Key Performance Indicator (KPI) helps you determine your marketing campaigns performance. When you know your marketing KPIs, you can pinpoint the best ways to improve your results.
Below we go through how to measure the marketing KPIs for a fictional company. The Internet gives us a flood of marketing data at our fingertips. Our job is to measure only the numbers we need to grow our business.
To help you, we measure KPIs for a fictionalized widget company, Compatriots Widget Assemblers (CWA). I am sure you heard of their incredible, edible imaginary products and services! Joking aside, this article is going to be super-helpful to you as it is not just a list of marketing KPIs but also examples and formulas that will help you apply them in your own business.
In this post, we discuss all sorts of digital marketing KPIs, lead generation KPIs, email marketing KPIs and more.
How much revenue did your company earn last year? What percentage of this revenue can you link to your marketing campaigns?
A simple online CRM (Salesforce) or accounting tool (Quickbooks) tracks your revenue, so you know how much your company made. Despite being a sales KPI, we need it to figure out your digital marketing KPIs. A sales revenue report is an important marketing KPI because it shows how your marketing works.
The conversion rate measures how many prospects go to the next stage in the lead generation funnel. In most industries, you have a few different stages before an opportunity becomes a client.
Every business has different stages. You need to know how the conversion rate at each step of the lead generation process. You can use CR to calculate your marketing channel productivity. This is an important part of KPIs for websites.
For example, CWA drives 10,000 visitors per month to their website, and 200 visitors sign up to their email list every month. Out of 200 leads, 40 purchase their product. In this case, you have two different conversion rates, one for leads/prospects and another for customers.
In the previous step, we showed the lead conversion rate formula. The second CR explores how many leads become customers. According to HubSpot, the overall average for converting leads to customers is 19%. This number is essential, so you can determine if there is a break later in your marketing or sales funnel.
Often companies are excellent driving traffic and lead, but rotten at converting that traffic to customers. The lead to customer conversion rate helps you identify breaks later in the marketing funnel.
Once you know how much revenue you drove last year, you want to calculate how much it costs to drive each customer to your small business.
You calculate the acquisition cost by taking the total marketing budget divided by the number of new customers in a given period. For example, if CWA spent $3,500 on marketing last month and added 40 new clients, their CAC is $87.50 per customer.
Note: when you add in operations and other intangible costs, your product or service must sell for at least three times the CAC for you to be profitable.
Once you know the CAC, you want to work back and find out how much it costs to generate a lead. Before we do calculate this number, let us define a lead. Below we discuss the difference between Marketing Qualified Leads and Sales Qualified Leads.
For now, the Cost Per Lead is the number of prospects who sign up to your website for your free offers. Theoffer could be a webinar, eBook, white paper, checklist, demo, trial, or consultation.
The list varies widely, but the idea is that a lead is a website visitor who takes action on the information on your website. The CPL divides the marketing budget by the number of leads to determine how much it cost to convert each lead. Lead management KPIs like this are important to identify the most cost-effective ways to generate leads.
This type of marketing KPI is also very important for a business that uses a lot of different channels.
Not all leads are the same. Marketing departments need to identify the prospects most likely to buy your services based on their prior activity. Many companies use marketing automation tools to filter high-quality prospect from the rest. This is an example of another KPI for lead generation that works.
Interested prospects are the Marketing Qualified Leads (MQL). These prospects took a specific step like filling out multiple website forms or a long website form.
Once the marketing department approves the MQL, they send them to the sales department to see if they qualify as Sales Qualified Leads (SQL). The sales department looks for prospects who are ready to speak with them.
For example, when an MQL schedules an appointment, they then become an SQL.
At this point, you want to explore how what the ratio of MQL become SQL to make sure your funnel works. You can use the formula to check the CR across your lead generation funnel. For simplicity, we explore the MQL to SQL ratio.
Now we need to explore which marketing channel provides the highest return on investment (ROI). We have so many options at our disposal to drive traffic today that we need to spend time making sure we use the platform with the highest quality leads.
Of course PPC advertising, SEO and other marketing channels we use every day are also important, but for simplicity’s sake, let’s say CWA generates website traffic from two channels:
The key to track which channels drive specific leads is a unique tracking link. In the formula below, the social media traffic has a conversion rate that is two times higher than search engine traffic. Once you know the best channel, focus your efforts and budget on social media traffic to increase your traffic and leads.
Once you have a few clients, you need to estimate how much each client is worth. Often, an initial client purchase is smaller, so they can test the waters. As long as you deliver a valuable service, they keep coming back.
Let’s say a CWA client initial spend is $50. Then their monthly order is $100 over the next three years. You can use this to calculate their lifetime customer value.
The majority of the marketing KPIs in this article revolve around generating website traffic. However, a website has their own set of data points to incorporate into your marketing KPIs. These common website metrics help you understand the quality of your site traffic.
These are by no means the only numbers you can use. You should also consider the demographic and device statistics for your website. For example, do more men or women visit your site? Are visitors coming to your website from a mobile device or desktop computer? These digital marketing metrics provide powerful insights into the living, breathing organism that is your business website!
Many numbers including website demographic you can get directly from your Google Analytics.
Let’s clarify a few website terms. A website visitor is someone who checks out your website. Easy enough! However, some website users return to your site more than once (see #12 below). Every time a visitor returns to your website that is called a session.
For example, one unique website visitor can have multiple sessions to your website. When website admins talk about 10,000 visits to their site last month, they refer to the number of sessions on their website.
When you track unique visitors to your site every month, you want to know how many returned more than once. For instance, CWA might have 10,000 website visitors per month, but only 6,000 unique visitors. Therefore, at least 4,000 visitors returned more than once.
It is important for your marketing efforts to measure your returning visitors to determine which campaigns are working and which aren’t.
What pages attract the most initial interest from visitors? Is there a reason why that page or pages draw so much attention? For example, did you write a blog post that went viral? Maybe you have some catchy graphics and content that pulls in social media visitors?
The more information you have about what landing pages pull in the best results, the more you can duplicate those results.
It is important for your marketing efforts to know which of your landing pages are converting customers so you can duplicate those results in the future.
You want to know the top pages customers come in on your website and where they leave. If you see a discrepancy, like one website page has an overwhelming number of exits, then you probably need to update that page.
It is important for marketing success to fix the user experience on any or all of those underperforming pages.
Often the landing and exit pages are the same. When a visitor leaves your site before going to another website page, it is called a bounce. Like I got abounce from here. Your job is to know why visitors bounce from your site. Maybe visitors expect something different when they land on your website or the speed is too slow.
If visitors do not bounce, then how many pages do they look at on your website? The more pages they check in a session, the more interested they are in your website. The one exception is that the number is too high compared to the average time on site (see #17 below). The discrepancy might indicate that your visitors cannot find the information they need and leave your site.
This number is straightforward. How long do visitors stay on your site? The longer they are on your site, the more likely they appreciate your content.
Also, count how much time they spend on each page of your site.
Email marketing is a significant component of your lead generation strategy. Therefore, you need to make sure your list receives your emails. Then you can measure your email marketing KPIs.
If you find too many emails never get delivered, your email might be going into spam. You need to find out what blacklists you are on, and then make sure you take corrective steps to remove yourself from these databases.
The goal is to get a 100% deliverability rate. However, because it is not always possible anything over 98% deliverability is good. You will still have a few bounces because someone deletes an email account or your email is too big for their inbox.
Let’s assume you get 100% deliverability. Now you need to know how many subscribers unsubscribed in each email. Once you get over a certain size, it is guaranteed to happen with every email. The key is to minimize the losses here. Your unsubscribe rate should be less than .5%.
Compare your email unsubscribes over time. If you have a list of 5,000 email subscribers, you should average less than 10-20 unsubscribes every email. Then if an email costs you 50 subscribers, you know the message was not appropriate for your audience.
How many subscribers opened your email? The higher your open rate, the more opportunities for readers to click on your link. Usually, you can determine the success and failures of your marketing strategy on these two numbers.
If you have a high open rate, then your headline and preview text inspired your audience to learn more. Depending upon whether your audience liked the email content determines how many click through to the next page.
As you can see, your digital marketing KPIs tell a complete snapshot of how your company operates. The challenge is that you need to know what metrics to look for in your marketing. If you have questions about which marketing KPIs you should use for your business, please contact us today for a free consultation.
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