In marketing, KPIs (Key Performance Indicators) are a set of measurable criteria ranging from return on investment to customer loyalty levels. Metrics are selected depending on the set goals such as increasing the number of incoming qualified leads, sales volume growth, brand recognition enhancement, and other business objectives.
What are key performance indicators?
KPIs (Key Performance Indicators) are metrics by which the performance of the marketing department can be evaluated.
The key indicators should be:
Specific (What result do we want to achieve? We want to increase targeted leads coming to the website by 15%).
Measurable (How will we measure the result? Our goal is to increase website conversion by 15%).
Achievable (The set goals should be realistic. Otherwise, there is a high probability of demotivating the team. For example, if the number of subscribers to your official Instagram account increased by 3% last month, try to increase it by 5-7% next month, rather than immediately by 15%).
Relevant (The goals set for one department should be relevant to the company. For example, if we can increase the number of qualified leads, the number of sales will increase).
Time-bound (Set deadlines for achieving goals. For example, by March 17th, we want to see a 15% increase in webinar registrations, due to the promotion campaign on social media and email outreach inviting people to join the webinar).
Strategic KPIs vs. Operational KPIs
Operational – criteria that are tracked in real-time and allow for immediate response to deviations from the standard. For example, weekly ad click-through rates, quantity and quality of incoming leads, etc.
Strategic – criteria that help determine the direction of the company’s development in the market. For example, market share, company image, profit and capitalization growth.
The effective way to track the achievement of strategic goals is to cascade those down throughout the organization with the use of operational KPIs.
Key marketing metrics and KPIs for a marketing team
The choice of key performance indicators depends on the business goals. There are no universal sets of effectiveness metrics. However, we can identify the “basic set” for a marketer based on parameters that our team works with most often.
Number of leads: the number of potential customers showing interest by filling out forms on the website, leaving contact details for callbacks, etc. It’s also important to measure the ratio of qualified to unqualified leads, where the former convert into sales.
Number of sales: the conversion rate from leads to actual sales. We usually analyze this metric not only from month to month but also the sales dynamics compared to the same period in the previous year.
Cost per conversion: analyzing two parameters: CPL (Cost per Lead) – the cost of a qualified lead who fills out a form on the website or calls the company, i.e., provides their details for sales to interact with. CAC (Customer Acquisition Cost) – the cost of acquiring a customer who signs a contract and makes a payment.
Average order value: the ratio of total purchase amount to the number of orders, indicating your average revenue per purchase. It shows how much your customers are willing to pay, the peak times for sales, and the effectiveness of promotions and loyalty programs.
Return on Marketing Investment (ROMI): this metric shows whether the advertising campaign has been profitable overall and how much profit it has brought to the company.
Marketing indicators help evaluate the effectiveness of the marketing team. We use them as a thermometer to measure success. A properly structured system for analyzing key performance indicators allows us to influence the company’s development and increase business profit.
