Despite the tactical approach that most businesses take when it comes to marketing, data-driven decision-making must be at the very core of a business’s marketing efforts if you want to achieve real, lasting success.
But knowing that marketing measurement matters is only the start. With a surplus of metrics available at your fingertips, how do you know what you should be measuring, exactly? How do you determine what data points are “nice to have” and which are “must-haves”?
The key is to determine your company’s key performance indicators, also known as KPIs.
Defined by Investopedia as a set of quantifiable measurements used to gauge a company’s overall long-term performance, key performance indicators (KPIs) help you define success as it pertains to your brand’s objectives and orient your progress in relation to those goals.
Defining KPIs
As mentioned, key performance indicators (KPIs) are not merely conceptual. Rather, they are concrete, objective markers of your progress – and ultimately, your success.
There are several common categories of KPIs, and what you measure depends on your company’s unique characteristics.
The primary types of KPIs you can measure are:
Financial KPIs
Customer-centric KPIs
Process-based KPIs
When it comes to your marketing plan, financial KPIs include things such as return-on-investment for your marketing efforts, profit margins, profits gained from leads who found out about you through your marketing, revenue/sales per channel, conversion rates (per channel) – you get the idea.
Customer-centric KPIs may focus more on the lifespan of a customer, or the ratio of marketing-qualified leads to closed deals. These KPIs can include a range of metrics, from retention rates, length of the customer lifecycle (and how this relates to different lead sources).
It can also mean looking at the monetary value of a customer over time, and how this compares to the upfront investments to acquire a new customer. (How much does it cost you, in marketing spend, to sign on a new customer? How long does it take?)
Finally, process-oriented KPIs look at the effectiveness of the actual systems you have in place. In terms of your marketing, some examples include social media views/engagement, open rates in response to your email marketing campaign, blog post visits, increased website traffic, etc.
Developing a KPI Strategy
Developing a KPI strategy begins with understanding your organization's goals. From there, you must work backward and analyze the nuances in terms of how those goals are achieved from an action-oriented standpoint, and what data points connect to those specific actions.
Like any type of strategy, a KPI strategy isn’t a one-and-done creation – rather, it evolves over time.
With each iteration and development, you will gain a better understanding of which business processes are relevant to your KPI analysis, and how to deepen your KPI strategy moving forward.
If you are unsure of what your meaningful metrics – namely, your KPIs – truly are, here are some questions to reflect on:
What is your brand’s current primary goal and/or objective?
What does your desired outcome look like? (What does success look like?)
How can you measure your progress towards this result?
How can you influence the outcome of your company’s actions?
Who or what is involved in achieving the business outcome?
How will you know you’ve achieved your outcome?
How often will you review progress towards the outcome?
While everyone can get a dopamine rush from “likes” or “follows,” whether these results truly matter to your business (beyond the ego boost) determines on your definition of success, today and in the future.
KPIs need context to be effective, as well as alignment. To determine whether you are truly clear on your KPI strategy, you should be able to articulate what you're measuring – and why.
If you aren't making progress against your KPI, your objective may have missed the mark, and it may be time to reevaluate the alignment between your company’s goals and the metrics you are prioritizing. After all, your KPIs must be aligned with the strategic goals of your organization. Without alignment, you are working towards a goal that may look good on the surface, but likely won’t have the impact on your organization you might anticipate.
When you review your KPIs, do so from two perspectives:
Progress against the KPI
Progress in determining the effectiveness of the KPI
As your company grows, your KPIs might evolve too. As you measure your progress, be sure to take the time to evaluate whether your well-laid plans – and perspectives – are still relevant, or whether it’s time to sit down and make some much-needed changes to your KPI strategy.
You might not get it right the first time – and that’s okay! Over time, you can tweak and refine your KPI strategy to truly reflect your brand… but only if you start. Establishing any KPIs is better than leaving your data on the shelf, so start somewhere by taking the time to invest in developing a data-driven strategy to guide your firm.
Still not sure what metrics should be in the running for your brand’s KPIs? Our data-driven team can help you not only achieve marketing success but to measure it effectively. Contact us today to begin the discussion!