Marketing Key Performance Indicators (KPIs) are useful for developing successful marketing strategies which will help your brand in growing and generating more revenue.
For any marketing campaign, you will need to track its effectiveness and for it to be labelled as successful, you will need a set of KPIs that will help you measure its progress.
KPIs are ideally used as a measure towards a defined business goal by using the data collected in your marketing campaigns that can be analysed with marketing software such as Optimiser. Without a set number of KPIs, what you will have in your hands will be raw data with no context. The aim is to use this data and transform it into insights that will boost the business.
KPIs are slightly different from marketing metrics. While the former is tied to progress, the latter talks about the status of marketing campaigns. KPI is about the performance of specific projects and campaigns whereas metrics track whether the marketing campaigns are meeting the KPI and business goals or not.
Here's why your business should place emphasis on KPIs:
1. It keeps your teams aligned and ensures they are on the same page about the ongoing project.
2. It assists in the health check of the organisation and ensures that important risk factors, financial indicators etc. are under observation.
3. KPIs can help you make adjustments within your organisation by providing a realistic view of your successes and failures. You can analyse what tactics are working for you and which need to be excluded.
4. These improve the level of accountability within your teams and track the progress of every employee and help managers in moving things along.
KPI in Marketing
KPI is very important for marketing as it will help you in defining various things such as
1. Marketing goals and objectives
2. How will these goals be achieved
3. Proving how marketing efforts are generating results
4. Insights for future marketing initiatives
The best CRM for marketing, Optimiser comes with an AI-enabled Marketing Suite that is intuitive and offers robust tools for planning, organising and running effective marketing campaigns and tracking important key performance indicators.
1. Return on Marketing Investment (ROMI)
This is the measure of return of investment or ROI for the marketing team. It is a subcategory for ROI and it focuses on returns concerning specific marketing objectives.
If you have a positive ROMI, it means your campaign has brought more money than what you invested in it. It is what companies are interested in and it is an important aspect when seeking out stakeholders.
To calculate ROMI: (Income from marketing – Marketing cost) / Marketing cost x 100
2. Customer Acquisition Cost (CAC)
CAC examines the costs related to gaining new customers. It includes the program, salaries, commissions, software used, marketing expenses and/ or any overhead used to convert a lead into a paying customer.
CAC can help you in finding out about how much costs your business incurs while acquiring new customers through marketing campaigns and whether they are offline, digital, inbound or outbound.
It is important to note that while calculating CAC, you will need to choose a time frame such as monthly, quarterly, or yearly.
To calculate CAC: (Total marketing expenses + Total sales expenses) / No. of new customers acquired
3. Lead Conversion Rate
Tracking leads is one of the simplest ways to measure sales and marketing performance. It is used by small and bigger businesses.
Adding to this, it is important to find out the percentage of leads that convert into paying customers to analyse the effectiveness of your marketing efforts and to understand if they are successful or not.
This focuses on sales funnel performance and it puts a spotlight on which marketing campaigns have got the highest ROI statistics. Similar to CAC, you will need to choose a specific time frame to measure lead conversion rate.
To calculate Lead Conversion Rate: (No. of leads converted / No. of leads created) x 100
4. Customer Lifetime Value (CLV)
Customer lifetime value is an extremely important KPI as it tracks the amount of money can business can expect from a customer in the average time the customer engages with your business. Additionally, it helps in reducing the churn rate and allows the marketing team to focus on improving customer experience.
If you have an estimate of how much a customer is spending with your business, you will be better informed on how much time and resources you can devote to that customer.
To calculate CLV: Avg. sale per customer x Avg. no. of times a customer buys something per year x Avg. lifetime of a customer
5. Organic Traffic and Search Engine Advertising Traffic
Tracking organic traffic is very important as it is a valuable inbound marketing resource. This is website traffic generated by search engines like Google, Bing etc. About 46% of customers begin their search for finding new products from search engines, these are invaluable as well as directly tied to search engine optimisation (SEO) strategies.
When leads find relevant answers to their questions on your website, they will be more willing to convert. With a solid SEO strategy and content plan, you will have free website traffic and elevated marketing revenue.
Search Engine Advertising or SEA is a pay-per-click based marketing effort that populates many websites and search engine pages. Every lead that clicks on the ad will cost you money.
6. Social Media Marketing ROI
Important for every digital marketing strategy, it is used to educate the audience and build brand awareness. Using account-based marketing strategies, you can promote your brand and boost business.
Metrics that can be tracked for social media performance are:
i. Leads converted through social media
ii. Percentage of traffic on the channels
One of the most simple ways to calculate social media marketing ROI is:
(Social media marketing profits / Total cost of social media marketing efforts) x 100
7. Landing Page Conversion Rate
While making a landing page, it is hard to get a good conversion rate. If people visit the landing page and yet it is not generating new leads, then it is not useful. However, it points that you will need to make a few changes on the page to bring new leads by rewriting your call to action (CTA) text and making it more valuable. Change the colour of the CTA button and add more relevant content on the page to improve lead generation.
With the help of CRM for the marketing team, you can have these functions on one platform and run your marketing operations seamlessly.
KPIs should be tracked by every marketer to track their marketing efforts. Without them, it will be difficult to have strategic marketing campaigns or assess the marketing efforts.