best to start tracking KPIs early. In time, you’ll be able to establish performance benchmarks.
Will it move the needle? Many businesses track KPIs that have no impact on driving growth. For example, the number of likes on your Facebook page has little to do with how many truly engaged users you have in your audience. Tracking the number of post shares or comments is better KPI data for social media.
How to Create Key Performance Indicators to Grow Revenue
Here are some tips for setting revenue-driven KPIs:
Align KPIs with your business goals. Sometimes, your goals change. So, your performance metrics should change too.
Set achievable KPIs. You should have a reasonable chance of reaching the targets you set. Impractical KPIs can’t help you hit targets, which creates a false sense of failure.
Create long-term objectives with short-term KPIs. Your marketing team should begin with the end goal in mind. Once you’ve identified a broad objective, set short-term KPIs that support the long-term goal.
Review your KPIs regularly. At a minimum, review all KPIs quarterly. Much of this depends on your company’s situation.
Assess and adjust. Making adjustments is critical throughout the entire strategic planning process and execution. Sometimes, only slight adjustments to KPIs are necessary. In other cases, you may eliminate one or more KPIs completely if they don’t add value to the brand strategy.
Measuring Key Performance Indicators
Data alone doesn't always reveal everything you need to know about marketing performance.
Interpreting data is a combination of art and science. A marketing team can get bogged down in the numbers and inadvertently overcomplicate the process. The key is to keep the KPI process as simple and practical as possible.
In this section, I'll provide a framework that will make it much easier for your organization to manage indicators.
Start with Primary KPIs
Primary KPIs are the essential metrics that answer a fundamental question: Is the campaign, strategy, or tactic working?
For example, a primary KPI for a lead generation campaign could be 100 new email signups each month. This number tells you immediately whether your email marketing campaign is on track.
It’s best to start with the essential primary KPIs and add others as needed.
Here are some primary KPIs for specific departments:
Sales Teams
These key performance metrics help a company's sales department capitalize on every opportunity.
- New Inbound Leads
- New Qualified Opportunities
- Total Pipeline Value
- Sales Volume by Location
- Average Order Value
- Sales opportunities vs. closed sales (also called win rate)
Marketing Teams
Conversion rate (on the marketing strategy) is one of the most important KPIs because it directly impacts marketing dollars invested. But there are other metrics to consider as well, such as:
- Marketing Qualified Leads (MQLs)
- Sales Qualified Leads (SQLs)
- Social Program ROI (By Platform)
- Return on Ad Spend (ROAS)
Secondary KPIs
Secondary KPIs are sub-sets related to their primary parents. Using the email campaign example above, if the primary KPI is to get 100 new signups each month, a secondary KPI might be to get your landing page in front of 10,000 website visitors.
Diagnostic Metrics
Diagnostic metrics represent the overall health of your marketing. So, staying with our email marketing example from the section above, we might want to track how much we have to spend to get each new email subscriber. Comparing this number to other metrics, such as lifetime customer value (LCV), will help your marketing team optimize the campaign.
Establish a Baseline
Of course, it isn’t easy to define success until you have a baseline. Begin accumulating data early. As you continue to track results, KPIs will become more accurate and reliable.
Again, referring to our email campaign, we must know what a reasonable email subscriber rate is to assess the campaign’s success. Is it 2 percent? 5 percent?
We can’t know without a baseline.
So, how long does it take to establish a baseline? Of course, the answer varies, but a general rule of thumb is 90 days.
Assessing KPIs and Making Adjustments
Some of the KPIs you create for a growth strategy may become irrelevant. When that happens, it’s time to adjust.
Eliminate unnecessary KPIs. For example, you may find that tracking Return on Ad Spend (ROAS) isn’t helpful when analyzing total profit.
Also, concentrate on the KPIs that provide the most useful information. Sometimes, you may think it’s important to track a specific metric, but if you can’t use it to make improvements, it may be a good idea to drop it altogether.
Develop a KPI Strategy That Works
Are you tired of throwing money at marketing and advertising without seeing any results?
The Brand Auditors can help you create a strategy for your KPIs that will give you measurable results and save you money.
Our team will work with you to identify the most important metrics for your business and develop a plan to track and analyze them. With our help, you’ll be able to see exactly which marketing strategies are working and which ones need to be adjusted.
Click on the button below to set up a free consultation call with a brand auditor.
Are you ready to find out how a brand audit can transform your business?
Our brand audit process is a comprehensive analysis designed to help companies increase ROI and reduce marketing expenses.
- Increase ROI on lead generation and sales conversions.
- Reduce marketing expenses.
- Strengthen brand positioning to become more competitive.
We guarantee satisfaction or get your money back! Schedule a discovery call with a brand auditor to find out more.
Latest Insights
What Is a Premium Brand?
A combination of high quality and exceptional value puts elite brands in a category of their own.
