February 16, 2017
Analysis and performance monitoring is one of the most important aspects of digital marketing campaigns. There is discussion deep and wide these days about collecting data and forcing your organization to be decision makers driven by data. But where do you start? Too often we see brands who are eager to get into the weeds of data cultivation before they have established their goals, and most importantly, the core metrics that benchmark those goals. Enter KPI’s or Key Performance Indicators. KPI’s are measurable value markers that guide what data to collect and further shape how your collect it. As 2017 kicks into gear we decided to simplify this complex concept and give you the top 15 must track KPI’s. Lets dig in.
How to choose the best KPI’s for your campaign?
Your KPIs will depend on what you need from your digital marketing so it’s important to consider previous and current data carefully before you make a list of indicators to track. Where you want to go highly depends on where you’ve been, so be sure to set a baseline for each KPI so that you can effectively measure growth rates. For example, if you have never before monitored website traffic, you should carefully consider setting up analytics for a period of time before you choose indicators so that you can accurately set benchmarks. We will cover how to set up tracking in future posts, but for this article, we are going to focus simply on key performance indicator examples.
1. Site Traffic Volume
If you don’t know where to start, start here. Website traffic is the gasoline to your digital marketing engine, so it would make sense to ensure your not running on empty if you want to travel cross country. Monitoring site traffic will help you optimize your digital marketing campaigns on the front end of your funnel. You should be breaking down not just volume here but channel as well. Your goal is to achieve diversity from your traffic sources. It’s important to determine what percentage of your traffic is coming from search engines vs social channel, etc. If you are weak in say organic traffic compared to paid traffic then you’ll see an impact via your KPI’s. This is one of the best core key performance indicators you can track because it can tell you a lot about the overall health of your marketing campaigns.
2. Content Traffic Volume
After you have a handle on site traffic, push your brand to go deeper and look at traffic in particular areas of your website as well. Content marketing is essential if you want to bring organic traffic to your website. Content sections on your website, like a blog for instance, are the hub for most digital efforts. Often times this is a great place to start. for this KPI example breakdown and analyze which pages and articles are popular and what steps you need to take to increase customer engagement.
3. Traffic Source Percentage
Your website will receive traffic through different sources, and if you watch the sources, you will be able to optimize your marketing campaign accordingly. Traffic source performance KPIs will also help you determine which campaigns you should invest more into because they provide better results. When tracking this KPI, segmentation is key.
4. Traffic Source Volume
Pay-per-click management can be a drain on your marketing budget if you don’t keep proper track of the incoming traffic and related conversion rates. PPC traffic volume is an important performance indicator to monitor if you have an active paid ad campaign. PPC KPI’s are all about measuring return on your investment. If your benchmarks are being hit consistently here you have a math equation for profit. If they aren’t then you are simply losing money and need to ditch the losers in your paid campaigns before they consume your revenue.
5. Click-Through Rates
You need to compare click-through rates with conversion rates in PPC to determine just how successful your paid marketing campaign is. If you have high click-through rates and low conversion rates, you’re wasting your money. On the opposite side of the coin if you have low click-through rates and high conversion rates there is massive opportunity to increase revenue simply by improving this one KPI.
6. Unique Visitors vs. Returning Visitors
Both unique and returning visitors have their own value. Unique visitors indicate new sources of revenue while returning visitors indicate consistency, customer satisfaction, and enduring sources of revenue. It’s important to keep track of both metrics and adjust your marketing campaign if needed.
7. Time On Site
The more time your visitors spend on the site, the more likely they are to convert. It’s important to know the average length of each visit because it indicates just how effective your web pages and their content is. If your visitors spend too little time on your website and don’t convert at the end of the visit, you need to optimize the look and content of your pages.
8. Page Views Per Visit
Page views will tell you about the distribution of traffic. For example, you may have visitors just accesses the homepage, linger for awhile and leave. This indicates that they haven’t engaged or expressed an interest in your content, products, or message. However, if your pages per visit KPI is healthy it can indicate content and messaging on your website is engaging your audience. This produces an environment where your website traffic is more likely to convert on the buying propositions you offer.
It goes without saying that this is a must have on your KPI list. This is one of the most important key performance indicators because it gives you an overall picture of how effective the flow of your marketing campaign is. One less obvious angle to track here though is revenue by the hour. For example, if your revenue dips during weekends or evenings it may indicate a less opportune time to drip your content especially if you are paying to boost or advertise your pages.
10. Conversion(Lead) Rates
The conversion rate is the most important KPI to keep track period. This tells you both the performance, the opportunities, and the weaknesses of your digital marketing. You could have high success numbers on all the KPIs mentioned before, but if your conversion rates are low none of the other items could matter that much to your bottom line. The conversion rate KPI will help you refine your marketing campaigns, improve your services, and increase revenue.
11. Cost Per Conversion(lead)
In digital marketing, cost per conversion is a measurement that refers to how much you pay for each action completed. The most important aspect to understand is that you must begin by clearly defining what a conversion is and where that action is in the sales funnel. For example are you looking at purchases? Are you looking at downloads of an ebook? Perhaps your looking at trial signups to a software? In each of those examples as you can imagine the sustainable cost in which you can pay for that action may vary greatly. So while knowing cost per conversion is important, make sure you have a solid grasp of what you can pay per conversion in order to still generate a profit.
12. Lead to Acquisition Ratio
One of the core attributes of a strong digital marketing strategy is lead generation. Not every site visitor or social follower is ready to buy what you have to sell at first encounter. Often times you need to incubate users in the online world through a series of actions. For example you may perhaps be offering your users a coupon, an ebook download, or maybe video access, in exchange for their email address. The person behind this email address is now a lead for you to nurture, convince, and convert. Through every lead you have an opportunity to acquire them. The rate at which you can transform someone from a lead to an actual customer is the lead to acquisition ratio KPI example.
13. Cost Per Acquisition
You spend money on every customer acquisition. Generally the idea with your marketing is to minimize how much you spend on a converting customer and increase your profits. It always surprises us how many questions we get about this KPI and the lack of businesses who track this fundamental number. You must track this in 2017.
14. Average Order Value
Average order value is a good way to keep track of each customer on each conversion. This KPI will give a more in-depth understanding of traffic, customer behavior, and the effectiveness of your marketing campaigns. If you are talking to the right audience, and driving them through your content funnels efficiently, this number will be strong.
15. Customer Lifetime Value
Every customer you acquire through your marketing campaigns will provide revenue at the time of purchase. Too often we see businesses stop here. But there is much more to the story of value and tracking this KPI will help you uncover that story. We have witnessed businesses scrap marketing campaigns who do not turn a profit simply based on the cost per acquisition and average order value. This is a big mistake. You can’t fundamentally determine if you are profitable until you have analyzed how much a customer spends with you over time. It is important to note that customer lifetime value is an evolving metrics. Cross-selling, up-selling, and improving client retention are key strategies to increasing customer lifetime value.
Transforming into a data driven company can be a challenge. If you have any questions at all we are here to help! Contact us today and talk to one of our strategies about where to start. This list of 15 KPI’s is just the tip of the iceberg, but getting organized and consistent in tracking these in 2017 can help propel your performance to a different level.