We have so many measurable marketing metrics at our fingertips these days, that this can be both a blessing and a curse.
On one hand, we can drill down into every single aspect of the customer journey to a microscopic level, giving us a fully detailed picture of what is going on at each stage; on the other hand, however, we can be bombarded with so much data that it can be easy to become distracted by marketing metrics that aren’t actually all that meaningful in the grand scheme of things.
As a busy MD who has to be across all aspects of the business, this can be an even bigger issue. You just don’t have the time to be sifting through 50-page reports to find the gold hidden within.
So how do you cut through to the marketing metrics that count?
By identifying and maintaining a laser-like focus on your business’s key performance indicators, or KPIs.
KPIs vs. marketing metrics
“But wait,” I hear you protest, “isn’t KPIs just another term for marketing metrics?”
Well, yes – sort of.
While we often see these terms used interchangeably, they aren’t actually synonymous. In the same way that all elephants are mammals, but not all mammals are elephants, all KPIs are metrics, but not all metrics are KPIs.
So what’s the difference?
Metrics simply measure the performance of a particular process. Basically, if you can measure it, then it’s a metric.
Metrics can be tricky, though. It’s easy to get sidetracked by vanity metrics – metrics that might make you feel good, but not actually give you much insight into how the business is tracking. For example, a spike in page views might get you excited – but page views in and of themselves don’t contribute directly to your bottom line. Sure, it’s useful information to have, and it may be indicative that you’re heading in the right direction, but it’s not a KPI.
For example, say your IT business has business KPIs that include meeting a target for leads marketing hands off to sales each month. Your business also has a wide following on social media, and therefore with an ever increasing number of likes, followers and comments. The number of likes, followers and comments are not necessarily contacts moving down your marketing funnel, so are vanity metrics. The marketing metrics you should be focusing on are whether or not contacts are converting to leads, MQLs and SQLs. The vanity metrics could provide false signs of success if misinterpreted or looked at in isolation.
Unearthing the most relevant marketing metrics is not unlike trying to find a puppy lost in a sea of soft toys
KPIs, on the other hand, are directly tied to your business objectives, and produce meaningful insights towards growth. In other words, if you want to know, in real terms, how well the department or the business is doing, you need to be looking at KPIs. Not only should KPIs be highly relevant to business outcomes, they should also have targets, and specific timeframes for achieving those targets. In short, they should map the route to success.
Building a marketing KPI system
While understanding marketing KPIs is pretty easy, identifying KPIs – the right ones – is less so. How do you draw out those metrics that will ultimately paint you the big picture?
Buckley Barlow, founder of In The Know, suggests building a KPI system to help you identify and develop those KPIs that are inextricably linked to growth. Here’s a brief rundown of how the system works.
1. Define your goals
Before you get into the nitty-gritty details, it’s important to first remind yourself of the why: why do you exist? Why do you do what you do? By starting at this high level, you help to ensure your KPIs are in line with your company’s mission.
Once you’ve got your end-goal in mind, you can then start to think about the overall customer experience, and look more closely at your goals for each stage of the customer journey. This is where having a marketing mindset is valuable. Because marketing is wholly focused on understanding and targeting customers, a marketing mindset is really a customer mindset – and without customers, you don’t have a business.
2. Define your objectives
Once you’ve laid out the why, it’s time to answer the how: how exactly will you reach those goals?
Your objectives will be highly dependent on the stage of growth your company is at; for example, in the early start-up stages, it’ll be all about driving brand awareness and engagement, while in the later stages, you may be more focused on driving brand loyalty and finding your key promoters.
3. Determine how to reach your objectives
Now that you’ve got your objectives, how will you reach them? This step is all about finding the best strategies that will plug any marketing gaps and make your objectives – and, by extension, your goals – a reality.
For example, if your objective is to increase brand engagement, you might develop a content marketing strategy that involves creating deeper pieces of content, such as ebooks, that provide a lot of value to customers.
4. Choose your KPIs
After you’ve laid all that groundwork, now, at long last, it is time to determine your KPIs – those marketing metrics that will tell you whether or not you’ve achieved your objectives.
Remember, don’t get distracted by surface-level metrics here! Be sure your KPIs are meaningful. For example, rather than looking at the number of email subscribers, you might want to look at email click-through rates, which give a truer reflection of customer behaviour and engagement.
5. Choose your platform and create a KPI-only dashboard
Masses of data can get very ugly, very fast. If you want to have any hope of making sense of your data, without having to spend an entire afternoon each week inputting information into a spreadsheet, you’ll need some technology, most likely in the form of a marketing automation platform, to help you out.
Looking at pretty graphs is much easier than trying to decipher rows of numbers in a spreadsheet (and trust me, your eyes will thank you).
Once you’ve got your platform set up, be sure to set up a KPI-only dashboard to keep a strong focus on your objectives and goals.
6. Build an A/B optimisation plan
OK, you’ve got your KPIs – now what do you do with them?
While your KPIs will give you a pretty accurate picture of what’s happening in the business, they’re not going to tell you what to do in order to reach that next milestone.
A/B testing lets you exercise your creativity while incrementally improving your strategy, and also helps you make sure you’re working with clean data.
7. Create a timeline
Setting a timeline is an important step, because not only does it give you something to work towards, it also helps your business stay on its growth trajectory.
Growth is about constant evolution. Once you’ve reached one objective, it’s time to look ahead to the next one, and keep setting the bar higher. And don’t forget your KPIs might change, or you might find better ones that are more tied to growth, so it’s important to keep reviewing them on a regular basis.
Examples of key KPIs
Every business is going to be a little different, so it’s important to note that what might be a KPI for another business might not be for yours.
That being said, here are some KPIs we think are pretty key.
1. Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLV)
Your CAC is, as you might’ve surmised, the cost of acquiring a customer, while the CLV is the projected revenue a customer will generate during their lifetime.
Both these marketing metrics are essential because they speak directly to your budget and return-on-investment (ROI).
We highly recommend breaking down your CAC by source, so you can see exactly which channels cost the least, allowing you to double down on these channels and stretch your budget as far as possible. Be sure to calculate your CAC for:
The ultimate goal is to move customers down the sales funnel or to the next stage of the buyer journey, from awareness, to consideration, to decision, so it’s important to have a clear idea of how successfully you’re managing to do this.
What constitutes a funnel conversion rate is going to be dependent on the business; for example, a consideration conversion might be looking at case studies, or signing up for a demo or a free trial.
3. Individual campaign performance
This one’s pretty obvious – after all, there’s no point running campaigns if you don’t know whether they worked or not. Again, be sure to drill down into those metrics that really reflect customer engagement and behaviour in a meaningful way. These might include things content download rates, ad view-through rates or email click-through rates – but don’t forget to look at whether those leads converted into opportunities or even customers.
Adopting a marketing mindset and maintaining a laser-like focus on KPIs not only helps your improve marketing strategy – it can reveal a lot about the overall health of your business and, more importantly, your customers.
Along with KPIs, knowing your marketing ROI is also key to the success of your marketing efforts. Download our free Inbound Marketing ROI Calculator to uncover your return on investment today!
April 24, 2018