Key performance indicators (KPIs) play a vital role in day-to-day business management. A bit like a compass, they can indicate the direction you are heading. They can help you understand how well the business is performing and importantly, whether it’s on track to achieve its goals.
There are loads of different KPIs that you could track for all the different areas of your business, as this example list shows: 18 Key Performance Indicator Examples Defined). Therefore, one of your key tasks is identifying the ones that are going to be most important for you to measure and report on.
Every number tells a story but that story can be influenced by many contributing factors.
In general, you will extract the most important KPIs by looking at your company goals and finding out what will contribute to you achieving the goal.
For example, let’s say you want to grow aggressively and double your turnover within a year. This is a huge, companywide goal that every department needs to contribute to. Your primary KPIs here will be looking at turnover trend and the total generated.
But this number may be influenced in many ways. It could be that you’re a seasonal business and your biggest turnover is in the summer months, whereas during winter it all slows down. So, you will have to adjust for that.
In this instance, looking at your monthly average is perhaps not going to tell you anything meaningful because of the seasonal variation. You would instead need to compare the same month from previous years, to truly understand what’s happening in your business (you get the idea).
From resources to capital and equipment, all these things can have an influence on the end number, as can other internal and external factors. So, you need to dig deeper to find other meaningful KPIs that will help you understand the full story, in order for you to make strategic decisions. The key is to know at any moment how well you are doing.
How deep do you need your reports to go?
One of the first questions to address when determining which KPIs to use for monitoring your progress, is how deep you want your reports to go.
A top level overview may not be enough to tell you the true story, but digging down too deeply won’t help you either.
KPIs can quickly become overwhelming, as there’s often lots of data available and one will lead on to the next, and so on. The best way to handle this is to take a step back and ask yourself two questions:
– What story is this KPI telling me?
– How does a change in the KPI influence my activities?
Look at the story the KPI is telling you and figure out if it is relevant. Then how you could act on the information. If the story isn’t important, or you can’t act on it, then the KPI isn’t a good one.
Be clear in your mind on those two questions for each KPI and you’ll soon uncover the really important ones.
Asking why – the story behind the number
To have meaningful and effective KPIs that help you monitor your success, you need to know why you have the number you have.
Ask things like: what is happening? why is it changing? what are the factors contributing to any change in the number?
All these questions need to be looked at and you must be extremely cautious with the answers. They often won’t be clear cut and as hard facts won’t always be easy to come by, interpreting the figures may come down to experience, knowledge and instinct. Be aware of this and any assumptions being made.
In marketing, we like to A/B test landing pages, emails, etc. in order to prove our assumptions. With every A/B test a marketer learns more, gains more experience and increases the correctness of their gut feel.
An experienced content marketer, who has worked on campaigns and looked at stats for years, will also start to better understand what’s happening and be able to fine tune their strategies. This means they may only need to look at a few figures to get what’s going on.
Levels of information
KPIs cross over many levels and so their uses and the frequency with which you may want to look at them, will also vary:
- Some KPIs will give you a good overview and it will be enough to look at them monthly.
- Others will tell a more detailed story and you will want to look at them weekly.
- Some will affect your daily activity, so you’ll want to check on them daily.
- Then there are KPIs that the executive board will need to see and understand, or heads of departments, or other stakeholders. The times you look at these will also vary accordingly.
The way you present the information is equally important and dashboards are your secret weapon here, as they provide a visual representation of what is going on.
A dashboard is simply a window with various numbers and charts put together in a meaningful way. It makes sense for you to spend time working out what your dashboard should look like, in order for you to extract meaningful information.
Small businesses and those who are just starting out tend to use some sort of spreadsheet or graphs, which will be pulled together for reporting purposes.
As an organisation grows, the need for more complex KPI reporting may be called for and the use of a more sophisticated system. There are lots of options out there and great software that can help you, from full business intelligence solutions to big data mining.
In short, a good dashboard will give you the correct information at the right time for you to be able to make good strategic decisions.
Sales and marketing alignment
KPI reporting is another reason why sales and marketing teams should be working closely together. This is a topic we’ve talked a lot about on this blog, as getting the two departments fully aligned can do amazing things for your bottom line.
For more advice on this, check out:
- Smarketing: how to align your sales and marketing teams
- Bridging the communication gap between sales and marketing
- Next level ‘smarketing’: why sales, marketing AND customer services need to talk
When it comes to KPI reporting, traditionally the two departments would look at the numbers in very different ways.
Not all KPIs will be important for both teams, but there are many crossovers. It makes absolute sense for sales and marketing to sit down together to figure out the overall KPIs that are important for both teams. This in turn will help improve alignment and encourage them to start influencing the KPIs together.
Lead Forensics is software that can help sales and marketing teams to make sense of data that is available to them about their website visitors. It can support both team’s with their individual needs, as well as showing the overall picture.
KPIs for online lead generation
When it comes to online lead generation, there is one key piece of information that sales and marketing teams need to figure out together, in order to find the most important KPI for them:
How many leads, of what quality and within what timeframe, do we need?
From this one question, stems a long list of activities which will again produce actionable goals (and so more KPIs).
Taking our earlier example, the two teams may decide: ‘We need 50 SQLs (sales qualified leads) every month to reach our company goal of doubling turnover within a year.’
That becomes the overall KPI which they need to be monitoring on a month to month basis.
But in order to qualify the goal further, they then need to work out how soon they need to achieve that number in order to reach the overall company goal. Is it enough to reach it within a year, or do they need to achieve it in six months, in order to double turnover?
Breaking down overall goals and KPIs
From your main goal, you should start breaking it down into actionable chunks. Make a list of all the activities you assume will help you in reaching your goal. One of those items could be ‘increase leads generated online with content marketing and convert them faster to paying customers’.
Don’t forget to quantify the goal and give it a timestamp or frequency. An example would be: Increase leads generated online with content marketing every month by 20% and reduce time to close by 20% within 6 months.
Again, now you have more KPIs on your list to keep watching. In your joint team meetings, pull out these KPIs, report on them and discuss the findings together. You have your goal and your actual figures, so what’s left now is to watch what’s happening and act accordingly.
Data sources for KPI reporting in sales and marketing
One of the trickier parts of KPI reporting is getting all your source material and effectively combining it within one dashboard.
With online lead generation, your most likely sources are going to be:
- Google Analytics
- Marketing automation software analytics
- Social media stats
- CRM activities
- Other tools used (Lead Forensics e.g.)
Each one will give you slightly different data, or a different view on that data. Combining the various data sources will give you the information you need.
Your marketing automation software will tell you how many leads are actually coming in and which ones are converting.
Software like Lead Forensics will tell you how many good visitors are coming in, even if they never convert. Information that could bring about a huge change in the actual number of leads being converted, if you knew it. (As our customers have found – Clients reveal all about working with Lead Forensics and the impact it has had for their business).
We know that overall on average only 2% of website visitors actually convert on an offer, what about all the other 98%?
Closed loop marketing means that you can trace every sale back to the marketing activity that brought you the customer. For that to work, you need to be able to connect your marketing data with your CRM. Depending on your systems, this shouldn’t be too much of a problem.
All your social media platforms will also present a host of actionable data (and some not so), which you may like to include in your KPI reporting – especially if it has an influence on the overall outcomes.
So, as you see, it can get a bit tricky pulling it all together, but your time will be well spent. The reward of doing so will be that you know exactly what works and what doesn’t, so you can make strong decisions moving forward and improve your results.
High level KPI dashboard for joint marketing and sales meetings
You should at least aim to have a monthly joint strategy meeting, where you report back on the key KPIs and discuss any strategy changes that may be necessary.
A few KPI ideas here would be:
- Number of leads coming in
- Conversation rate
- Visitor to lead conversion rate
- Lead to customer conversion rate
- Per lead turnover
- Total turnover projection
- Sales velocity (which includes time factor of days it takes to make a sale)
Each department will then break these down further, in order to set them in the right direction.
Marketing may look at:
- Total views of individual content, top 5-10 of the month for:
- download assets
- blog posts
- Conversion of individual content, top 5-10 of the month for:
- download assets
- blog posts
- Attribution reports – showing where leads are coming from exactly and how they convert
- Sources analysis – which channels bring in the best leads
- Closed loop – where do the sales come from (campaigns, channels, activities)
- What are the best leads – monitoring hand over of leads to sales
For sales, they may look at:
- Check sales velocity points to increase performance of your online marketing activities
- Conversion rates overall:
- per sales rep
- per territory
- per any other distinction relevant to you
- Consistently monitor for what is a good lead
- Revenue per sale/lead
- Profit per sale/lead
- Ease of interaction (some sort of customer quality score)
Of course, within the departments you will each have overview KPIs and then need to break them down into the individual numbers and figures you want to watch.
For example, in marketing, before you decide on the next editorial calendar you should take into consideration all the KPIs of past performances, keywords, etc. Before you actually start producing any piece of contents, you need to know exactly what you should be doing to generate the best results.
In a truly aligned marketing and sales environment you will regularly meet and start thinking about campaigns together. The result will be a better overall performance. And you never know, an ambitious goal of doubling turnover might suddenly become reachable, because everyone is working together towards one goal.