Best Uses for KPIs with Digital Marketing for Your Business:

Why KPIs are paramount for success

It wasn’t that long ago when the concepts of both business success and profitability were measured simply by the accountant’s quarterly and/or year-end bottom lines. Today, metrics and analytics play a significant role in profitability, growth potential, market share, potential market base and demographics, to name but a fraction of the parameters used to determine a company’s “worth” and growth potential, including social media engagement, search engine rankings and SEO effectiveness.

Keeping a vigilant watch on all of these factors is necessary for implementing any true successful and effective marketing plan; as well as for tracking the outcomes of the various strategies used for marketing campaigns and brand awareness.

One of the main processes used for these decisions — particularly in digital marketing — is the use of KPIs, also known as “Key Performance Indicators”.

But what exactly are KPIs and why are they considered so important? Let’s explore this and learn about some relevant examples of best use case practices.

What are KPIs?

To begin with, KPIs are not something new that have just come along with the full-on advent of the internet. The concept was actually hatched in the early 90s — known back then in the age of dinosaurs as simply “performance indicators” — by Peter Drucker, in an effort to correlate progress in business goals and outcomes in real-time.

Today, KPIs are much more complex and are considered one of the fundamental elements to organizing a clear path of marketing goals and outcomes. They should not be confused with digital marketing metrics, which are small individual data points used to determine if aspects of campaign goals are being successfully achieved. KPIs go much deeper.

Also, KPIs are often associated with numbers that represent monetary value. But in fact, they are actually about the non-financial metrics of a company’s business, such as strategic and operational processes, which in turn factor heavily on a business’s profitability.

The best KPIs follow this SMART criterion:

S — Specific purpose

M — Measurable

A — Achievable

R — Relevant

T — Time bound

There are key stages to follow for properly using KPIs. First, you must have a predetermined business process that has been fully fleshed out and has requirements that are followed.

Second, determine the qualitative and quantitative measurements of your business process requirements. Knowing this ensures you’re looking at the right data set in an understandable, meaningful and measurable way (eg. the performances of your organization’s sales team, overall sales, market reach, regional and global reach, etc.)

Lastly, know how to tweak undesirable variances for maximum gain.

Types of KPIs

KPIs come in all shapes and sizes, and each has a specific purpose. The most recognized KPIs are:

1. Quantitative KPIs — this is basically anything that involves numbers such as users, impressions, visit times, etc. (examples presented further down this article). This is generally the style of KPI that people associate with.
2. Qualitative KPI — instead of being number based, this focuses more on description, say like employee contentment, for example.
3. Operational KPI — this is designed to evaluate the overall efficiency of a company’s day-to-day operational procedures, focusing on sales. Some examples are cost-per-conversion and lead conversion ratios, and cost per acquisition.
4. Strategic KPI — This focuses more on monitoring progress and/or trends that are moving toward a stated end game mission goal; big picture goals, if you will.
5. Leading KPI — This is designed to measure the existing patterns before commiting to a trend or pattern. It can help for future pivoting. And,
6. Lagging KPI — In contrast to leading KPI, a lagging KPI assesses the performance after following a trend, such as total sales for the last fiscal year.

KPIs and Digital Marketing

One of the benefits of digital marketing over traditional marketing is its ability to quantify and measure all of a company’s actions online. So it goes without saying (although I guess I’m just about to) that it is important to track all of these actions for evaluation to see where improvements can be made. What worked? What didn’t? Enter KPIs.

Let’s face it, numbers matter. Worth needs to be quantified. But having these numbers doesn’t guarantee success. Extrapolating and fully understanding what these numbers mean is the true key. Which of these numbers should you focus on most to maximize profitability and growth? How does one go about measuring the KPIs for an effective digital marketing strategy?

Good Examples of KPI Usage

Here are some of the best KPI use case examples for digital marketing:

1. ROI (Return on Investment): This is calculated by taking the benefit (return) of an investment divided by the cost of the investment; typically presented as a percentage or ratio. Obviously, the goal here is to get a higher percentage, meaning more money is coming in than going out.
2. Increased Sales: Are you seeing quarter-to-quarter or YOY sales growth? Does this account for inflation and increasing/decreasing dollar values? Does the increase satisfy your stakeholders or match your projections?
3. Traffic sources: This is focused specifically on web traffic, honing in on the implemented SEO strategy and search engine analytics for a website. Which web-based sources were the most effective, had the widest reach, biggest engagement and longest viewing times?
4. Conversion rate: This is calculated by taking the number of “conversions” divided by the number or total ad interactions. Which campaigns were most effective in creating new customers? Why? What is the percentage increase/decrease for each campaign?
5. Social media: What is the audience size for each platform you used to advertise/inform? Monitoring the amount of followers, both repeat and new, that you’ve achieved on each social platform is invaluable for moving forward with your next strategies.
6. Sales Funnels: This is important to know in regards to your native advertising; the overarching process used to attract customers. Where was there a breakdown along the funnel if a sale was lost?
7. CTA (Call-to-action) Conversion Rate: These are contact and industry leads and cold calls that are recipients of your marketing campaigns, usually in the form of emails, blogs, info-articles or phone calls. What percentage of these efforts converted into new and repeat sales? Which methods worked the best?
8. Average Time on Page: Knowing how long each unique visitor spends on a web page and at what point there is disengagement is valuable information for restructuring links and layout.
9. Page Authority: What is your ranking on the various search engines? Are you at the top? On the first page?

10) Keywords: Which keywords got the most hits? The least? What are the industry “hot topics”?

11) Mobile Devices vs. Laptops: What device got the most engagement? Which type of mobile phone was used most? Apps or SMS, which worked best?

12) CPL (Cost Per Lead): This is an online pricing model where the advertiser pays for leads based on product interest. Did these leads pan out? Should you switch companies/platforms that provide them?

KPIs and what they can do for you

Hopefully this article helped clarify the merits, advantages and best practices for KPI implementation for your business. As you can see, there are myriad types of KPIs that can benefit your business. The key is to implement the ones that most benefit your business needs and budget.