You don’t know what a KPI is? No worries: KPI is the abbreviation of Key Performance Indicator. Or, in other words: what is the most important result to measure your success?
Financial and salespeople know exactly what their KPIs are: cash flow, growth, turnover, margin, new business ratio, etc.
But marketing? Have KPIs been set down for marketing? Does the marketing team know and support them?
"Oh! But we have Google Analytics and get reports from Google AdWords, Facebook, Twitter … Our marketing is perfectly measurable."
Hmmm.
First of all, marketing is more than digital marketing alone and second of all … figures can lie sometimes.
The danger in measurable marketing is that you are swamped with data. So, what's really important?
Google Analytics, for example, offers you dozens – if not hundreds – of metrics to analyze website visits. However, a lot of people find it difficult to go beyond simply making lists of the figures.
There's a big difference between the figures. Some boost your ego ("Look how many fans we have already!"), while others allow you to take concrete action ("X percentage of our new visitors effectively become customers"). You can call these vanity metrics versus actionable metrics.
Vanity metrics measure your company's vanity. They also measure vain hope, because there's not much you can do with or learn from these figures.
Examples of vanity metrics:
Actionable metrics will help you optimise your channels. Do more visitors lead to more new customers? Can we improve our online processes to enable us to get more new customers from the same number of visitors? Or can we convince existing customers to buy more of our products or buy them more frequently?
But metrics are not KPIs. You will need to determine KPIs and monitor them.
A KPI helps you focus. Where do we want to go as a company, team or individual? Goals do not remain empty boxes but are rendered into concrete action plans. Achieving these goals is expressed in figures.
KPIs are not only figures that look back at the past; they also offer a perspective. In the meantime, you can see if you are on schedule, or where you should make adjustments.
Consultants just love to strew acronyms about. It's a great gimmick and a mnemonic device that helps you remember things. You have probably heard about SMART goals already. SMART is the acronym for specific, measurable, attainable, relevant, time-bound.
You probably expected a list of marketing KPIs here. However, an extremely long list is not a good starting point. Dividing KPIs into relevant categories is a much better way to get started. A commonly used technique (and one that we apply ourselves) is the RACE model of Smart Insights. RACE is an acronym and stands for Reach, Act, Convert and Engage.
Examples of KPIs per category:
Reach
Act
Convert
Engagement
That's a lot to make you think. Of course, there are also other ways of categorising KPIs. For example, according to the teams you are going to report to:
Every business is unique and faces different challenges. A news website, for example, will focus on getting the widest reach possible. Because this more easily yields income from advertisements. A specialised online store will be particularly interested in getting as many customers as possible within its target audience that can create as much turnover as possible.
The growth phase that a business (or business unit) is in determines the corporate goals and therefore also the KPIs. A starting company shouldn't be all that concerned with Customer Lifetime Value (CLV) and should start by going in search of its first customers, who will bring new customers in their wake.
It all comes down to the ROI of your marketing efforts. An ROI is not just a gut feeling. Branding and community building help to achieve your corporate goals, but in the end, the most important thing in the corporate world is the financial result. In order to grow, you always try to increase your profits and lower your costs. In other words: you want to generate more customers and turnover while keeping the costs for attracting new customers as low as possible.
Can you draw up five significant KPIs for your marketing department? Good job! These are the figures that you want to attain and that will guarantee you a big end-of-year bonus.
Make sure that everyone knows what they mean and why they are important. By "everyone" we don't mean just the marketing staff, but also senior management or other departments.
Discuss the status of the KPIs during monthly meetings or updates so that everyone feels involved. Briefly explain why goals were or were not achieved.
If specific tactics don't work to achieve your goals, don't hesitate to change. Or, if the strategy works better than anticipated, try to get the most out of it by refining the tactic for even better results, or apply the tactic to other products or services.
Because KPIs are so important for your business and, therefore, also for the marketing department, they should not be left to gather digital dust in some Excel file, but have to be easily accessible in the tool that you use every day.
That is the Husky philosophy in a nutshell. Hence the reason why you should add a monthly KPI to every project in the Results module. Every KPI consists of goals and the results you have achieved. Focused, monitorable on a monthly basis and accessible to everyone in the marketing department.
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