Marketing Manager KPIs: Essential Metrics for ROI
Are you a marketing director who wants to know which KPIs drive results? This post shows marketing executives which key performance indicators matter most.
February 13, 2024
Key performance indicators (KPIs) are specific, measurable metrics used to track the performance of marketing campaigns and goals.
This post will help marketing managers and teams choose which KPIs to watch and how to use them to increase ROI.
Marketing manager KPIs: Benefits and uses
Marketing KPIs are used by businesses of all sizes to evaluate their success at reaching targets.
Here are a few key benefits of KPIs:
Improved decision-making: KPIs give us a clear focus for strategic and operational improvement. They provide the data we need to make informed decisions and keep our attention on what really matters. For instance, let's say a company's KPI is to grow its customer base by 15 percent every quarter. This goal guides their decisions and strategies to achieve it.
Track progress over time: KPIs help businesses keep track of progress over time, giving a clear benchmark and target to aim for. For example, a manufacturing company could use the number of products produced per hour as a KPI. If they see this number consistently going up, they know they are getting more efficient.
Align goals and objectives: KPIs help align your organization's goals and performance measures. For example, if one of your KPIs is to increase sales by 10 percent within a year, every department in your organization will work together to achieve this common goal. This leads to better alignment and increased collaboration within the organization.
The best approach is to start with basic KPIs that apply to all aspects of a marketing strategy.
Customer acquisition cost (CAC)
CAC measures the average investment required to get a single customer. By tracking this KPI, marketing managers can develop more reliable budgets.
Conversion rate is the percentage of visitors who take a desired action. Examples are purchasing, filling out a form, or signing up for a newsletter. Tracking conversion rates for each customer action across all campaigns is critical.
Return on Investment (ROI)
Return on investment is the revenue generated relative to the amount spent on a marketing campaign or strategy.
Using KPIs to improve the marketing strategy
KPIs provide marketing managers with insight that enables them 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
Businesses think of marketing metrics as they relate to revenue, but they should also measure every factor that impacts growth. For example, KPIs can help marketing teams track the performance of digital marketing vendors and the value of qualified leads.
These KPIs help you make minor adjustments that have more impact over time.
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 for marketers
Knowing the distinction between KPIs and OKRs is crucial.
An OKR contains an objective that is usually associated with a broad growth goal. The second part of an OKR is the key result, which is a smaller goal that supports the effort to achieve the broader objective.
Here is a simple example:
Suppose your company wants to increase revenue by $100,000 over the next quarter. You might need to get 50 new customers over the next 90 days to do that.
The $100,000 revenue goal 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 50 new customers. You should establish KPIs for the campaign to help you 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 percent conversion rate = 50 new customers
To optimize ROI, you could focus on improving the lead conversion rate. You can use other KPIs that measure email conversions to get more responses, such as click-to-open rate. Improving the open rate and conversions will help you reduce expenses associated with the email campaign.
Many companies are unsure how to develop a structure for OKRs and KPIs, so they struggle to optimize performance. Following this framework for OKRs and KPIs will make the process easier.
Marketing manager KPIs: Types of indicators
In this section, we will focus on four categories of marketing KPIs. Each one serves a unique purpose. They provide a well-rounded assessment of your growth marketing strategy when used together.
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 and percentage of revenue collected.
Most business owners and companies track lagging indicators, but these do not help an organization prepare for what may lie ahead. You also need data that sheds light on trends or issues impacting future performance.
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 have been tracking them for an extended period. So, get them in place as soon as possible.
KPIs and the cost of acquiring customers
Cost Per Lead (CPL) and Customer Lifetime Value (CLV) are the lifeblood of your business. These two key metrics can make or break your marketing efforts.
CPL is the cost incurred to get a new lead. To find the average marketing spend per lead, divide the total marketing spend by the number of leads generated. This metric gives you a clear picture of the efficiency of your marketing campaigns. If the CPL is high, it means you are spending too much to attract potential customers. This might not be sustainable in the long run. However, a low CPL indicates that your marketing efforts are efficient.
CLV estimates the financial value of a customer over their “lifetime” with your brand. This metric helps you understand how much you should spend on getting and keeping customers. A high CLV implies a healthy customer relationship.
In the grand scheme, your marketing strategy should maximize customer lifetime value and minimize cost per lead. Consider CPL as the investment you make to attract customers and CLV as the return you get on the investment. The lower the CPL and the higher the CLV, the better your return on investment (ROI). Optimizing these KPIs should be a top priority for any marketer that wants to drive growth and profitability.
Digital marketing KPIs
It is best to use several KPIs to measure digital marketing campaigns. Here are some examples:
Reach/Impressions: These numbers are usually used for paid advertising and social media. Each time an ad is shown on a search result page or another site, an impression is recorded.
Return on Advertising Spent (ROAS): This is revenue generated versus the amount spent on ads.
Click-through Rate (CTR): This metric represents the ratio of ad clicks to total views.
Cost-per-click (CPC): The average dollar amount needed to convert one user.
For a website, certain KPIs are more important than others. Here are the primary ones:
The number of people visiting your website is critical to its visibility and reach. But raw traffic numbers only tell part of the story. You should also understand where this traffic is coming from (source), which pages are most visited (page views), and how long visitors stay on your site (session duration).
This is one of the most critical KPIs. This tells you the percentage of visitors who complete a desired action. Making a purchase, signing up for a newsletter, or filling out a form are examples of conversions. Low conversions might mean the site has issues with design, content, or user experience. It may also reveal that your offer is not strong enough to get the target audience’s attention.
Events track user interactions with content on your website, such as button clicks, video views, downloads, and more.
User engagement metrics include average engagement duration, pages per session, and events per session.
Page load time
Tracking and improving how quickly your website loads is important. Faster load times reduce bounce rates. You can use an online tool like PageSpeed Insights to check page load times.
This KPI refers to the percentage of visitors returning to your site after their first visit.
Marketing manager KPIs for a sales funnel
You must use detailed metrics for marketing campaigns to optimize each stage of the customer’s path to purchase.
Here are examples of KPIs for each stage of the typical marketing funnel model (illustrated above):
- Awareness: Brand awareness metrics
- Consideration: Social media engagement rates
- Purchase: Sales conversion rates
- Loyalty: Customer retention rate
- Advocacy: Net Promoter Score (NPS)
Increase ROI on PPC ads, websites, and other digital marketing tactics with conversion rate optimization consulting services from The Brand Auditors.
How to use KPIs to measure revenue and cost
Here are some tips for setting revenue-driven KPIs:
Set achievable KPIs and align them with your business goals. Sometimes, your goals change. So, your performance metrics should change, too.
Create long-term objectives with short-term KPIs. Your marketing team should begin with the end goal in mind. First, identify a broad objective, then set short-term KPIs that support the long-term goal.
Review them regularly. At a minimum, review all KPIs quarterly. Making adjustments is critical throughout the entire strategic planning process and execution.
Marketing manager KPIs: Interpreting the data
Data alone does not 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 overcomplicate the process. The key is to keep the KPI process simple and practical.
In this section, I will provide a framework for managing indicators.
Primary marketing performance KPIs
Primary performance KPIs 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.
Start with the essential primary KPIs and add others as needed.
It is difficult to define success without benchmarks. Begin accumulating data early. As you continue to track results, KPIs will become more accurate and reliable.
To assess our email campaign’s success, we must know what a reasonable email subscriber rate is. Is it two percent? Five 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.
Reports and marketing team KPIs
Here are examples of popular reporting software tools teams can use for marketing KPIs:
Improvado: An automated marketing reporting software solution streamlining data collection and analysis.
Ruler Analytics: This tool tracks customer journeys, phone calls, form submissions, and revenue.
Klipfolio: A browser-based dashboard reporting tool that supports team sharing.
Do you need help with marketing KPIs?
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