Marketing Objectives and KPIs
“What gets measured, gets managed.” – Peter Drucker, 1954 book titled, “The Practice of Management.”
So, it’s crucial that your business activities, whether marketing, sales, or operational, are measured to give you the necessary insights to help you make decisions resulting in building a successful business.
Marketing Analytics is analyzing and interpreting data, setting up goals, strategies, and KPIs for marketing activities. It’s about creating a strategic roadmap for businesses.
If you are familiar with Analytical tools, you know how easy it is to be overwhelmed by all the Key Performance Indicator (KPI) buzz words and data generated by such tools.
Modern analytical tools generate a ton of data points, but are all those data points meaningful? How can they be used to tell if your marketing strategy is working? In this article, we will discuss:
- How KPIs are set up and available tools that let you track such numbers
- How KPIs relate to business objectives
- Why less is more when it comes to the number of KPIs
Marketing objectives are specific goals set by businesses when promoting their products & services to prospective consumers within a given time frame. These objectives are necessary for any business that wants to raise awareness about its products & services.
Marketing objectives set by the business are achieved if they are tracked, measured, and managed along the way. This is where KPIs come in. KPIs are quantifiable, and so it is easy to measure and compare them to understand trends and evaluate marketing objectives.
It is crucial to ensure the KPIs are SMART, i.e., Specific, Measurable, Achievable, Realistic, and Time-specific. The SMART approach helps you to effectively manage marketing activities and determine how successful your marketing objectives will be.
For example, the following are some of the Marketing Objectives a business may want to achieve
- Improve Product Awareness
- Generate Qualified Leads
These objectives can be tracked and measured by KPIs we are going to discuss later in this article. A KPI can be based on one or more metrics. The metrics used in this conversation are based on digital marketing strategies.
Setting up and Managing Digital Marketing KPIs
Let us consider a store selling sports equipment. Let us assume they have an objective to increase Sports Bike leads for 2020.
You can set up a KPI to track such leads. Here’s how you might define that KPI:
- Name: Sports Bike Leads
- Objective: To increase Sports Bike leads by 15% in the year 2020. Achieving this target will allow you to beat your revenue expectations.
- Strategy: Drive traffic to the website and Social Media page on topics related to Sports Bike and have the target audience call or signup online for test rides or request quotes.
- Measurement: Compare the number of leads generated in 2020 vs. 2019. The increase is expressed as a percentage.
- Optimization: The Digital Marketing team will be responsible for optimizing and adjusting the strategy ensuring short term goals (for example, quarterly goals) are routinely met.
- Performance: Increased sales of Sports Bikes.
- Evaluation: By the end of the year, but the progress will be reviewed monthly or quarterly with benchmarks. If you are not hitting these benchmarks, something is wrong with how the KPI is set up. You need to review and revise.
How many KPIs should you track?
So, how many KPIs do your businesses need to track? The answer varies from business to business and how your organization is set up.
KPIs should be set up with the business context and the marketing objectives in mind; otherwise, KPIs are just a meaningless set of numbers. Putting some thoughts into setting up a KPI will allow you to know not only what the KPIs are but also how they connect to your organization’s goals.
Fewer KPIs are better. Tracking too many KPIs can turn into overhead and a waste of time. It is not how many KPIs we have set up that is important, but whether these KPIs are providing the necessary insights for a business needs to operate effectively, efficiently, and profitably.
KPIs and Marketing Activities
As discussed above, once you establish your marketing objectives, you need to decide how you measure your progress. KPIs provide the necessary information to measure their progress towards a defined purpose.
Marketing KPIs can be about
- Leads, Prospects, and Customers
- Conversions, Content, Emails, and Social Media
- Other KPIs
KPIs about Leads, Prospects, and Customers
Following are some of the KPIs you can track on this topic. The list of KPIs can be very long, but here is a shortlist of some of the critical KPIs you can track.
Customer Acquisition Cost (CAC)
CAC is the total (marketing + sales) cost required to earn a new customer over a specific period. If you spent $1000/- and earned 20 customers in a year, your CAC is $50/-
Leads generated is the number of leads generated in a given timeframe.
Cost Per Lead (CPL)
CPL is how much does it cost you to bring in a lead from your marketing. The leads are when you turn relative strangers into prospects. Converting leads to prospects is a critical initial step in your marketing performance tracking.
Traffic to Lead Ratio
Only a percentage of leads turn into customers. Tracking this conversion rate helps to know how many leads you need to get to hit your customer acquisition targets. It is one of the numbers that go into lead generation advertising decisions.
CPL and the number of leads generated per campaign will also help you calculate the total cost of the campaign & ROI on your marketing campaign.
Traffic to lead ratio tells you how many page views, clicks you need before someone becomes a lead.
When you know how much each leads costs, how many leads become customers, and how many customers you need, you can define your campaign expectations better.
Metrics and KPIs about Conversions, Site Content, Emails, Revenue, and Social Media
Metrics for different stages of Buyer’s journey
Landing Page Conversion Rate
Landing pages are designed to convert site visitors into leads or, better yet, Sales!
Landing Page Conversion Rate is the percentage of time visitors convert on your offering upon visiting your landing page. Landing page offers could be a lead magnet, content upgrade, coupon code, or an invitation to purchase an article.
Page visits are the number of times users visit a site. Page Visits help understand the popularity of a site. A Page Visit can mean multiple Page Views. In general, an average higher Page Views/ Page Visit ratio indicates better content, navigation, and a better conversion rate.
It is the percentage of visitors to a particular website who navigate away from the site after viewing only one page. Businesses should take note of higher Bounce Rate pages and see why visitors are leaving the site just after visiting one page.
Average Session Duration (ASD)
ASD is the average length of all site visits combined. ASD is measured in seconds. Like bounce rate and pages per session, average session duration contributes to the user engagement activity by indicating how long users stay on your site. ASD is an important KPI for reporting user engagement, the true value of your site content.
You may also want to track other metrics like All Page Views vs. Unique Page Views, Referral traffic vs. Organic, Desktop traffic vs. Mobile traffic etc. As we discussed earlier in the article, based on your objectives and the campaigns you are measuring, you can track different metrics. Here is a link to a comprehensive list of Google Analytics Glossary of terms.
If you are running Social Media campaigns on Facebook, Instagram, or YouTube, you may want to track the metrics like Likes, Follows, Top Videos, and Avg. Watch time, Engagements, Top Engagements, Stories, and Top Stories, etc.
Average Order Value (AOV):
AOV is the average amount spent each time a customer places an order on an E-commerce website. AOV is calculated as a ratio of total revenue generated by the number of orders. Increasing this value is a road to higher profitability.
Some of the AOV increasing techniques to entice buyers are:
- Cross-Selling – selling related products.
- Upselling – a more expensive product than the one already in the shopping cart.
- Volume discounts – Buy another pair of shoes for 10% off.
- Free shipping – if the Buyer spends an additional $50/-
Breakdown of traffic sources and how the traffic volume is distributed across different traffic channels.
- Organic search traffic: Traffic generated from search engines.
- Direct traffic: Traffic generated by people directly entering the URL in the browser.
- Social traffic: Traffic coming from Social Media sites like Facebook, Instagram, Twitter, etc.
- Referral traffic: Traffic coming from people clicking on links in emails.
- Paid traffic: Traffic generated using Google Ads, Facebook Ads, etc.
If a business is spending a significant of money on Search Optimization and the Search Traffic is not trending high, it is an indication of the ineffective campaign. Similar inferences can be made on email and Paid Ad marketing campaigns.
Email marketing is an effective marketing strategy. This is how businesses effectively communicate with their prospects and customers. So, every email marketing campaign should be tracked, analyzed, and fine-tuned for marketing success.
The following are some of the KPIs that should be tracked and analyzed for Email marketing success.
- Delivery Rate: Percentage of your emails make it into the inbox or junk folder.
- Unsubscribe Rate: Rate at which the people unsubscribed your email. It is the ratio of the number of Unsubscribes/ number of delivered emails.
- Open Rate: Rate at which the people opened your email. It is the ratio of a number of Opened emails/numbers of delivered emails.
- Click-Through Rate: It is expressed as a percentage of a number of clicks/number of opened emails. A higher percentage indicates a higher level of engagement by users.
- Conversion Rate: Conversion rate is a crucial overall email marketing KPI because it means business. This conversion rate denotes the number of email recipients who clicked call-to-action (CTA) link within your email and took the suggested action.
Tools to Help Monitor KPIs
Most of the discussed metrics related to the KPIs can be tracked using Google Analytics. Social Media (Facebook, YouTube, Instagram, LinkedIn, etc.) and Email (Mailchimp, Constant Contact, SharpSpring, HubSpot, etc.) related metrics can be tracked using the analytics platform available through respective applications.
Also, there are third-party tools in the marketplace that do similar tracking with advanced reporting abilities. There are reporting tools like Google Data Studio, which can bring data from multiple platforms (website, social, email) and present it in dashboard format so businesses can see all the relevant metrics related to their business in one place.
Analytical and reporting tools like Google Analytics and Google Data Studio are free, and effective use of these tools add value to your business!
KPIs and Overall Business Strategy
KPIs are an essential tool for evaluating and meeting your business objectives. They allow you to draw useful insights into your marketing strategies and what changes you may need to make to stay on track to reach your goals.
Defining and tracking well structured KPIs helps you measure marketing activities and may also help define the roles of the stakeholders of those activities.
By tracking and analyzing the marketing data, businesses can better understand:
- the current state of marketing – whom businesses are reaching, which keywords bring more traffic, which ads are generating more engagement, what is the engagement level, what is working vs. not working etc.
- the trends and adjustment – the trends businesses want to stay away from or continue and whether they need any adjustments in their strategies to reach their goal.
- competitors – who they are and why are they doing better and is there anything businesses can learn from competitors
For more information on KPIs and generating a solid marketing strategy, feel free to contact us at [email protected] or at 972-635-3550