When it comes to making strategic decisions, key performance indicators (KPIs) are a very useful tool. They’re numbers that can tell a story – the tricky part comes in knowing exactly what that story is and understanding its true implications.
In a nutshell, KPIs can help you define a business goal and then measure your progress along the way. They give you an opportunity to react and put into action various tactics, to either counteract or support any trends that may be showing.
For example, if you are an organization that wants to grow and you currently have a team of three sales reps, then you may decide to expand and employ another seven.
When thinking about the best KPI to focus on, is reaching 10 sales reps really the key? Or is your goal actually to reach a specific amount of sales?
The answer is likely to be the latter, which means concentrating on the number of reps is a pointless task.
There are, of course, many factors that will determine the level of sales that are made in any given month. You’ll need to tweak and adjust all the pieces of the puzzle if you’re to achieve the result you’re striving for. (If growth is your aim then you may also find our blog on increasing sales velocity a helpful read).
For any company, but particularly if you’re just starting out, it can feel a little overwhelming at times to try and figure out exactly what to measure. You may have an exec team or board members telling you what they want to know, but you need to drill down to pinpoint exactly what you need to know.
The real question to be asking is – what could you measure that will specifically help you in achieving your desired goals?
A process for setting KPIs
Here’s how to get the process started:
- Be clear on your business objectives – It all starts by having some clearly defined business objectives. For most companies, these will be decided by the executive team. Find out what they are, if you don’t already know.
- Turn the objectives into goals – the next step is to take the business objectives and translate them into measurable business goals.
- Think which KPIs will help you meet these goals – Step three is thinking about the KPIs that will give you the information you need, so you can see whether you’re on track or not when it comes to reaching your goals.
- Define what success will look like – once you have set up some KPIs, you need to know what good results will look like. What will determine success and failure? What should the numbers be? Getting input from various people who may be directly involved in the process, is a good idea here.
- Outline the whole process in detail – It’s then important to note down everything that is involved in, or may influence, the process of achieving the KPIs. Think about people, processes, behaviors and outcomes.
- Start tracking your progress – finally, on an ongoing basis you need to track the KPIs and review the outcomes.
Tracking your results
The first point to make about results is that they may not always be what you were hoping for. In this situation, if the results aren’t what you were expecting, then avoid finger-pointing at all costs. It will lead to nothing and help no one.
Instead, routinely ask the following questions, so you can move forward in a positive way and look to improve on your results:
- What happened? (list out the KPIs, their numbers and any interpretation or assumptions that may sit behind them)
- What worked well? (it’s very important to first establish what went well, particularly if the overall outcome isn’t what it should be)
- What didn’t work? (again, don’t play the blame game, just list anything in the process that simply didn’t work)
- What have we learned? (an often overlooked question but one that can lead to deeper understanding, so don’t overlook it)
- What steps should be taken? (think what can you do to prevent the negative from happening and to repeat and improve on the positive)
Using macro and micro KPIs
To use KPIs effectively, it’s important to have both ‘macro’ KPIs – top-level figures, such as the total number of leads generated per month – and ‘micro’ KPIs, which can help you delve deeper within your activities.
Your micro KPIs will help you understand any movement in your macro KPIs.
Here’s an example of how it can work in practice:
Say the overall number of leads coming in (your macro KPI) is going down. As a first step, you decide to analyze the microelements, to see what type of leads are coming through. Next, you may filter out the high-quality leads.
At this point, it becomes clear that the number of quality leads is actually increasing. So, overall the total number of leads may be going down, but the quality is going up, meaning you’re being more successful in your targeting.
And voila – the micro has helped explain the macro.
At the heart of everything you do and everything you achieve, will sit your marketing plans.
From the tactics you’re using to your website and use of social media channels, each individual element needs to be covered by your KPIs.
Begin by thinking about the goals that have been set and the marketing mix you’re using. Both of these things will have an impact on how you measure your progress.
Here’s a rundown of different types of marketing activity and examples of KPIs you could track:
If you use content marketing – a tactic that can work wonders for any organization looking to generate leads – then being able to track and measure success is really important.
Proving content marketing ROI, and indeed the ROI of any type of marketing is frequently cited as a key challenge by marketers. It’s an important issue and one which can have implications for a department in all sorts of ways, including future budget allocation. Anything that can help when it comes to measuring and demonstrating progress, such as KPIs, can be very helpful.
The first step to using KPIs in this context is to encourage content ownership among the marketing team. If individual people are responsible for a particular campaign or piece of content, then they need to know about all the important KPIs they will be expected to measure and report on.
Here’s a rundown of some of the most popular KPIs associated with the different elements of content marketing:
- Total number of leads
- Number of leads per channel
- Number of leads per asset
- Overall trend (comparison to previous numbers)
Conversion rate of landing pages
- Number of pages read
- Page flow before conversion
- Categorisation in MQLs (marketing qualified leads), SQLs (sales qualified leads), supporters
- Ratios of MQL to SQL and closed
- Lead scoring
- How many leads inactive campaigns
- How many leads converting in campaigns
Individual emails and other touchpoint KPIs
- Email open rate
- Click-through rate
- Cost of content
- Length of process
Your Content library
The performance of your core content needs to be measured on an ongoing basis. The main KPIs you should look at here will be based around views and conversions.
Work with sales to see if you can find new ways to enhance the process. Ask what type of content gets requested and how often. Think about:
- The performance of your existing content
- What additional content may be needed
- What patterns you can see
- Number of views
There are some extra ideas for you here on how content marketing can help you achieve your particular business goals.
Paid Earned Shared Owned (PESO)
When you’re thinking about all the content you’re using and need to set KPIs for, don’t forget to consider all the different types.
PESO is one model being followed by modern marketers. It focuses on the need to combine all four types of media – paid, earned, shared and owned media – if you’re to achieve your company goals.
It breaks down as ‘paid’ (any media you pay for), ‘earned’ (others talking about you), ‘shared’ (social media interaction), and ‘owned’ media (anything you create).
When it comes to your KPIs, you will need to set them up for each of the four types.
For more details about the strategy itself, check out: Why everyone is talking about the PESO model)
Another important area to track is the performance of your website. When it comes to lead generation, a well designed and thought through website can quickly become your best friend. It should work as both an effective lead generation tool and a strong branding asset.
The type of basic website KPIs you may want to look at would include:
- Visitor numbers
- Duration of stay
- Number of pages
- Bounce rate
- Source of the web traffic
Many metrics are available to you through Google Analytics, which is free and easy to set up.
The goals function allows you to track your website’s effectiveness. With properly configured goals, Google Analytics will provide you with critical information, such as the number of conversions and the conversion rate for your site.
Also, make the most of tracking codes, which can help you measure your marketing efforts across other websites and channels. Use custom links to keep track of the number of sales that resulted from those advertising and promotional activities on other platforms
Most businesses nowadays will use social media as part of the lead generation mix. And when it comes to KPIs, the success of social media should never be about the number of followers. It should be about the quality of the engagement being achieved.
There will be more engagement the more followers you have, so it’s still ok to aim to increase this number – as long as you do so in a targeted way, aiming to grow your audience with the right kind of followers.
Depending on the type and size of the events you are holding, there are many different KPIs you may consider for this type of activity. Such as:
- Number of attendees
- Number of quality leads
- Number of pipelines moved along
For more ideas, check out our blog how to evaluate your event marketing strategy and define ROI.
Don’t forget about your offline marketing too.
The great thing about digital marketing and all things online is the capability that it gives you to gain detailed insights into what works and what doesn’t. The ability to gather and compile data is easy. However, when it comes to offline marketing campaigns it is infinitely more difficult to measure – but not impossible.
When it comes to sales teams, the most important KPI for any sales department is its conversions ratio – i.e. how many leads are converted into paying customers and the amount of revenue coming in.
If you’re a seasoned sales team then you’re likely to have your own metrics worked out already, but if you’re still building your team, then here are a few pointers.
The key is to land customers as quickly as you can, at the lowest cost possible, while keeping hold of the ones you’ve got. Good KPIs to look at in sales would therefore be:
- Sales velocity
- Cost of acquisition (COA)
- Customer retention rate
We’d also recommend taking a look at Mark Roberge’s book “The Sales Acceleration Formula” which details how he turned HubSpot from a five-person team, into a fast-growing company with a successful IPO. It’s particularly useful in terms of how best to use modern marketing and sales tactics, along with issues of recruitment and reward.
The value of data
No digital marketing analysis is possible, without first having lots of data to analyze!
Make sure you have at least one person on the team who understands data and can extract it and help you with the interpretation. We’re not even talking big data here (which is an entirely different game), we’re talking about the data you gather via all your digital tools – from your marketing automation software to client interaction tools, your social platforms, customer service reports, CRM, etc.
Data is constantly being churned out and it’s a highly valuable resource for any business. However, if it’s just left as a heap of bits and bytes, then it will have no meaning. But if you use it properly then it will lead to knowledge that you can then learn from and apply, encouraging even greater business success.
For example, knowing why people only stay on your landing page for 20 seconds and then leave without converting, is crucial. In this situation, the data you need to collate will stem from using some A/B testing, to figure out what is going on.
Does the design need updating? Is the wording in need of an overhaul? Is the wrong audience being driven to your page? There are many potential causes.
When you’re working with data, it also needs to become a daily activity if it’s to work well. Don’t be afraid to constantly revisit and question every assumption you make. It’s sometimes not that obvious why a certain behavior leads to a certain result. You need to test and retest to see if you get a different result. Tweak and test, rinse and repeat.
Success with KPIs
Finally, when it comes to KPIs, avoid jumping from one to the next. Everything takes time to settle in. Start with a list of KPIs you want to measure and use them for at least a year before throwing them out or changing them. Adding new ones in isn’t a problem but always keep the macro and micro needs in perspective. And don’t forget to test, test and test again.