It seems like no matter what industry you work in, the term KPIs is constantly being thrown around.
But what exactly are KPIs when it comes to digital marketing? Do you even need to set digital marketing KPIs at all?
Well, today we’ll run through a detailed guide for digital marketers that can help them get the most out of their own key performance indicators, as well as explaining just why they are so vital for business growth and client satisfaction.
KPIs, or key performance indicators are great ways of ensuring the whole team is across a broader strategy, and without them, measuring success becomes extremely difficult, if not downright impossible.
After all, if you’re not tracking metrics, how do you know if any of your marketing efforts are working or not?
What are KPIs in digital marketing
Digital Marketing Metrics or KPIs are a set of values that are often used by marketing teams to measure and track the performance of their marketing campaigns.
KPIs can range from high-level to low-level – you might be looking at sales growth, brand awareness or lead generation.
They include data such as your online sales revenue, website traffic, SERP, conversion rates, page conversion, marketing qualified leads (MQL), engagement rate, total revenue … phew.
And that’s not even an exhaustive list!
You can measure data across platforms like YouTube, Facebook, Instagram or other socials, as well as Google Ads, Bing Ads, Microsoft Ads or any analytics tools you use.
Just a word of warning, however, before we jump into the heart of KPIs. Only real data matters. If you care about Facebook likes and shares, you won’t be interested in learning more about key performance indicators as this is simply not important.
It’s not a real metric that can actually impact your business growth.
KPIs should be meaningful enough to use in your marketing decisions.
They need to concentrate on material gains in terms of contributing cold hard cash to your bank account.
Why are KPIs important?
Well … you don’t want to be wasting a whole lot of time, money and effort on marketing efforts that are not having impact for your business or the client.
Digital marketing teams use a number of tools to promote their services and products, and tracking the results can often be time consuming and difficult.
By creating specific digital marketing KPIs, it’s easy to determine targets and goals and measure performance based on those values.
For example, if you are making profits but you don’t have any idea where these profits are coming from, that’s a problem. Likewise if all of your traffic is coming from one source of website traffic, but you’re focusing your market efforts elsewhere, that’s not exactly a great use of resources, is it?
Luckily, key performance indicators are easier to measure and keep track of than they used to be – thanks in large part to analytics platforms that your business or marketing agency is probably already signed up to anyway.
Armed with this knowledge, you can simply stop spending money where it doesn’t need to be spent and have a truly killer digital marketing strategy.
The top digital marketing metrics are data-driven and SMART.
That’s specific, measurable, achievable, relevant and time-bound.
In other words, the KPI needs to provide a specific result that digital marketers can measure, that can be identified when you achieve it, is relevant to your goals, and can have a deadline or timeframe applied to it.
This a good rule of thumb for goal-setting in general, but one that becomes even more important when it comes to KPIs in digital marketing.
Never assume that any goal is self-evident. What seems straightforward to you may not be for clients or other team members, so get everybody together (whether that’s on Zoom, Teams or in-person) so you can ensure that you really are all on the same page.
Making sure they are SMART really helps (especially the time-sensitive stage).
Don’t be scared of KPIs, however, as setting and sticking to them can be an invaluable tool for your business and helping your clients.
How to measure KPIs
One of the most important aspects of KPIs is actually choosing what you want to measure. Obviously, you need to choose factors that are actually going to have a tangible impact and effect upon business goals.
Begin by defining your objective, define the success criteria (and how it will be measured).
Normally, KPIs in digital marketing will be connected to a conversion. This is super important at the moment as we find ourselves in such uncertain economic times.
Generally, your conversions chosen should be specific, as in, they are easily defined and measured. Likewise, they have got to be significantly beneficial to your organisation.
This could be something along the lines of a user filling in a contact form, signing up for emails, downloading an ebook, making a purchase or signing up for a consultation.
Sometimes, it pays to come up with an acceptable threshold for measuring success. Say you want to improve conversion rate, and you say you want to do so at a level of 80%, depending on whether or not you’ve set a boundary, you might be called a failure for delivering at a level of 78% improvement.
What should you measure?
Depending on your own goals, you will pick different KPIs. However, there is one general rule which is to pick KPIs in digital marketing that are quantifiable – usually sales or leads. For startups or smaller business you might not be measuring leads yet, but reach and engagement across paid and social media channels are always options.
Another tip is to measure leading indicators. Economists use these in order to show where they think the economy is headed, even if they have nothing concrete. You might look at a low bounce rate even if not all of these people ended up signing your contact form.
What not to measure
Anything you have no control over – if you cannot affect it, you cannot measure it.
Same goes for vanity metrics – anything that can be easily changed, manipulated or simply doesn’t bear a correlation with numbers that actually affect your business success.
The classic example is ranking highly on Google for a keyword like peanut butter, when you’re a Sydney-based SEO company. What would be the point? Sure, you might feel great about your high rankings, but why would anybody who is searching for peanut butter want your services?
Likewise, measuring likes on Facebook is simply a vanity metric. Always go back to the golden rule – does the data being measured have any real effect on your bottom line?
If not, it doesn’t deserve measuring and it certainly doesn’t need to be presented to the client as indicative of any real growth.
The other thing to keep in mind, of course, is the marketing funnel.
If you need to brush up on your marketing funnel knowledge, we’ve got you covered on that front as well.
The marketing funnel can co-exist with measuring KPIs as it helps you scale key performance indicators along the scale, not just focusing on end conversions.
You could have one KPI which looks at the beginning of the funnel – impressions to engagement, while another looks at sales to sharing across socials.
Some key metrics:
Revenue growth is a good place to begin and it’s quite simply the difference between two revenue numbers, perhaps the revenue before and after the campaign.
Customer Acquisition Cost is simply how much it costs your business to get new customers. The lower, the better.
Customers can be acquired through various lead generation methods – paid traffic, socials, email marketing and organic search.
Conversions are another easy one, and as mentioned before it’s simply an action you want a customer to complete – whether it’s a sign-up or a purchase.
Share of voice shows how visible you are compared to your competitors, often an indicator of future growth.
A return on investment is a measure of the impact a campaign or channel had on the revenue of the business. It’s obviously much easier to calculate through channels like paid advertising.
Customer lifetime value is how much revenue a typical customer will generate for you over time.
What will you remember Nike’s marketing for?
These are the most basic KPIs, and where everybody should start before jumping further in to any specific channels and challenges.
Different KPIs for different channels
There will be some KPIs that are going to naturally relate to your overarching business goals, while others will be more channel specific.
Most organisations should be dealing with both of these.
Across channels, there are obvious metrics that can be focused on.
On social, a primary goal will be reach. You can measure followers, engagement, site visits and conversions.
On PPC, you can set your primary KPI as cost-per-acquisition rather than revenue because this is so highly dependent on what you’ve ultimately set your marketing budget for PPC. It’s one area that is very easy to blow out of proportion if you spend too much.
In SEO campaigns you might be measuring keyword rankings, bounce rate, domain authority and search traffic.
It’s important to note that the channels don’t all have the same primary KPI. This is because not all channels are likely to have a direct impact on revenue/conversions.
From KPIs to reporting
With digital marketing, perhaps more so than in other industries, almost everything is quantifiable – you may have heard the saying a few times that it really is a numbers game.
But after you’ve measured your KPIs, it’s time to do everybody’s favourite parts and write a nice succinct report so it becomes understandable for everyone.