Discover what a KPI in marketing is, how it empowers strategy, and the best ones to use for your marketing campaigns.
In the fast-paced marketing world, the difference between success and failure hinges on one’s ability to track, measure, and adapt. But how can marketers pick the proper benchmarks for their campaigns? That’s where key performance indicators (KPIs) come in handy.
So, what is a KPI in marketing? We’ll explore the ins and outs of KPIs, so independent marketers can understand their significance and identify the best KPIs to employ during their campaigns.
What are key performance indicators (KPIs)? 🔑
In marketing, key performance indicators (KPIs) are quantifiable business metrics that measure the effectiveness of a marketing campaign. Serving as vital performance benchmarks, KPIs help marketers determine whether their efforts are successful — did the campaign create the desired impact? If not, what adjustments can be made?
Marketing KPIs are useful for several reasons. They:
- Keep your team aligned. KPIs establish clear, measurable goals, ensuring team members understand their roles in achieving the overall marketing objectives.
- Evaluate success and adjust strategies. KPIs are barometers for the effectiveness of a company’s current marketing strategies. They allow marketers to make data-driven decisions and fine-tune their approach for better results.
- Increase team member accountability. Tracking individual performance against specific KPIs allows marketers to take ownership of their work, identify areas for improvement, and celebrate successes. It also allows managers to evaluate the performance of their employees more objectively.
According to research by Splunk, the data gleaned from tracking KPIs has a significant positive impact on companies’ overall positioning and marketing:
- Better data use has helped 72% of innovators improve the speed/quality of their decision-making.
- With the right data, 91% of organizations surveyed are confident they can compete and succeed in their markets over the next few years.
- 93% of organizations think improved data use can improve the experience of their customers.
Contrary to popular belief, KPIs, and metrics are not the same (but are related). Metrics measure everyday business activities, and KPIs are carefully selected goals derived from these metrics that align with organizational objectives. Tracking and analyzing metrics allows marketers to calculate their KPIs. They then use this data to continuously improve marketing strategies organization-wide.
The end goal? Better business performance and greater success for your brand!
What to consider when choosing marketing KPIs ⚖️
To ensure long-term success, marketing KPIs must align with your goals and accurately measure the impact of your efforts. To choose the best KPIs for your objectives, consider the following questions:
What are our core business goals? 🥅
Determine your company’s primary objectives. These could be anything from increasing revenue to expanding market share to maximizing customer satisfaction. By understanding these goals, you can select KPIs that directly contribute to them.
Which marketing activities are key to achieving those goals? 📧
Brainstorm specific marketing activities to drive the business goals you outlined in the first question. Examples include social media marketing, content marketing, and email campaigns. Pinpointing these activities will help you tailor KPIs to each method.
What is considered a success for each marketing activity? 🎯
Establish clear criteria for success in each marketing activity based on the desired outcomes. For example, a successful email campaign might be defined by a high open rate and click-through rate, whereas successful content marketing can be determined by increased website traffic. Setting criteria for success allows you to choose KPIs that accurately measure your marketing team’s performance and progress.
9 marketing KPI examples 🤔
The right KPIs will offer valuable insights into your marketing performance, helping you identify areas for improvement and providing a tangible pathway toward your business goals. But how do you determine the right KPIs?
We’ve provided nine examples to help you decide which KPIs suit your needs:
General marketing 📈
Marketing Return on Investment (ROI)
ROI measures the profit generated from marketing efforts against their cost. It’s calculated as (Revenue – Marketing expenses) ÷ Marketing expenses ✕ 100. For example, if your $2,000 marketing campaign generated $10,000 in revenue, your ROI would be 400%.
Customer Lifetime Value (CLV)
This KPI’s meaning is fairly straightforward. CLV is the net revenue a business can expect from a single customer throughout the duration of their relationship, identifying the most profitable customer segments. A straightforward way to calculate this is Initial cost to acquire a customer – Revenue earned from the customer.
Social media marketing 👍
Tracking the results of your social media efforts will inform how you spend your marketing dollars. Typically, conversion rate measures the percentage of users who take the desired action after engaging with your social media content, which may include TikTok, Instagram, and Facebook ads. The action could be anything from following your page to making a purchase or signing up for a newsletter.
Engagement is a primary KPI for social media that measures the success of your posts. An easy way to calculate it is Total number of interactions (likes, comments, shares, etc.) ÷ Total number of followers ✕ 100. For this KPI, any interaction with a lead or customer counts.
Cost per lead
This KPI tracks the amount you spend to acquire a prospect through social media. To calculate it, use the following simple equation: Cost of a social media campaign / Number of leads generated. This helps assess the efficiency of your lead-generation efforts on platforms like TikTok, Instagram, and Facebook.
Email marketing 📨
This digital marketing KPI refers to the number of recipients who opened an email. Tracking this is an excellent way to assess the efficacy of your email subject lines and the engagement and quality of your email list.
A simple way to calculate email open rate is Number of opened emails ÷ Number of delivered emails ✕ 100. For instance, if an email is sent to 100 subscribers and 50 open it, the open rate is 50%.
Click-through rate (CTR)
In email marketing, the click-through rate (CTR) is the number of recipients who click a link within an email. This assesses the potency of the email’s call to action. To determine the CTR of your email campaign, use this equation: Number of link clicks ÷ Number of delivered emails ✕ 100.
For example, if an email is sent to 100 subscribers and 20 click on a link in the email, the CTR is 20%.
Paid media marketing 💸
Impressions and reach
Impressions represent the number of times your marketing piece has been displayed to a user, and reach is the number of unique users who have seen it. These metrics help gauge the visibility of your marketing efforts. The more people see your hard work, the better!
Customer acquisition cost (CAC)
The customer acquisition cost (CAC) calculates how much it costs to turn a prospective lead into a paying customer. Tracking this KPI enhances your marketing strategies by informing crucial budgetary choices.
For example, investing excessive funds into acquiring qualified leads and new customers isn’t recommended if it doesn’t yield a significant profit. To calculate this KPI, use the following equation: Marketing expenses / Number of new customers acquired during a specific period.
Harness the power of KPIs with Contra ✨
Understanding and implementing the right marketing KPIs drives business success. By selecting relevant metrics and consistently tracking them, marketers can optimize strategies, identify opportunities for improvement, and make data-driven decisions. If you’re an independent marketer seeking remote opportunities to help clients reach their goals, consider joining Contra. Our commission-free platform connects freelancers with businesses that need their expertise. If you’re not a marketing expert and need some help, Contra can match you with an Independent that has the skills you need.