This post is intended for colleagues and business owners to evaluate themselves and their projects. I often encounter situations where entrepreneurs are dissatisfied with the work of marketers or teams but cannot clearly explain which metrics were tracked in the project and what exactly they were dissatisfied with.
KPIs for each should be defined individually based on business goals. This article lists the most basic and commonly encountered ones.
What are KPIs
KPIs (Key Performance Indicators) are metrics used to measure the success or failure in achieving specific goals and objectives in business. They help assess the effectiveness of work and make decisions based on data and facts. KPIs can vary depending on the industry, company, and tasks that need to be solved.
Why KPIs Are Important in Marketing
KPIs are important in the marketing department because they allow measuring and evaluating the effectiveness of marketing campaigns and strategies. They help determine which marketing actions work best and where improvements are needed. Additionally, KPIs allow comparing results with competitors and analyzing industry trends. This enables informed decision making and building more effective marketing strategies. For example, KPIs in the marketing department may include metrics such as website traffic, conversion funnel, cost per acquisition, growth in social media followers, etc.
Common Marketing KPIs
There are numerous KPIs (Key Performance Indicators) in marketing, some of which include:
Traffic
To evaluate website traffic, data from analytics systems such as Google Analytics should be used. Alternative services like open Web Analytics, Umami, Similarweb, etc., can also be utilized.
CPC (Cost Per Click)
This metric reflects the cost of clicking on an ad and is calculated using the formula:
CPC = Advertising Cost / Number of Clicks
CPL (Cost Per Lead)
This metric shows the cost of acquiring an interested user and is calculated using the formula:
CPL = Advertising Cost / Number of Leads
CAC (Customer Acquisition Cost)
This metric indicates the cost of acquiring a real customer and is calculated using the formula:
CAC = Advertising Cost / Number of Customers
CR (Conversion Rate)
This metric shows the proportion of target actions to the total number of visits and is calculated using the formula:
CR = (Number of Target Actions / Number of Visits) * 100%
ROI (Return on Investment)
This metric characterizes the degree of return on marketing investments and is calculated using the formula:
ROI = (Revenue – Advertising Cost) / Advertising Cost * 100%
AOV (Average Order Value)
This metric allows evaluating the purchasing ability of the target audience and marketing effectiveness and is calculated using the formula:
AOV = Revenue / Number of Purchases
Return Rate
This metric allows assessing the level of customer interest in the product and is calculated using the formula:
Return Rate = (Number of Repeat Purchases / Total Number of Purchases) * 100%
LTV (Customer Lifetime Value)
This metric shows the profit brought by a customer over the entire period of cooperation with the company and is calculated as
LTV = Revenue – Acquisition Costs
Calculating KPIs is crucial for evaluating the work of a marketer. However, as noted above, not all metrics characterize the effectiveness of their work.
These are just some of the many KPIs used in marketing to assess the effectiveness of campaigns and strategies.
How to Use KPIs in Marketing to Improve Company Business Metrics
Follow these steps to use KPIs in marketing to monitor and improve your situation.
Step 1: Define Your Marketing Goals and Strategies
Before selecting KPIs, it’s essential to understand what goals you want to achieve and what strategies you will use to achieve them.
Step 2: Choose the Most Important KPIs
Select several key indicators that most accurately reflect the effectiveness of your marketing strategy.
Step 3: Set Target Values for KPIs
Define desired values for each of the selected KPIs and set them as target values.
Step 4: Measure KPIs Regularly
Measure the selected KPIs regularly to track changes and progress.
Step 5: Analyze Results and Adjust Strategy
Use the results gathered from measuring KPIs to analyze the effectiveness of your marketing strategy and adjust it according to the needs of the business.
Step 6: Compare Your KPIs with Competitors
Compare your KPIs with competitors to determine how effective your marketing strategy is compared to other companies in the industry.
Step 7: Use KPIs to Make Decisions
Use the results of measuring KPIs to make informed decisions on how to improve your marketing strategy and achieve your goals.