KPI stands for Key Performance Indicator. These are the most relevant metrics for your strategy, which determine your success or not.
Do you know what success strategies have in common?
All of them constantly accompany how their actions behave.
According to Content Trends 2017, 78.1% of companies that document their strategy are considered successful. In companies that do not make this documentation, this percentage falls to 25.2%.
It is this accompaniment that makes it possible to determine what is working and what is not. Basically, is the best way to analyse the results . But this analysis needs numbers!
These numbers are the best way to know if your results are in line with the objectives of your digital marketing strategy, and if your company is getting the desired ROI.
If you want to understand more about marketing in the online environment, planning, benefits and goal setting, download this complete material on the subject:
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To help you measure these results, were going to talk about everything you need to know about the famous KPIs.
In this article you will learn:
- What is KPI;
- What is the difference between KPI and metric;
- How to choose a good KPI;
- Why Facebook “likes” are not good master KPIs;
- What are the types of KPIs.
What is KPI?
KPI stands for Key Performance Indicator . It is a way of measuring whether an action or a set of initiatives are effectively meeting the objectives proposed by the organization.
There are thousands of indicators that can be measured. We are in an age where the flow of information is immense and constant. The central point is to know how to choose the best indicators to measure.
A KPI can be a number or a percentage.
For example, if you want to measure how many pages a visitor saw on the blog you created for your company during a visit, you will have a number (3 pages per visit, for example).
Now, the rejection rate of a page in your blog is a percentage (70%, for example).
What is the difference between KPI and metric?
This is a very common confusion.
KPIs are not the same as metrics, but a metric can become a KPI.
Yes, I know! It seems confusing, but Ill explain.
KPIs are important indicators for your business and your target, a metric is just something to be measured.
If for any reason that metric becomes relevant to your strategy, it becomes a key indicator. Got it?
The important thing is to understand what can help in the decision making process within your company. This is the basic premise for choosing any KPI and this is how a metric becomes an indicator.
A Key Performance Indicator needs to be valuable to the business and help you and your superiors make smart decisions.
This brings us to the next topic.
How to choose a good KPI?
First of all, it needs to be relevant to your goal. If you want more visitors on your blog, tracking the average price of your customers purchases within e-commerce is not interesting (at least not yet).
KPIs are intrinsically related to objectives for a very simple reason: they are the ones that measure the performance of each of the objectives, wrong indicators show wrong performances.
This way you can get the impression that you are doing very well, but in reality you are not, and vice versa.
To help you make that decision, I listed five characteristics of a good KPI.
1. Availability to be measured
It seems obvious, but its the truth. To choose a main KPI, it needs to be available so that it can be measured and analysed correctly. For example: you can only quantify leads after you start generating them.
2. Importance for the business base
The KPI shows that your strategy is working and that the main objective is being achieved.
If your business grows and you sell more, your KPI should show you that you are really growing and selling more.
One of the biggest mistakes when choosing indicators is choosing vanity indicators , that is, numbers that do not show any result but make the marketing team happy.
Primary indicators such as comments, “like” and content shared in social networks do not show concrete results, they just seem important – focus on what really matters!
4. Help make smart choices
Data and information are the basis of good choices. Your primary Key Performance Indicator needs to help you make smart choices.
What good are good data, if they are not the basis for choosing the best path for your company?
5. Have periodicity
The KPI needs to be measured constantly, this accompaniment is what allows to understand what works and what does not work, and if the ROI is interesting.
Choose KPIs that can be measured periodically and can assist in periodic decision making.
Why are Facebook “likes” not good KPIs?
Yes, I know. You already suggested using the amount of comments or “like” on Facebook as an indicator. From today on well make a deal: dont do it anymore!
Ill tell you why.
A good Key Performance Indicator is one that shows you how your goal is bringing you more business or more business opportunities for your company. A “like” alone is not an exact way to analyse that.
The only way to use social interactions as KPIs is by relating them to other factors.
For example, how many customers who came from Facebook commented on your post? how many gave “like”? These correlations can bring interesting data, but a social interaction alone does not.
My advice here is to focus on what really matters and what is clearest to be measured and accompanied.
Types of KPIs you can use
As you can imagine, there are countless indicators that can be important for your strategy (and for your boss, if that is the case). But many of them only make sense if they are based on data, or on day-to-day evidence.
That is why you can use different types of indicators according to the interests of the person who is analyzing the results.
To make it easier, lets divide them into three categories: primary, secondary and practical . Without further ado, lets get down to business:
These are the Key Performance Indicators that your directors and C-Levels want to see. They are the main ones for your target and indicate that you are helping the company to make more money , just like that.
Analyzing the strategies of Inbound Marketing and Digital Marketing, most of them will have as primary KPI some of these options:
- Acquisition cost per lead;
- Conversion rate;
- Total income;
- Income from purchase.
When showing the results to your superiors, always remind them of the main objective.
If you have managers and/or superiors, they follow the development of the strategy and the results more closely.
Therefore, they have the need (and the time) to analyze other Key Performance Indicators in more depth.
The KPIs you work with and report to your manager need to show that your testing and management strategy is on track. Those indicators need to reinforce the primaries and show the why .
Some interesting secondary Key Performance Indicators
- Cost per lead at each level of the funnel;
- Newsletter subscribers;
- Blog subscribers;
- Recurring visitors on the blog;
- Cost per visitor;
- Traffic source (organic, paid, social networks, direct, e-mail and others);
- Average price per transition.
Remember, the secondary KPI must justify the primary , it must show how those results are being achieved.
Heres a little geek content! But dont panic, everything will continue to be very well explained and easy to understand.
Within a Digital Marketing and Inbound Marketing campaign, whoever manages and administers the day-to-day, needs to constantly test and monitor more detailed data on user behavior, acquisition and characteristics.
Therefore, you (or your marketing analyst) need to accompany a slightly longer list of indicators, some of which are
- Pages per visit;
- Bounce rate;
- Best landing pages;
- Page Rank;
- Most searched keywords (according to your business);
- Most read/visited content;
- Visitors (new vs. recurring);
- Social interactions.
This list can go on for a long, long time. The important thing is to understand what is interesting for your target and what will help you deliver better results for your board.
If you want to learn how to measure and analyze these indicators, dont miss our Complete Guide to Google Analytics.
It is important to understand that as you move down in the KPI category (primary, secondary and practical), it is necessary to accompany the previous ones.
In other words, your marketing analyst needs to follow all the chosen indicators, but for your manager it is interesting to see which one will bring more profit to the company, which one will prove the ROI.
Maybe some concepts are still a little confused. But dont despair! The best way to understand how to choose KPIs correctly is to put all the theory into practice.
That is why we are going to create 4 examples so that you can better understand how the choice of Key Performance Indicators works. We are going to choose the primary and secondary ones, okay?
Lead generation KPIs
Your company wants general leads. How are we going to do this? With a super Inbound Marketing strategy and a well done blog!
What to choose as a KPI?
Seems easy, doesnt it? Leads.
But the secret is in the secondary indicators. If you want to generate leads through the blog, you need traffic, so the total traffic is an interesting secondary KPI.
However, a good Content Marketing strategy will bring a lot of organic access to the blog, through blog posts that work on interesting keywords.
We can then also consider the organic traffic. Now we have 3 KPIs, thats enough.
KPIs of those who need to educate the market
Technology companies (mainly startups), have specific areas of operation and businesses, which are not so well understood by the market.
Therefore, it is necessary to educate the market about that product or service.
To educate the market it is necessary that people follow your blog constantly, read the blog posts and understand about your product.
An interesting KPI for this objective is the total traffic . To educate the market you need visitors.
But again, make no mistake! You need to accompany how this traffic behaves.
Therefore, recurring visitors, new visitors (or new sessions), subscribers to the newsletter , pages per visit and bounce rate are secondary indicators that you should follow.
A unique visitor is one who enters your blog from the same IP address.
Therefore, if you have many unique visitors, you have people being educated by your content, which also applies to subscribers to your newsletter.
Remember also the organic traffic.
KPIs for e-commerce
KPIs work very well for e-commerce (so well that Google Analytics has metrics created especially for online businesses).
Lets assume that you want to increase the average ticket for purchases within your online store. For this you can use different tactics: discounts, combos, free deliveries, etc.
But how do you know if the ticket is really increasing?
Accompanying the average revenue per transaction !
If he grows up, youre doing a good job, if not, something might be wrong. And how do you find that out?
With secondary KPIs.
Your visitor may not be buying anymore because his checkout has some problem or the information is not well distributed within the page.
You can follow the bounce rate to find out which pages have the most gaps, or the average time spent to find out how long visitors spend on a certain page, and even the number of pages per visit to find out if they are browsing your website, discovering and researching your products.
Do you notice how the use of KPIs is closely related to the target ?
Some indicators that I cited as commonly secondary or practical become more important within a given strategy.
For this reason it is important to always consider the context . An important KPI for Rock Content (owner of this blog) may not be as important for your company.
Therefore, work well your objective and create strategies that match what your company expects. Only then do you select the KPIs that really matter and begin to follow them.
But dont leave it till the last minute! Analyzing the result must be a practice followed from the beginning of the efforts and must be accompanied constantly.
Remember that your superiors like to receive reports (and a lot of them) and nothing better than to show concrete data.